With wildfires burning across the western United States and hurricane season off to a troubling start, 2018 could outpace 2017 as the most costly natural disaster year on record. As we wrestle with more frequent and damaging weather events as the new normal, the question of who’s responsible for footing the bill in their wake has led to contentious debates between public and private sector stakeholders. While the finger pointing rages on, it’s important to keep two things in mind:
- Investing in resilience saves money – every $1 invested returns up to $6 in avoided future losses, and;
- New financing approaches that align interests of public and private sector stakeholders are critical for future deployment of resiliency projects.
Determined to design new solutions, a team of scientists and economists at the Environmental Defense Fund (EDF) and Quantified Ventures (QV) evaluated whether environmental impact bonds (EIBs) – an innovative form of performance-linked debt financing – could help finance coastal resiliency projects in Louisiana. The state’s Coastal Protection and Restoration Authority (CPRA) faces a significant funding gap to fully implement its 50-year, $50 billion plan to save Louisiana’s coastlines. After a year’s worth of intensive feasibility analysis, funded by NatureVest – the conservation investing unit of The Nature Conservancy – through its Conservation Investment Accelerator Grant, the conclusion is a resounding yes.