Mapping Innovative Financing For Utility Projects

When it comes to making the most out of budgets, drinking water and wastewater systems need to get creative.

As water and wastewater utilities are asked to meet more regulations than ever, there are continued calls for creative financing models that will allow them to do so. But with mounting treatment challenges butting up against increasingly restricted budgets, it’s one thing to describe these models to the utilities that would implement them and quite another to show them in practice.

To inspire creative financing for some of the most pressing drinking water and wastewater issues out there, a program from Stanford University has developed a “Living Map of Innovative Water Financing Mechanisms in the United States.”

Developed by the school’s Water In The West program, the map serves as a digital atlas of the country’s best water projects with details on how they were achieved. It has a particular focus on multi-benefit, decentralized solutions.

“Unfortunately, the current financial landscape in the water sector is designed in a way that it is quite difficult to secure funding for water projects,” said Newsha K. Ajami, director of urban water policy for Water in the West and a creator of the map. “Still, we have found a number of communities across the U.S. that have established innovative financing tools and mechanisms… The map is meant to showcase these examples and provide a peer-to-peer learning and sharing platform to encourage adoption of some of these solutions while demonstrating various ways for the utilities to engage with various stakeholders and build a more diverse and innovative financing portfolio.”

The project began in 2016 when the Water in the West team introduced a framework for what it considered “innovative financing,” consisting of four central elements: catalyzing change, establishing funding sources, using resource pathways, and creating innovative governance structures. It released a report on the strategies identified using this framework, things like green infrastructure, water efficiency measures, and watershed management. Eventually, water agencies started contacting the team to share the success they found through the report and Water in the West decided to share them.

“We ran every case study through our innovative financing framework to understand what financing elements were employed by each utility and then developed a factsheet that would provide some basic information about the mechanisms used in these case studies,” Ajami said.

Water in the West settled on a digital map as the most captivating and powerful way to illustrate these case studies.

“Using GIS [geographic information system] mapping tools is one of the most effective ways to engage stakeholders and share information,” said Ajami. “The map provides a visual understanding of what is happening throughout the country to fund alternative water projects. It shows how many communities are adopting distributed water solutions and what kind of financing tools and mechanisms are used to implement these solutions.”

The map currently illustrates seven projects, stretching from San Francisco to Philadelphia. By clicking on accompanying fact sheets, visitors can learn about a cost-effective stormwater management plan in Cincinnati that utilized a two-year “reverse auction” pilot program that asked residents to submit sealed bids stating how much they would be willing to be paid for installing infrastructure on their property. Or they can read up on a novel “Environmental Impact Bond” that allowed DC Water to fund green infrastructure projects and repay investors based on how well they perform.

In addition to providing inspiration to utilities who face similar problems, the map is meant to facilitate relationships between these communities who have found innovative ways to finance their solutions and those who are looking to do the same.

“[Utilities] can use the map to identify what financing mechanisms have already been designed and implemented by one or a number of other utilities and ultimately reach out to them,” Ajami said. “We are also happy to put them in touch with these utilities.”