Environmental impact bonds offer innovative approach to improve public spaces

Environmental impact bonds (EIBs)—a pay for success (PFS) strategy—have become increasingly popular in cities with combined sewer systems that collect rainwater runoff, sewage, and wastewater in the same pipe.” During periods of heavy rainfall, sewage from these systems can flow into local rivers, damaging local water and air quality, natural habitats, and public spaces. In 2016, Washington, DC, launched an EIB to finance green infrastructure, an inexpensive alternative to costly pipes and pumps. DC’s water and sewer utility partnered with intermediary Quantified Ventures on a $25 million green infrastructure plan that includes rain gardens, permeable pavement, and landscaping that can stall stormwater runoff.

Baltimore has also struggled with a combined sewer systems. The city is required by both federal and state regulators to decrease and treat polluted runoff from more than 4,000 acres across the city by 2019 to better manage stormwater runoff in more than three dozen neighborhoods. In partnership with the Kresge Foundation, Baltimore plans to issue up to $6.2 million dollar in EIBs by the end of this year.

Atlanta, another city suffering from combined sewer systems, has employed another innovative strategy to tackle polluted runoff. In March, Atlanta became the first city to win the Environmental Impact Bond Challenge for green infrastructure projects, funded by the Rockefeller Foundation in partnership with Quantified Ventures. This publicly offered EIB will allow Atlanta residents to invest in improving their city’s sewer systems. Through this challenge, Atlanta hopes to fund approximately $12.9 million worth of infrastructure projects in the city’s Westside neighborhood.

EIBs may not be a solution for every city and municipality, but they offer a powerful tool that has the potential to reduce pollution and provide better public spaces for many urban residents. 

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