1. Partners and supporters Building a Business Case for Investing in Natural Infrastructure Suzanne Ozment Associate, World Resources Institute June 16, 2016

2. WRI is a global research organization that turns big ideas into action at the nexus of environment, economic opportunity and human well-being. Water Forest Climate Cities Energy Food About WRI Finance · Economics · Governance · Business About the World Resources Institute

3. Where we work

4. Catalyze a global movement to enhance water security, strengthen climate resilience, and bolster economic development through a green-gray infrastructure initiative to transform how government, businesses and utilities manage water resources. Raise awareness Economic and finance analysis Tools, methods, and guidance WRI’s Natural Infrastructure for Water Initiative

5. Why are economic and social data important for water funds to collect and analyze, and what are some promising approaches to this?

6. Improve water quality Regulate hydrologic cycle Mitigate flood Reduce erosion Improve energy security Conserve biodiversity Protect coastlines Sustain livelihoods Reduce costs Source: IUCN 2015 WHY NATURAL INFRASTRUCTURE?

7. Key challenges facing our field Source: Forest Trends 2014. Note: 415 watershed investment program developers were surveyed

8. Need awareness among decision makers Source: Adapted from Forest Trends 2014; Ozment, S. et al. 2016 Need a clear business case 1 2 3 Key Challenges Need investment in science and monitoring to demonstrate results Addressing these challenges

9. Top investment motivations by sector Source: Forest Trends 2014. Note: 196 “buyers” were represented in the survey

10. What are the risks to water supply caused by watershed degradation? How much will the program cost, and how much could I save or make? How can I be certain the program addresses these risks? 1 2 3 Key Questions Key questions from investors Source: Ozment, S. et al. 2016

11. Source: Gartner, T. et al. 2013. Comparison of costs for natural and built options for cities to meet water quality requirements in the US (millions $) Medford, Oregon Santa Fe, New Mexico Auburn, Maine Syracuse, New York How to Analyze How to analyze the business case

12. Steps: 1.Define water management investment objective 2.Construct portfolios green-gray investment options 3.Identify clearly modelled outcomes of each portfolio 4.Analyze the present-value costs and benefits of individual green and gray measures 5.Use alternative investment analysis to compare the portfolios Green-Gray Analysis Method Source: Gray et al. 2014

13. Example: Portland, Maine

14. Portland, Maine Present value of investments over 20 years, USD millions Most Optimistic Scenario (Discount rate: 3%) Reforestation Riparian buffers Conservation easements Culvert upgrades Forest certification Total green Savings Membrane filtration (gray) $15 $16 $12 $1 $0.1 $44.14 $111 $155 24,151 acres 1,602 acres 10,936 acres 110 units 4,699 acres 71% savings Source: Talberth et al. 2013, Solutions Journal

15. Portland, Maine Outcomes: Key partners: Portland Water District, U.S. Forest Service, local land trusts Annual investment: USD 200,000 - USD 500,000 Conservation strategy: Forest protection Estimated savings: USD 12,000,000 over 20 years Source: Talberth, J. et al. 2013; Ozment, S. et al. 2016

16. Takeaways from Portland’s GGA Economic data helps secure investment The analysis required partnerships, trust, and data sharing The analysis informed program design to meet investor needs Alternative scenarios, sensitivity analysis, and conservative estimates helped manage uncertainty

17. INTRODUCING A NEW INITIATIVE: NATURAL INFRASTRUCTURE IN BRAZIL Natural Infrastructure in Brazil

18. What is the economic potential of natural infrastructure investments to manage urban water supply and provide ecosystem services to cities in Brazil? How can key stakeholders act on smart natural infrastructure investment opportunities? Empower water providers, watershed committees, and government agencies in Brazil to integrate natural infrastructure into mainstream water security and climate adaptation actions OUR GOAL RESEARCH QUESTIONS Natural Infrastructure in Brazil

19. SITES FOR CASE STUDIES Credit: Jasmine Qin, WRI

20. -New insights to guide stakeholders -New estimated costs and benefits of natural infrastructure -A replicable economic analysis method -New opportunities to replicate method throughout Latin America EXPECTED RESULTS Natural Infrastructure in Brazil

21. Final thoughts -Economic data and analysis can help secure investment -Knowing the investors and their objectives requires trust and capacity to “speak their language” -Exact approach will vary depend on context and investor interests -The quality of economic analysis often depends on biophysical data -Lack of program performance data can be a limiting factor in making a credible business case

22. THANK YOU! Rio Claro Demonstration Project, RJ

23. Appendix Rio Claro Demonstration Project, RJ

24. VITORIA Source watersheds: Jucu & Santa Maria da Vitoria Water challenge(s): Availability and sedimentation Natural infrastructure (NI) challenge(s): deforestation and deforestation legacy Existing NI financing: $20 million/ year oil & gas royalties for Reflorestar (state-wide) Possible investors: Vitoria watershed committee; CESAN (utility); State-run Reflorestar Program Building on: WRI-Br ROAM; InVEST; World Bank Integrated Water and Landscape Management projects Natural Infrastructure in Brazil

25. VITORIA Credit: Marcelo Matsumoto, WRI-Br

26. RIO DE JANEIRO Source watersheds: Guandu (small); Paraiba do Sul (large) Water challenge(s): Water quality Natural infrastructure (NI) challenge(s): Deforestation legacy and agriculture Existing NI financing: R$660,000 from Guandu Watershed Committee; foundation grants Possible investors: Guandu watershed committee; CEDAE (utility); Building on: Rio Claro Pilot Project (5k ha); WRI ROAM Paraiba do Sul (?); Assessments from CI Natural Infrastructure in Brazil

27. RIO DE JANEIRO Credit: Hendrick Mansur, TNC Natural Infrastructure in Brazil

28. SAO PAULO Source watersheds: 5 large interconnected systems; Cantareira historically most important Water challenges: Availability and sedimentation Natural Infrastructure (NI) challenge(s): deforestation legacy; agriculture production; sprawl Existing NI financing: multiple sources Possible investors: SABESP (utility); PJC Watershed Committee; Alto Tiete Watershed Committee Building on: Water Producers Programs (Extrema etc.) Natural Infrastructure in Brazil

29. SAO PAULO Credit: TNC Natural Infrastructure in Brazil

30. Source: TNC SAO PAULO Natural Infrastructure in Brazil

31. SAO PAULO Source: TNC Natural Infrastructure in Brazil

32. Identify target areas through near real-time mapping and in-depth modeling WRI TOOLS

34. Source: Advantech Non-revenue water Waste management Energy efficiency Climate resilience Water Reuse System monitoring RETHINKING ENGINEERED INFRASTRUCTURE