Environmental Impact Bonds

Environmental Impact Bonds allow communities to share the risks and rewards of financing large projects based on outcomes.

About

Environmental Impact Bonds (EIBs), also known as Pay-For-Success Bonds, are a performance-based financing mechanism. Private funders provide upfront capital to fund the healthy watershed project, and the local government only pays for the project if it measurably meets pre-established goals.

Repayment is based on how successfully the project achieves environmental, social and economic outcomes for the local community. EIBs to meet healthy watershed goals could include outcomes related to reduced runoff volume, reduced nutrient runoff, a decrease in sediment runoff, healthy floodplain habitat metrics, and much more.

Environmental impact bonds are publicly issued and competitively priced. They typically provide up-front capital for a pilot project, or to scale-up an existing pilot project.

Investors in environmental impact bonds are repaid if the project performs better than expected, and the investor pays the municipality a 鈥渞isk-sharing鈥 payment if the project underperforms.

For example, a city鈥檚 payout on a bond for a bioretention project is tied directly to the volume of stormwater and the nutrient reduction the project successfully manages. The measurement of effectiveness for most projects will occur in the first year after installation. However, long term success of green infrastructure is reliant upon ongoing maintenance. There may be opportunities for a maintenance and measurement contract to ensure the necessary maintenance is completed, and that the project continues to perform at the optimal level.


Project Examples

Atlanta, GA

to improve local flooding, water quality and the economy. GI included right of way planters, bioretention in public parks, and stream and floodplain restoration. The outcome metric measured is volume capture (flow/runoff).

View Project Flyer

Washington DC

GI included right of way planters and bioretenion in public parks. The outcome metric measured is volume capture (flow/runoff).


Report by Harvard Kennedy School: 

Baltimore, MD

. GI included right of way planters, bioretention in public parks, stream and floodplain restoration, and impervious surface removal. The outcome metric measured is plant survivability.

Consult your community鈥檚 attorney and financial advisors prior to moving forward with any of these funding options. Any reference in this website to any person, or organization, or activities, products, or services related to such person or organization, or any linkages from this website to the website of another party, do not constitute or imply the endorsement, recommendation, or favoring of companies or organizations.