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Scaling-up nature-based solutions to water challenges

About the blog

Robert Brears
Robert is the author of Urban Water Security (Wiley), The Green Economy and the Water-Energy-Food Nexus (Palgrave Macmillan), Blue and Green Cities: The Role of Blue-Green Infrastructure in Managing Urban Water Resources (Palgrave Macmillan)
  • Scaling-up nature-based solutions to water challenges

Green Bonds are becoming a main source of funding to scale-up nature-based solutions to water challenges.

In the 21st century, society is faced with a variety of climatic and non-climatic challenges that can lead to abrupt, and in some cases, irreversible environmental change that adversely impacts human development. For instance, rapid population growth and urbanisation are resulting in ecosystem degradation from excessive water withdrawal while climate change is increasing the frequency, intensity, and magnitude of disasters, leading to a higher number of fatalities and injuries as well as increased property and economic losses.

One approach to addressing these challenges is to increasingly rely on engineering solutions, which are designed and managed to be simple to implement, easy to replicate and provide predictable outcomes. However, ‘grey infrastructure’ is costly economically and environmentally, for instance, it is often capital intensive in building, operating, maintaining, and replacing. Also, as grey infrastructure is mainly built to address a specific water management problem it can amplify risks downstream. For example, canals may magnify floods downstream resulting in harm to life and damage to infrastructure. Environmentally, grey infrastructure often degrades water quantity and water quality from ecosystem degradation, for example, large-scale water transfer schemes damage aquatic health while increasing competition for scarce water resources downstream. As such, there has been a turn to more long-term economically and environmentally sustainable nature-based solutions (NBS) that provide equivalent or similar benefits to ‘grey’ infrastructure.

NBS provides multiple co-benefits

In addition to managing water scarcity and improving water quality, NBS provides multiple co-benefits including restoring natural habitats, cleaner air and reduced temperatures in urban areas, energy efficiency in buildings or water treatment, lower carbon emissions from less water requiring treatment and carbon sequestration by vegetation, increased property values, and green jobs and green growth. However, despite the multiple benefits NBS provide, there is significant underinvestment in water resources management, including NBS in many countries around the world. Reversing this trend, the green bond market is becoming a large source of funding for NBS, with Green Bond issuance having passed $200 billion in 2019.

Green bonds funding San Francisco’s green infrastructure

Since issuing its first green bond in 2015, the San Francisco Public Utilities Commission (SFPUC) has sold more than USD 1.4 billion in certified green bonds for all three of its enterprise utilities: Water, Wastewater, and Power. Impacts to date include the use of green infrastructure to divert stormwater from treatment plants. In total, SFPUC is constructing eight flagship green infrastructure projects, one in each of the city’s urban watersheds to test green technologies and evaluate their long-term effectiveness in decreasing the amount of stormwater going into the combined sewer system during large storms, reducing localised flooding, and protecting the water quality of the Bay and Ocean.

Anglian Water financing a greener future

In 2017, Anglian Water issued the first-ever public sector Green Bond at the London Stock Exchange valued at GBP 250 million. With the rate of return set at 1.625% and a maturity of 2025, all Anglian Water’s capital expenditure qualifies as eligible expenditure for the Green Bond. However, the water company will select some of its largest, innovative schemes to be funded through the initiative including innovative water abstraction, drought and flood resilience schemes, progressive water recycling, and water resources management projects.

Conclusion

Cities and municipalities can tap the Green Bond market to scale-up NBS to water challenges.

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