New Study Shows How Performance-Based Bonds
Can Speed Up Coastal Resilience Efforts
EDF and Quantified Ventures outline steps for implementing
first-ever environmental impact bond for wetland restoration
This week we are proud to release a new report with the Environmental Defense Fund (EDF) defining how using the Environmental Impact Bond model can help Louisiana protect its coastal communities and economy.
In Louisiana, the coastline is disappearing at a rate of roughly one football field every 100 minutes. The state has put together a bold $50 billion Coastal Master Plan to address these losses through investments in coastal resilience and protection, including through natural solutions such as wetlands. While they have some funding identified for this work, it’s not enough – and these projects get increasingly more extensive and expensive over time as more land is lost to the sea.
Our partner, EDF, has long worked along the Gulf coast to protect land and habitat, and together we explored a key question: how can innovative financing through an Environmental Impact Bond help bring much-needed capital to these projects quickly?
Environmental impact bonds, or EIBs, are a pay-for-success debt financing tool in which investors purchase a bond and repayment to investors is linked to the achievement of a desired environmental outcome – in this case, sustained wetlands that help curb land loss and provide risk reduction.
Environmental impact bonds would allow the state of Louisiana to:
· Use capital more efficiently by building wetland restoration projects sooner,
· Involve local asset owners who benefit from wetland restoration projects,
· Reward high-performing wetland projects and the contractors who build them,
· Build an evidence base for the value of wetlands for reducing land loss, and
· Expand the range of possible coastal restoration financing tools.
The study finds that environmental impact bonds can be scaled and replicated to support coastal resilience efforts across Louisiana, the Gulf Coast, and beyond to help areas coping with sea level rise, land loss, and damaging storms. EDF and Quantified Ventures designed a conceptual EIB transaction for a $40 million investment in a portion of the Belle Pass-Golden Meadow Marsh Creation project adjacent to Port Fourchon—one of the largest in the Coastal Master Plan.
The study was funded by NatureVest, the conservation investing unit of The Nature Conservancy, through its Conservation Investment Accelerator Grant, which aims to find and support the best talent and most meaningful work in the field of conservation investment.
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