INTEGRATING GREEN AND GRAY Creating Next Generation Infrastructure GREG BROWDER, SUZANNE OZMENT, IRENE REHBERGER BESCOS, TODD GARTNER, AND GLENN-MARIE LANGE WORLDBANK.ORG | WRI.ORG Integrating Green and Gray i ABOUT THE AUTHORS ACKNOWLEDGMENTS Greg Browder is the Global Lead of We are pleased to acknowledge our institutional strategic partners, who provide core the Water Security and Water Resource funding to WRI: Netherlands Ministry of Foreign Affairs, Royal Danish Ministry of Foreign Management Global Solutions Group within Affairs, and Swedish International Development Cooperation Agency. the World Bank Water Global Practice. This report was prepared through a partnership between the World Bank (WB) Contact: gbrowder@worldbank.org and the World Resources Institute (WRI). The WB team was led by Greg Browder comprising Irene Rehberger, Glenn-Marie Lange, Denis Jean-Jacques Jordy, Niels B. Suzanne Ozment is a Senior Associate Holm-Nielsen, Brenden Jongman, Stefanie Kaupa, Kathia Havens, and Boris Ton Van with the World Resources Institute’s Natural Zanten. The WRI team was led by Suzanne Ozment comprising Todd Gartner, Gretchen Infrastructure Initiative. Ellison, Kara DiFrancesco, Mai Ichihara, Russell King, and Leah Schleifer. Contact: sozment@wri.org The report has greatly benefitted from the strategic direction of Andrew Steer (President & CEO of WRI) and Marianne Fay (Chief Economist of the Sustainable Irene Rehberger Bescos is a Water Development Vice-presidency of the WB). Resource Management Analyst with the World Bank Water Global Practice. We express our sincere gratitude to the following individuals who provided incisive comments and guidance on this report, listed in alphabetical order: Paola Agostini Contact: irehberger@worldbank.org (WB), Ger Bergkamp (ARCOWA), Benoit Bosquet (WB), Roland Alexander Bradshaw (WB), Moushumi Chaudhury (WRI), Richard Damania (WB), Julie Dana (WB), Sean Todd Gartner is Director of the World Gilbert (WRI), Klaas de Groot (WB), Nagaraja Rao Harshadeep (WB), Juliet Lamont Resources Institute’s Cities for Forests and (Creekcats Environmental Partners), Xiaokai Li (WB), Fabiana Machado (Inter- Natural Infrastructure Initiatives. American Development Bank), Laura Malaguzzi (WRI), Lisa Mandle (Stanford Contact: tgartner@wri.org University), Elizabeth Moses (WRI), Betsy Otto (WRI), Kate Owens (WRI), Jennifer Sara (WB), Steven N. Schonberger (WB), Daniel Shemie (TNC), Rod Taylor (WRI), and Javier Glenn-Marie Lange is a Senior Warman (WRI), and Carmen Rosa Yee-Batista (WB). Environmental Economist with the World Bank Environment and Natural Resources The case studies featured in this report draw on inputs from the following individuals: Global Practice. Anjali Acharya (WB), Vietnam case; Eric Brusberg (WB) and Winston Yu (WB), Poland case; Jaime Camacho (TNC), Ecuador case; Marcella D’Souza (WOTR), India case; Contact: glange1@worldbank.org Gunars Platais and Stefano P. Pagiola (WB), Brazil case; Jennifer Pryce (Calvert Impact Capital), Washington, DC case; Chantal Richey, Natalia Limones, and Dominick Revell de Waal (WB), Somalia case; and Julie Rozenberg (WB), Sri Lanka case. Toyoko Kodama, Gaia Hatzfeldt, and Sofia Bettencourt provided input on the social dimensions of green infrastructure. Design and layout by: Billie Kanfer This report’s production and layout were provided by WRI’s Shazia Amin, Billie Kanfer, billie.kanfer@wri.org and Romain Warnault, and Lauri Scherer. James Anderson, Meriem Gray, Martin Hall, Li Lou, Pascal Saura, and Leah Schleifer provided invaluable support for dissemination of the work. This report was prepared with support from the Global Water Security & Sanitation Partnership (GWSP) and the Global Facility for Disaster Reduction and Recovery (GFDRR). TABLE OF CONTENTS 1 Foreword 3 Executive Summary 13 Why Integrate Green and Gray Infrastructure? 27 Improving Service Delivery with Green Infrastructure 41 The Social Foundation of Green Infrastructure 51 The Economics of Green Infrastructure 61 Creating New Financing Options with Green Infrastructure 73 Enabling Policies for Effective Green Infrastructure 81 The Way Forward 85 Appendix A. Services That Can Integrate Green Infrastructure and Related Case Studies 122 Appendix B. References Endorsing Green Infrastructure and Similar Approaches 125 References iv WRI.org FOREWORD The world has huge infrastructure needs for eco- This report is, therefore, essential reading for those nomic growth, jobs, and poverty reduction. In responsible for delivering infrastructure services. developing countries, achieving the infrastructure- Water and power utilities, storm and flood man- related Sustainable Development Goals (SDGs) agement agencies, and irrigation departments can and staying on track to limit global temperature use the guidelines to integrate natural approaches increase to two degrees could cost 4.5 percent to into their plans. Public officials can learn to how 8 percent of GDP, depending on how efficiently it to enable green-gray infrastructure development is done. A traditional focus on exclusively human- through improved policies, laws, and regulations. built “gray” infrastructure would put costs at the Ministries of Finance and Budget can gain insights higher end of that spectrum and make it more chal- on how to approach financing, often a major lenging to meet these needs. barrier for infrastructure, by opening new financ- ing channels from mission-driven investors and But this challenge also provides an incentive to take governments. advantage of an opportunity we have always had: using “green” systems such as forests, wetlands, The World Bank Group aims to elevate the role and mangroves to complement gray infrastructure. of natural infrastructure across its operations. It By harnessing the power of nature, infrastructure has committed to leveraging its finance to catalyze services can be provided at a lower cost while deliv- potentially billions of additional dollars from public ering greater impact. and private sources for climate adaptation. To meet its ambitious goals in this area, ensuring that infra- In this report, the World Bank and World structure performs well under a changing climate Resources Institute show how the next generation will be essential to success. World Resources Insti- of infrastructure projects can tap natural systems tute is also expanding its analytical, convening, and and, where appropriate, integrate green and gray coalition-building roles in advancing natural infra- infrastructure. This call for the next generation of structure, while pioneering new financing models to infrastructure—both green and gray—echoes the increase investment in green-gray approaches. World Bank’s Changing Wealth of Nations 2018 report, which showed that natural capital can be The next generation of infrastructure can help drive leveraged rather than liquidated through the devel- economies and strengthen communities and the opment process. environment. But this needs governments, service providers, and development agencies to work Natural systems have long been recognized for their together to amplify the benefits of natural solutions. ability to deliver or contribute to core infrastruc- We hope this report provides them with the inspira- ture services—water purification and storage, flood tion and guidance to do just that. management, irrigation, and electricity genera- tion. But, until now, there has been a lack of clear guidance on how to integrate green infrastructure into human-built projects so that they deliver better services at lower cost. Andrew Steer Laura Tuck President Vice President for World Resources Institute Sustainable Development World Bank Integrating Green and Gray 1 2 WRI.org EXECUTIVE SUMMARY Integrating nature into mainstream infrastructure systems can produce lower cost and more resilient services. This report guides developing country service providers and their partners on how to seize this opportunity. It reviews approaches and examples of how to integrate green infrastructure into mainstream project appraisal processes and investments. Integrating Green and Gray 3 HIGHLIGHTS The Challenge A new generation of infrastructure proj- ▪▪ Traditional infrastructure systems worldwide rely on built solutions to support the smooth and safe ects is necessary to achieve development goals, including water security, disaster functioning of societies. In the face of multiplying risk reduction, poverty alleviation, and environmental threats, this approach alone can no resilience to climate change. Nearly half the longer provide the climate resiliency and level of world’s population already lives in areas with water services required in the 21st century. scarcity, and natural disasters affected 96 million people in 2017 (Burek et al. 2016; CRED 2017). ▪▪ Natural systems such as forests, floodplains, and soils can contribute to clean, reliable water supply Climate change and growth patterns will exacerbate these threats: by 2050, nearly 20 percent of the and protect against floods and drought. In many world’s population will be at risk of floods, and up circumstances, combining this “green infrastructure” to 5.7 billion people will live in water-scarce areas with traditional “gray infrastructure,” such as dams, (WWAP 2018). At the same time, communities, levees, reservoirs, treatment systems, and pipes, can rural and urban, developed and developing, are provide next generation solutions that enhance system struggling to build reliable, safe, and economically performance and better protect communities. viable infrastructure to provide residents with clean ▪▪ Service providers such as water utilities, flood management agencies, irrigation agencies, and water and power, flood protection, and resilience against drought. hydropower companies can deliver more cost- Protecting populations from these multiply- effective and resilient services by integrating green ing threats with traditional built infrastruc- infrastructure into their plans. However, to guide its ture such as massive dams and seawalls appropriate use in mainstream infrastructure programs, alone will be insufficient. Projections of global green infrastructure must be as rigorously evaluated financing needs for water supply infrastructure and carefully designed as gray projects. alone are estimated at US$6.7 trillion by 2030 ▪▪ This report offers service providers a framework to evaluate green infrastructure from a technical, and $22.6 trillion by 2050, significantly outpacing financial flows to this sector (OECD 2018). Against this backdrop, the gains the world has made toward environmental, social, and economic perspective, and meeting UN Sustainable Development Goals to assess key enabling conditions, with illustrative (SDGs), including ending poverty and hunger, examples. and providing clean water and sanitation for all, ▪▪ It also provides guidance for policymakers and development partners, who must set the incentives and are under threat. Solutions that are cost-effective, enhance infrastructure service provision, show enabling conditions to mainstream solutions that unite resilience in a changing climate, and contribute to green and gray infrastructure. social and environmental goals must be developed and deployed worldwide. Recognizing that next generation infra- structure has a critical role to play in meeting the climate adaptation challenge, a growing movement is promoting nature- based solutions and creating opportunities to scale up use of green infrastructure. The United Nations World Water Development Report 2018 highlighted how nature-based solu- tions (including green infrastructure) can help meet the 2030 SDGs (WWAP 2018). Similarly, the High Level Panel on Water convened by the United Nations and World Bank concluded that green infrastructure can “help address some of the most pressing water challenges, particularly if planned in harmony with gray infrastructure” (HLP 2018). 4 WRI.org Toward Next Generation Infrastructure Ongoing projects that utilize green infra- structure have generated many lessons Integrating green and gray infrastructure learned that can inform the next generation can help fill the need for climate-resilient of infrastructure. Although green infrastructure 21st century solutions. While it is still early may not be appropriate for every project or loca- days, there is mounting evidence that natural sys- tion, opportunities to use natural systems in project tems can be combined with traditional gray infra- designs are frequently overlooked and have not yet structure to provide lower-cost and more resilient entered the mainstream. This is partly the result services. Over time, and done properly, combining of piecemeal research, focused mainly on isolated green and gray infrastructure offers the potential case studies with limited relevance to other con- to help provide water, food, and energy to growing texts or insight into long-term trends. However, populations, lift communities out of poverty, and successful examples of and experience with green mitigate climate change. infrastructure have now gained critical mass, gen- While this report focuses on the services erating robust design processes that enable service shown in Table ES-1, the general approach providers and development partners to confidently can be applied to almost all gray infrastruc- consider green and gray infrastructure approaches, ture, including transportation and power. and investment opportunities, on an equal footing. Real world examples from around the world feature Green infrastructure has gained momen- throughout the report, and Appendix A provides tum among governments, civil society, and 12 detailed case studies, 6 of these from the World development partners such as multilateral Bank’s portfolio. These describe successful, innova- development banks and bilateral agen- tive approaches to infrastructure service delivery cies. As green infrastructure gains momentum, being pioneered in Brazil, China, Costa Rica, development partners historically focused on gray Ecuador, India, Poland, Somalia, Sri Lanka, the infrastructure are embracing the concept and value Netherlands, United States, and Vietnam. of “putting nature to work.” For example, the World Bank’s Wealth Accounting and the Valuation of Table ES-1 | How Green and Gray Infrastructure Can Work Together SERVICE GRAY INFRASTRUCTURE EXAMPLES OF GREEN INFRASTRUCTURE COMPONENTS AND COMPONENTS THEIR FUNCTION Water supply and sanitation Reservoirs, treatment plants, pipe Watersheds: Improve source water quality and thereby reduce treatment network requirements Wetlands: Filter wastewater effluent and thereby reduce wastewater treatment requirements Hydropower Reservoirs and power plants Watersheds: Reduce sediment inflows and extend life of reservoirs and power plants Coastal flood protection Embankments, groynes, sluice gates Mangrove forests: Decrease wave energy and storm surges and thereby reduce embankment requirements Urban flood management Storm drains, pumps, outfalls Urban flood retention areas: Store stormwater and thereby reduce drain and pump requirements River flood management Embankments, sluice gates, pump River floodplains: Store flood waters and thereby reduce embankment stations requirements Agriculture irrigation Barrages/dams, irrigation and drainage Agricultural soils: Increase soil water storage capacity and reduce irrigation and drainage canals requirements Source: Authors. Integrating Green and Gray 5 Ecosystem Services framework seeks to account The report describes how combining green for the value of nature in mainstream planning and gray infrastructure can deliver a triple processes, and its programs aim to drive uptake of win for the economy, communities, and the nature-based solutions in disaster risk management environment, and provides guidance on and other relevant sectors (WAVES 2016). From how to incorporate green infrastructure in 2012 to 2017, the World Bank approved at least 81 project design, appraisal, and implementa- projects with green infrastructure components in tion. As shown in Figure ES-1, the report covers the environment, urban, water, and agricultural the technical, environmental, social, and economic sectors—however, this remains a small percentage dimensions of a typical project assessment and the of all approved projects in these sectors. key enabling conditions required to facilitate suc- cessful implementation of green-gray projects. About This Report This joint report by the World Bank and the In Summary: Evaluating the Benefits World Resources Institute seeks to guide and Limitations of Green Infrastructure developing country service providers and Strategically combining green and gray their partners on how to integrate natural infrastructure to lower costs and improve systems into their infrastructure programs resiliency can help tackle the looming in ways that better protect their populations financial and environmental crisis facing and achieve service delivery goals. It provides global infrastructure systems. With the right insights, solutions, and examples that will guide conditions, green infrastructure components can the World Bank’s thinking on how “putting nature cost-effectively enhance service delivery, while to work” can help meet its core mandates related also empowering communities and increasing to reducing extreme poverty, promoting shared infrastructure systems’ resilience and flexibility in a prosperity, and meeting the challenges of climate changing climate. Below, we summarize the report’s adaptation and resiliency. findings on the technical, social, and economic potential offered by green infrastructure, and the The report is intended for a broad audience enabling conditions it requires. Readers should of stakeholders that are key to advancing the note that the mixed success of green infrastructure integration of green and gray infrastructure projects to date suggests that these advantages may solutions on the ground. These include the not be realized unless service providers conduct an following: early, thorough, and robust assessment to inform ▪▪ Service providers, such as water utilities, mu- nicipal stormwater departments, flood manage- the utilization, design, and implementation of combined green-gray solutions. ment agencies, irrigation agencies, and hydro- power companies in the vanguard of efforts to design and maintain green infrastructure. ▪▪ The coalition of partners, including local gov- ernments, central government agencies, and community leaders that are typically required to get green infrastructure off the ground. ▪▪ Policymakers looking to understand the chal- lenges and opportunities of integrating green infrastructure into development plans and seeking guidance on the enabling conditions for green infrastructure investment. 6 WRI.org Figure ES-1 | Integrating Green and Gray Infrastructure: Key Questions and Opportunities for Stakeholders TECHNICAL AND SOCIAL ECONOMIC ENVIRONMENTAL CHAPTER 2 CHAPTER 3 CHAPTER 4 Green infrastructure can boost Green infrastructure can Green infrastructure can be OPPORTUNITIES infrastructure system resilience empower communities low-cost, and cost-effective, due to its natural adaptive through participation in project helping enhance the economic and regenerative capacity. operations. This enhances efficiency of infrastructure It can be multifunctional, project sustainability as investments. Its multiple generating numerous positive long-term viability is highly benefits can generate environmental impacts. dependent on community both monetary values and support. nonmarket benefits. Can green infrastructure Is it possible to get multiple Can green infrastructure QUESTIONS reduce the cost, increase stakeholders to support be justified in terms of the quality, and/or green infrastructure, cost, as well as in broader improve the resilience of and can land issues be economic terms? the service? addressed? ENABLING CONDITIONS: FINANCE AND POLICY CHAPTERS 5 & 6 Green infrastructure’s ability to provide multiple public and private benefits can unite interests of diverse investors and decision-makers to open pathways for financing, utilization, and large-scale promotion. Supportive policies can greatly aid in adoption of green infrastructure. Understanding policy and financing conditions is a key step of the project development process. Source: Authors. Integrating Green and Gray 7 Improving Technical Performance Stakeholders assessing the technical per- formance of green infrastructure must take Considering green infrastructure cre- into account complexity and uncertainty. ates new technical options for service The performance of green infrastructure depends delivery. By combining built infrastructure with greatly on ever-shifting local environmental, social, solutions that harness natural systems, providers and political conditions, which can sometimes cast can improve performance and decrease risk. For uncertainty onto projects. At the same time, green example, Appendix A highlights a project in Poland infrastructure’s innate ability to adapt to changing where establishing multipurpose flood retention climate conditions and its relative ease of revers- areas in the Odra and Vistula River Basins will ibility are advantages in a rapidly changing world. reduce peak river flows. Together with traditional Appendix A features an example of how to deal with flood embankments, this will protect against the uncertainty, centered on an urban wetland conser- recurrence of a very severe (1,000-year) flood. vation project in Sri Lanka to improve stormwater Defining the role natural systems such drainage services. Project partners used a com- as forests, floodplains, and mangroves prehensive “decision-making under uncertainty” can play within infrastructure systems is economic model, which showed a wide range of becoming easier with emerging technology, potential outcomes but indicated that going ahead scientific knowledge, and insights from a was worth the risk. growing number of projects. These demon- strate that green infrastructure can be designed in The Social Foundation of Green Infrastructure response to local circumstances to complement, Green infrastructure has an important substitute, or safeguard gray infrastructure. New social dimension. While gray infrastructure biophysical and economic modeling techniques can is usually operated and owned by a company or also enable green infrastructure assessments as part government entity, the main operators of green of typical project evaluation. Figure ES-2 | Reservoir Lifespan Increases with Well-Designed Green Infrastructure for Erosion Control Image: World Bank. 8 WRI.org infrastructure are often local communities, respon- and maintaining the infrastructure. These small sible for implementing land stewardship practices, dams capture and store sand, which accumulates and for maintaining the project over the long term. water and recharges readily accessible shallow Green infrastructure typically operates at a land- aquifers. scape level, crossing property boundaries or juris- dictions and often involving multiple stakeholder The Economics of Green Infrastructure groups. Understanding the costs and benefits for Green infrastructure can be cost-effective different groups, including women, is therefore and deliver wide-ranging cobenefits valu- important for success; green infrastructure does, able to society. The financial case for considering however, often have high social transaction costs. green infrastructure has been well-documented in areas such as reducing the cost of water-related Green infrastructure is most successful service provision, but varies depending on local when it meets the needs and interests of conditions. Service providers and their partners local stakeholders and communities, and should therefore conduct site-based assessments on when these groups have a stake in main- a case-by-case basis to evaluate financial impacts. taining the solution over the long term. Savings generated by natural systems can be large— Green infrastructure offers significant opportu- for example, Chapter 4 showcases how New York nities to resolve social inequality or to support City saved 22 percent, or $1.5 billion, by combining vulnerable communities—but these opportunities green and gray infrastructure instead of pursuing can be missed, and social challenges exacerbated, if a gray-only strategy to secure water supply for the projects are poorly planned and executed. Although city (Bloomberg and Holloway 2018). this typically requires more effort than employing social safeguards for gray infrastructure, it also While the financial case is critical to green- opens opportunities to develop win-win solutions lighting projects, it is also advantageous for that both benefit communities and enhance ser- service providers to consider environmen- vices. For example, Appendix A presents a project tal and social cobenefits. These cobenefits can in rural Somalia where simple “sand dams” were be expressed in either monetary or nonmonetary built in place of expensive and difficult-to-maintain terms on the basis of a “multi-criteria analysis” of groundwater wells, with the communities operating a green-gray infrastructure approach, including potential winners, losers, and trade-offs. Figure ES-3 | Cobenefits for Communities Makes Next Generation Infrastructure More Successful Image: Payton Chung/Flickr. Integrating Green and Gray 9 Creating Enabling Conditions: Finance and Policy Integrating green infrastructure into traditional projects helps overcome a common challenge with Green infrastructure opens up new financ- gray infrastructure: the “Not in My Back Yard!” ing frontiers for an industry facing major (NIMBY) Syndrome. If project proponents engage investment shortfalls. In general, tight gov- with government agencies, civil society organiza- ernment budgets are constraining infrastructure tions, and communities to develop win-win green improvements even as need soars. However, infrastructure, political leaders can have a dual because they generate significant environmental incentive to support green infrastructure: public and social cobenefits, projects that harness natural support and enhanced services. Governments or systems are attractive options for grants, subsidies, civil society can serve as intermediaries and guar- and mission-driven investors. Leveraging govern- antors between service providers and communities. ment funds as cost-share, pooling investment Appendix A features the example of a flood bypass across project beneficiaries, issuing green bonds for in California on land that farmers were allowed to green infrastructure, and engaging insurance com- cultivate between flood events and where a wetland panies are all relevant approaches that mainstream conservation area was also created. financial institutions are pursuing. Appendix A includes a case in Quito, Ecuador, where water Recommendations for Scaling Green utilities, private companies, and nongovernmental organizations (NGOs) set up a “water fund,” which Infrastructure acts both as an organization and a financing mecha- Service providers, policymakers, financial nism for watershed protection. institutions, researchers, civil society, regulators, and communities must cooper- Policy support for green infrastructure ate to put green infrastructure to work. can make good politics. A common barrier Partnerships among these actors in developing for widespread adoption of green infrastructure is countries, in collaboration with and support from that government agencies must develop enabling development partners, can spark the urgently policies, laws, and regulations for its use. However, needed transition to next generation infrastructure as evidence mounts that combined infrastructure by integrating the consideration and assessment of approaches can provide multiple community and natural systems throughout the project cycle. The public benefits, several countries have adopted following efforts are key: ▪▪ comprehensive enabling policies, blazing a trail for others to follow. Chapter 6 highlights the example All stakeholders must work with and en- of Peru, which passed a law requiring water utili- courage policymakers to promote green- ties to earmark revenue for water conservation gray approaches through policies, laws, and combatting climate change, and to consider and regulations. Once there is policy com- these strategies in their budgeting and planning mitment at multiple levels, then governments processes. 10 WRI.org can create the enabling conditions by adjusting laws and regulations to allow service providers ▪▪ Service providers should develop sup- portive partnerships with approving to proactively develop green infrastructure. bodies, civil society organizations, ▪▪ National and local government agencies should routinely consider opportuni- potential co-investors, and technical experts. For example, multilateral develop- ties to integrate green infrastructure ment banks can bring financial resources, and approaches in regional and master bilateral development agencies can offer more planning, as well as land-use planning upstream, specialized expertise to help plan processes, such as river basin or urban green-gray solutions. Civil society groups often development plans. This will encourage wa- bring cutting-edge expertise and/or are well attuned to local circumstances. ▪▪ ter service and other providers to assess if and how green infrastructure components might be In addition to supporting their client’s incorporated into their infrastructure projects. efforts to develop green-gray infrastruc- ▪▪ Service providers must utilize advanced methods and tools to analyze the perfor- ture, development partners can advance the knowledge frontier for next genera- mance of green infrastructure. Specifi- tion infrastructure in three ways. First, cally, they need to expand beyond traditional they can build capacity with their own orga- engineering approaches to incorporate new nizations to understand the potential of green approaches related to ecology and environ- infrastructure and engage developing country mental management. The same analytical rigor clients. Next, they can utilize green-gray as- applied for gray infrastructure must be applied sessment tools and approaches in their internal for “ecological engineering”—while recogniz- processes. And finally, they can help overcome ing that the complexity of natural systems may knowledge gaps that act as barriers to scaling generate less precision. green infrastructure, by investing in perfor- ▪▪ mance monitoring and in widely communicat- Stakeholders should prioritize social ing results and real world experience. support for green infrastructure and build long-term coalitions. Service pro- viders, in particular, need to invest resources in developing new areas of expertise related to stakeholder engagement and community interactions. ▪▪ Service providers should take advantage of green infrastructure’s characteristics to sell innovative financing approaches. In addition to standard financing instruments for built engineering systems, service provid- ers should increasingly tap emerging funding sources from governments, development agen- cies, and the private sector. Integrating Green and Gray 11 WHY INTEGRATE GREEN AND GRAY INFRASTRUCTURE? What do these three stories have in common? ▪▪ During the 1990s, Costa Rica was at risk of losing much of its power supply because farming practices were causing siltation of downstream hydropower reservoirs. To ad- dress this risk, the government implemented a Payment for Ecosystem Services (PES) Program that provides incentives to landowners to restore and conserve forestland. As a result, siltation is being reduced, helping preserve the country’s electrical power generation infrastructure. ▪▪ Sri Lanka’s capital city, Colombo, has endured increasingly severe urban flooding due to climate change and the loss of natural wetlands, which used to retain water dur- ing storms. To help safeguard the community as climate impacts intensify, the city has implemented wetland protection and restoration alongside conventional flood control approaches such as bank protection walls. ▪▪ Northern China’s agriculture production depends on dwindling groundwater reserves. To address this challenge, China’s government launched a project to enhance the ability of the region’s soils to store water. A program of mulching, land-leveling, improving soil organic content, and planting forest shelterbelts is reducing reliance on groundwater pumping while boosting productivity. Integrating Green and Gray 13 These stories demonstrate how governments and Today’s Infrastructure Development communities can harness nature’s innate ability to Challenges substitute for or enhance infrastructure systems, and design development projects in ways that While traditionally, human societies understood both address development challenges and curb that they depended on healthy ecosystems for ecosystem degradation. These types of strategies well-being and economic development (MEA 2005; are collectively called nature-based solutions, while Gartner et al. 2013), this recognition has eroded solutions explicitly designed to deliver a service are in the modern industrial era. As they developed, termed “green infrastructure.” Box 1.1 defines all countries shifted focus to engineered, gray solu- the key terms used in this report; the relation and tions—providing reliable, safe drinking water distinctions between them are shown in Figure 1.1. exclusively through water storage reservoirs and treatment plants; protecting communities from floods and coastal storms through construction of seawalls and jetties; securing water throughout the BOX 1.1 | KEY TERMS growing season through massive dams and irriga- tion systems; and using pipes and pumps to collect and transport stormwater away from cities. This Green infrastructure (also sometimes called natural infrastructure, or engineering with nature) intentionally and gray infrastructure has played an important role in strategically preserves, enhances, or restores elements of a overcoming development challenges to date, and natural system, such as forests, agricultural land, floodplains, will continue to do so. riparian areas, coastal forests (such as mangroves), among others, and combines them with gray infrastructure to produce Today, however, gray infrastructure systems are more resilient and lower-cost services. falling short of meeting our needs, and are increas- Gray infrastructure is built structures and mechanical ingly at risk of failure in a changing climate and a equipment, such as reservoirs, embankments, pipes, pumps, changing world. Nearly half the world’s popula- water treatment plants, and canals. These engineered solutions tion already lives with water scarcity, and natural are embedded within watersheds or coastal ecosystems whose hydrological and environmental attributes profoundly affect the disasters affected 96 million people in 2017. Rising performance of the gray infrastructure. global temperatures means that infrastructure must become more resilient to deal with ever more Nature-based solutions (NBS) is an umbrella term referring to “actions to protect, sustainably manage, and restore natural or severe drought and floods. Yet service providers are modified ecosystems that address societal challenges effectively relying on infrastructure principles conceived in and adaptively, simultaneously providing human well-being and the last century to address 21st century challenges, biodiversity benefits.”a while ignoring and degrading natural ecosystems. Service providers are responsible for delivering development objectives, such as water security, river flood management, Strategically combining green and gray infrastruc- coastal flood protection, drought prevention, and groundwater ture to provide services and achieve development management. This report is aimed at service providers and their goals can help address these urgent challenges. This development partners, responsible for water supply, hydropower, report focuses on green infrastructure approaches flood management, coastline protection, and irrigation and drainage, to help them consider green infrastructure as a means that tackle challenges in the following sectors: of enhancing service delivery. Water supply and hydropower: Projections Development partners include development banks, bilateral of global financing needs for water supply infra- donors, and other development agencies that work with structure alone (not including energy, flood, or service providers and developing country governments to support development projects. These organizations increasingly irrigation) are estimated at $6.7 trillion by 2030 acknowledge the potential role of “putting nature to work,” and $22.6 trillion by 2050, significantly outpacing including through green infrastructure. financial flows to the sector. Watershed degrada- Source: Authors. tion compounds these challenges. As upstream a Cohen-Shacham et al. 2016. ecosystems and the services they provide are lost or degraded, downstream water and hydropower operations face greater risk of siltation, loss of hydropower production, wear and tear on infra- structure assets, and higher treatment or operating 14 WRI.org Figure 1.1 | Green Infrastructure Is a Subset of Natural Capital and Nature-based Solutions NATURAL CAPITAL: The planetary resources (e.g., plants, animals, air, water, soils, minerals) that sustain life and well-being. Natural capital underpins clean air, water and energy security, shelter, medicine, and more. Natural capital concepts are increasingly applied in national and corporate accounting to keep track of society’s dependence and impact on these vital resources. NATURE-BASED SOLUTIONS: An umbrella term referring to actions that protect, manage, and restore natural capital in ways that address societal challenges effectively and adaptively. These include structural and nonstructural actions, ranging from ecosystem restoration to integrated resource management, green infrastructure, and more. GREEN INFRASTRUCTURE: A subset of nature-based solutions that inten- tionally and strategically preserves, enhances, or restores elements of a natural system to help produce higher-quality, more resilient, and lower-cost infrastructure services. Infrastructure service providers can integrate green infrastructure into built systems. Sources: Adapted from WAVES 2016, Cohen-Shacham et al. 2016, and WWAP 2018. costs. Already, this impacts drinking water for more under high threat, and about 1 percent of mangrove than 700 million people, and costs global cities forests are lost each year (Burke 2011). $5.4 billion per year in water treatment (McDonald et al. 2016). River flood management: Global GDP losses to river floods total roughly $96 billion per year, Coastal flooding and erosion protection: and the world’s poorest countries are most exposed The consequences of unabated coastal flooding (Luo et al. 2015) (see Figure 1.2). Natural flood- can be extremely costly. In 2005, average losses plains and riparian areas dissipate flood energy, suffered by the world’s 136 largest coastal cities reducing peak flows and storing water for slow amounted to roughly $6 billion per year. By 2050, release (USEPA 2016). On most large rivers in the these losses are expected to soar to at least $52 world, these benefits have been lost as upstream billion per year, and as high as $1 trillion per year dam operations and levees have disconnected if climate change and land subsidence significantly floodplains from rivers, and landscape degradation worsen (Hallegatte et al. 2013). Coastal ecosystems has reduced nature’s capacity to capture and store such as mangroves, coral reefs, and sand dunes water and attenuate peak flows (BGS 2010). Devel- can act as buffers against sea-level rise as well as opment in former floodways can also increase flood against natural hazards that bring intense wind, risk by putting more assets and lives in danger. rainfall, or storm surge. Yet, globally, these ecosys- tems are at risk due to coastal development, unsus- Urban stormwater management: Because city tainable fishing, watershed and marine pollution, surfaces are impermeable, storms generate high or thermal stress triggered by climate change. As of volumes of runoff, which can lead to flooding and 2010, more than 60 percent of the world’s reefs are pollution. In systems with combined sewer and Integrating Green and Gray 15 stormwater pipes, excess floodwaters can result in cultivable land. The top two meters of soil contain raw sewage discharging into waterways or back- most water storage capacity, store plant nutrients, ing up into homes. These hazards threaten human serve as a critical greenhouse gas sink, and are a health and safety while disrupting transport and hotbed of biodiversity. Yet, widespread erosion, business activities. Urban property flood dam- compaction, nutrient loss, and salinity are degrad- age alone is costing $120 billion per year—about ing the capacity of soils worldwide to support the one-quarter of total global economic losses related ecosystem services essential for meeting humanity’s to water insecurity (PBL et al. 2014). By 2050, an projected food production needs (FAO and ITPS estimated 1.3 billion people will live in flood-prone 2015). areas, and the poorest and most vulnerable will suf- fer disproportionately. The Case for Embracing Green Infrastructure Numerous studies have found that green infra- Drought management: From 1980 to 2010, structure can be a viable component of water, temperature extremes and droughts caused global disaster risk, flood, and agriculture management economic losses of nearly $250 billion, and on aver- programs providing infrastructure services, among age about 35 million people are affected annually others (see Table ES-1). Box 1.2 and Appendix B (PBL et al. 2014). Forests, wetlands, and floodplains reference works that have already made the case have a natural capacity to help sustain water sup- for greater integration of nature-based solutions plies year-round by storing water during wet sea- into infrastructure programs, or are initiating sons, slowly releasing it during dry seasons, and/ efforts to jumpstart green infrastructure in earnest or promoting groundwater infiltration. However, as worldwide. Proponents argue that while gray infra- demand for water resources outstrips supply, and structure typically serves limited purposes, green ecosystem degradation takes hold, these natural infrastructure can sometimes deliver multiple ben- water reserves are depleted. efits, simultaneously, underpinning environmental Agriculture, irrigation, and drainage: According and social goals. In addition, research suggests that to the Food and Agriculture Organization of the green infrastructure is more flexible and resilient to United Nations (FAO), food production must grow climate change than its gray counterpart (Cohen- by 70 percent by 2050 if everyone is to have enough Shacham et al. 2016; Ozment et al. 2015; WBCSD to eat. Unsustainable land and water management 2017). practices can damage the health and productivity of Figure 1.2 | Dramatic Rise in Economic Losses Due to Flooding 250 200 US$ Billions 150 100 50 0 1950s 1960s 1970s 1980s 1990s 2000s Note: The occurrence of floods (including coastal, urban, and river flooding) is the most frequent of all natural disasters, and the risk is increasing. Total flooding losses exceeded $40 billion in exceptional years such as 1998 and 2010. Source: Jha et al. 2012. 16 WRI.org BOX 1.2 | DEVELOPMENT PARTNER INITIATIVES TO SCALE GREEN INFRASTRUCTURE Development partners and governments have formed new programs and facilities to encourage service providers to consider green infrastructure in development programs. For example: ▪▪ The High Level Panel on Water is an international body convened by the World Bank and United Nations that comprises several heads of state. The panel’s action plan recognizes the role healthy ecosystems play in the provision of water services and the importance of green and gray infrastructure working together to address global water challenges (High Level Panel on Water 2018). ▪▪ The UN World Water Assessment Programme in its World Water Development Report 2018 detailed how nature-based solutions to water challenges can accelerate progress toward the 2030 Sustainable Development Goals, making the case that green infrastructure is cost-effective, flexible in the face of climate change, and can provide multiple benefits to communities (WWAP 2018). ▪▪ The Inter-American Development Bank along with The Nature Conservancy, FEMSA Foundation, and the Global Environment Facility formed the $27 million Latin American Water Funds Partnership. This aims to protect 7 million acres of watersheds across Latin America by investing money in conservation practices through 19 active funds (IDB 2018). ▪▪ biodiversity The European Natural Capital Facility, funded by the European Investment Bank, supports projects delivering on and climate adaptation through loans and investments (EIB 2018). ▪▪ The World Bank recently inventoried its portfolio related to water management and disaster risk management and identified at least 81 projects with green infrastructure components. It recently launched a dedicated green infrastructure support program, producing technical guidance notes and creating a cross-sectoral community of practice. Building on these and similar efforts, development partners can move from isolated projects toward systematic integration of green and combined infrastructure projects in their investment portfolios. Integrating Green and Gray 17 While nature-based solutions are gaining trac- tion, the implementation of the concept of “next ▪▪ Enabling conditions and policies for financ- ing and implementing green infrastructure are generation infrastructure,” where green and gray often missing. As a result, it is often challenging infrastructure work in harmony, is still in its early for service providers, such as flood manage- stages. Many reasons account for this slow uptake, ment agencies, municipal governments, water but fundamentally green infrastructure requires a utilities, or power companies, to own green new way of doing business: governments and devel- infrastructure. opment partners need to perceive the infrastructure challenges from new perspectives, and develop ▪▪ Lack of synthesis of lessons learned from existing green infrastructure projects, and the innovative techniques for planning, designing, and lack of comprehensive scientific knowledge financing green infrastructure. There are many and data to inform green designs in different challenges of incorporating green infrastructure geographies, has led to some inefficiencies in into water-related, flood protection, disaster risk, the design, assessment, and implementation of and other relevant sector management programs, green and gray infrastructure projects. including the following: ▪▪ This report seeks to help service providers and Assessing green infrastructure’s technical per- their partners navigate these barriers, by providing formance and its interaction with gray infra- high-level guidance and many examples of effective structure is imprecise because of the inherent real world approaches. The fundamental question complexity of most natural systems, though that most service providers face is not whether to technological advances are starting to overcome incorporate green infrastructure into their pro- these challenges. grams, but rather, given a specific context, how ▪▪ Green infrastructure requires service providers on the delivery frontline to engage with dif- best to blend green and gray solutions. The goal of this report is to provide strategic guidelines on how ferent types of stakeholder as well as to build to move forward in creating this next generation relationships with nontraditional development infrastructure. partners. This can be time-consuming and costly, and require new skill sets. Figure 1.3 | Green Corridors Prevent Diffuse Pollution from Agriculture Image: World Bank. 18 WRI.org Needs for Mainstreaming Green-Gray a requirement to include technical and economic assessments for all projects (World Bank 2018). Infrastructure This means that incorporating green components Research and early lessons from the field suggest requires that their technical specifications, costs that governments, utilities, and companies that and benefits, and overall risk tolerance can be invest in a combined infrastructure approach can assessed at the same level of rigor as for gray infra- cost-effectively improve performance, promote structure projects, with comparable metrics. Yet, resilience, and provide multiple benefits to com- at present decision-makers often lack information munities. However, the challenges presented by to adequately evaluate and compare green infra- identifying, designing, and evaluating green infra- structure options to business-as-usual (BAU) built structure with the necessary rigor and exactitude approaches. to meet engineering standards are relatively new. The mixed success and inconsistent documenta- Successful green infrastructure projects must tion of existing green infrastructure components also map the interests of all stakeholders and find around the world has exposed the need for service common priorities. Typically, such projects involve providers to conduct thorough, systematic assess- significant cross-sector coordination to realize the ments to determine if and how to proceed with such full range of benefits, community buy-in, and long- investments. At the same time, governments and term sustainability. Common stakeholders include development partners need to develop more refined project developers and coordinators, landowners approaches for assessing proposed green infrastruc- and communities serving as project implementers, ture projects, addressing related social issues, and investors such as development partners, approv- understanding risks. Professionalizing and system- ing bodies, technical advisers, and third parties atizing green infrastructure in this way is critical to providing monitoring and evaluation (Ozment et al. pursuing such projects on the global scale. 2016). Development partners can play a key role in supporting governments and other stakeholders in Site-based design and assessment is a clear start- the complex planning required. Educating stake- ing point for mainstreaming green infrastructure. holders about the benefits of natural capital can Engineers, planners, and decision-makers are also lead to more favorable outcomes. trained to follow explicit guidelines and national or international standards for evaluating the techni- Green infrastructure design and performance is cal, social, and economic performance and impacts heavily influenced by local ecological, social, and of gray infrastructure, and comparing performance political conditions. It is therefore not the most across different strategies. And development banks suitable, cost-effective, or desirable solution in and other institutions that invest in infrastructure every situation, given that natural and human use strict criteria. systems are inherently heterogeneous and vary across geographies. In this way, it is similar to gray The World Bank, for example, has strong environ- infrastructure design, which does not work well in mental and social safeguard requirements guided all settings, can overrun estimated costs, and may by operational policies and procedures, as well as Integrating Green and Gray 19 underperform if expected conditions do not materi- to meet climate challenges through the 2016 Climate alize. Risk assessment is therefore a key component Action Plan and 2019 Action Plan on Climate Change of site-based green infrastructure assessment. Adaptation and Resilience (World Bank 2016a; World Bank forthcoming). Together, these present the Why the World Bank Is Integrating Bank’s strategies for helping client countries mitigate Green and Gray Infrastructure greenhouse gas emissions and improve their ability to adapt to climate change. Green infrastructure can help Historically, the World Bank has focused on either to improve climate adaptation and resiliency, due to gray infrastructure projects or environmental projects the generally robust buffering capacity of ecosystems as distinct efforts. However, as evidence mounts that and their ability to help mitigate rainfall or drought putting nature to work not only enhances infrastruc- extremes. At the same time, natural systems’ compo- ture services, but also generates significant social and nents like mangroves, seagrass beds, and estuaries environmental benefits, the World Bank has started to can contribute to mitigation efforts due to their large finance and promote green-gray approaches that align carbon storage capacities. Under the 2016 Climate with its core mandates. A key objective of this report Action Plan, the Bank has committed to accounting is to help inform and expand the Bank’s own use of and tracking climate cobenefits from the projects it green-gray approaches. finances. Understanding the linkages between natural World Bank’s Twin Goals: The Bank’s overarching and gray infrastructure will help broaden understand- goals are to reduce extreme poverty and increase ing of climate-related adaptation measures, and allow shared prosperity in a sustainable manner. Green the Bank to more comprehensively account for how it infrastructure contributes to these goals on many supports adaptation measures in client countries. fronts. By incorporating natural options alongside World Bank’s Green Infrastructure Portfolio: The built ones, the World Bank can help clients achieve World Bank typically analyzes its portfolio through lower-cost, higher-benefit, and more sustainable assigned project codes, which specify the sector(s) infrastructure solutions. Sustainable and inclusive and themes a project supports. The Bank recently infrastructure services, which focus on quality and conducted a customized portfolio analysis to review impact, have the potential to raise economic growth water, environmental, and disaster risk management and people’s well-being, thus contributing to shared projects under implementation during 2012 to 2017 prosperity (Bhattasali and Thomas 2016). that analysts judged to contain green infrastructure– Green infrastructure can also contribute to social related components. The analysis found 81 World inclusion and poverty reduction. For example, it may Bank–financed projects that employed a combined help raise incomes and provide important benefits in approach of green and gray infrastructure during the rural areas, where typically a disproportionate share time frame. Chapter 5 provides more information on of the population is poor and indigenous groups are the Bank’s portfolio. more likely to be located. In rapidly growing urban In addition, the World Bank has recently produced areas, poor people often have no alternative but to live guidance notes and related reports for implement- on flood-prone land, such as low-lying neighborhoods ing green infrastructure, presented in Box 1.3. This or along rivers. Natural systems such as flood reten- report complements previous sector-specific publica- tion areas or river remeandering approaches offer tions with an overarching assessment framework for opportunities to improve their well-being. combining green and gray infrastructure. World Bank’s Climate Action Plans: The World Bank World Bank’s Next Generation Infrastructure calls for and promotes transformational approaches Projects: The World Bank Group has often been at 20 WRI.org the forefront of infrastructure policy and financing for of finance, expertise, and solutions (World Bank developing countries. The Bank was a leader in the n.d.[a]). The Bank also recognizes the potential for application of environmental and social safeguards for new disruptive technologies to transform the develop- infrastructure projects starting in the 1980s. The Bank ment agenda, including infrastructure (Mohieldin promoted public-private partnerships (PPPs) starting 2018). This report provides general guidance on how in the 1990s, and is now emphasizing Maximizing to mainstream this approach into the global develop- Finance for Development (MFD), an approach that ment agenda—including in World Bank–financed helps countries to systematically leverage all sources projects. Figure 1.4 | The Poor Are the Most Vulnerable to Climate Change A. Water collection in arid areas Source: World Bank. B. Flood waters impact communities Source: CAPRA Initiative/Flickr. Integrating Green and Gray 21 BOX 1.3 | S  ELECTED WORLD BANK NATURE- About This Report: A Framework to BASED SOLUTIONS REPORTS AND Integrate Green Infrastructure COMMUNITY OF PRACTICE This report is a joint publication of the World Bank and World Resources Institute. Its goal is to encour- ▪▪ Implementing Nature Based Flood Protection: Principles and Implementation Guidelines (World Bank 2017a) age stakeholders in the World Bank’s client coun- tries, including policymakers, government agencies, ▪▪ The public utilities, and civil society organizations, to Role of Green Infrastructure Solutions in Urban Flood expand their view of infrastructure to include green Risk Management (Soz et al. 2016) infrastructure, and then find the appropriate mix ▪▪ Managing Coasts with Natural Solutions: Guidelines for Measuring and Valuing the Coastal Protection Services of of green and gray infrastructure to best meet their development needs. Development partners, such Mangroves and Coral Reefs (Beck and Lange 2016) as multilateral development banks and bilateral aid agencies, may also use this report as a resource ▪▪ Grow in Concert with Nature: Sustaining East Asia’s Water Resources through Green Water Defense (Li et al. 2012) to support developing countries in mainstreaming combined infrastructure approaches. The Bank also hosts a “Natural Hazards—Nature- Chapters 2 to 6 highlight key considerations for based Solutions Platform.” The website (http//:www. green infrastructure in relation to the technical, naturebasedsolutions.org) showcases projects, investments, social, and economic evaluations used for invest- guidance, and studies, making use of nature to reduce the ment decisions and project management, as well as risks associated with natural hazards (World Bank 2017b). financial and policy dimensions. Figure 1.4 shows the key opportunities for each of the dimensions, as well as the key questions each chapter addresses. Service providers and other stakeholders should Figure 1.5 |  ain Gardens and Other Green R consider this a conceptual road map for integrating Infrastructure Reduce Urban Stormwater green and gray infrastructure. The structure of the report mirrors the project cycle, touching base on and Flood Events the key technical, social, economic, financial, and policy dimensions that practitioners must take into account to operationalize the next generation of infrastructure. Given the widespread lack of long-term perfor- mance data for global green infrastructure projects, as well as inconsistencies in project assessments, this report is not the final say on how to integrate green and gray infrastructure. Rather, it is a first step in the right direction, compiling real world experiences and insights to guide stakeholders in improving assessment and execution and to encour- age greater deployment worldwide. Image: NACTO/Flickr. 22 WRI.org Figure 1.6 | Framework for Service Providers to Integrate Green Infrastructure Green infrastructure should be appraised on an equal footing with gray infrastructure, while also taking into account its special characteristics and related risks and opportunities. Key questions and guidance for conducting such an assessment are highlighted below. TECHNICAL DIMENSIONS: Would green infrastructure SOCIAL DIMENSIONS: Is it possible to get multiple lower the cost, increase the quality, or improve the resilience stakeholders to support the proposed green infrastructure of the service? design? ▪▪ Identification: Look for opportunities through regional and master planning exercises. ▪▪ Land: Ensure that it’s possible to purchase land or influ- ence land use to support the project. ▪▪ Planning: Undertake planning-level studies using general assessment tools to determine general scope, function, ▪▪ Communities: Obtain local community support, particularly over the long run. and cost for inclusion in the “Infrastructure Master Plan.” ▪▪ Government and civil society partners: Work with local ▪▪ Design: Use best-practice analytical tools to determine the natural system’s potential performance, as well as more governments and relevant government agencies in coordi- nation with civil society organizations to help build strong precise scope and life–cycle–cost estimates. coalitions to support use of natural systems. ▪▪ Environmental cobenefits: Use best-practice analytical tools to determine these as well as potential negative ▪▪ Social cobenefits: Develop win-win solutions so that affected communities benefit from green infrastructure; impacts that need to be mitigated. identify any negative social impacts and ensure they are mitigated. ECONOMIC DIMENSIONS: Can the green infrastructure FINANCIAL DIMENSIONS: Can the green infrastructure be be justified in terms of cost, as well as in broader economic financed and financially sustained over time? terms? ▪▪ Funding source: Evaluate your funding sources, such as ▪▪ Cost-effectiveness: Assess whether the proposed project will reduce or at least not significantly increase the cost of tariffs, taxes, and transfers, and determine how secure these financial flows are over time. service. ▪▪ Develop green financing packages: Investigate the pos- ▪▪ Cobenefits: Account for the environmental and social cobe- nefits using quantitative and qualitative indicators. sibility of packaging green infrastructure as a stand-alone component for financiers seeking sustainable investments. ▪▪ Multi-criteria Analysis: Systematically consider all relevant factors, including monetary and nonmonetary benefits to ▪▪ Market the green infrastructure: Explore government grants or concessionary loans or grants from development determine if the project is justified. partners or the private sector. ENABLING POLICIES: What can the service provider do to improve the enabling environment for green infrastructure? ▪▪ Proactive government engagement: Interact with governments at multiple levels, from political leaders to government ministries, for assistance with policies, laws, regulations, research, and community outreach. ▪▪ Development partners: Where appropriate, engage with development partners and specialized civil society organi- zations to help develop and finance the green infrastruc- ture project. Source: Authors. Integrating Green and Gray 23 Case Study Insights examples, described in detail in Appendix A, are used to illustrate effective deployment of natural Stakeholders can use the general framework above and combined infrastructure systems, and how in relation to almost all infrastructure services that that experience can be applied more broadly. They rely on gray infrastructure. However, this report highlight the costs and benefits of implementation, focuses on six key development challenges (see innovative or successful financing models, social Table 1.1), drawing on a broad literature base as dimensions, challenges, and lessons learned. They well as 12 case studies to offer practical insights into do not necessarily represent the best or most typical how to apply the framework to successfully assess use of natural systems, but instead shed light on and implement green infrastructure. These cases successful implementation by summarizing proven were selected from two sources: a literature review results or by highlighting unique challenges and combined with expert consultation, and an inven- approaches. tory of projects supported by the World Bank’s Global Practices that integrated green and gray Readers should note that the cases featured here infrastructure. were evaluated and designed in different ways, and some projects did not conduct a robust assess- Of the projects identified through the inventory, ment prior to implementation. Furthermore, given six were chosen from the World Bank portfolio the fledgling state of the sector, only a few offer as case studies, along with six cases led by other insights into the long-term performance of green stakeholder groups. Data collection consisted of infrastructure. desktop review of documents, databases, aca- demic journal articles, and expert input. These 12 Figure 1.7 | Map of Green Infrastructure Case Studies Featured in This Report The Netherlands Poland United States United States (West Coast) (East Coast) China India Vietnam Costa Rica Somalia Ecuador Sri Lanka Brazil Water Supply and Hydropower Coastal Flood Management and Erosion Control River Flood Management Urban Stormwater Management Drought Management Agriculture, Irrigation, and Drainage Source: Authors. 24 WRI.org Table 1.1 | From the Frontlines: Green Infrastructure Case Studies Tackling Multisector Water and Disaster Risk Challenges SERVICE EXAMPLE OF GREEN INFRASTRUCTURE FEATURED CASE STUDIES Water supply and Watersheds: Forestland and riparian areas surrounding water sources can naturally Costa Rica: Payments for Ecosystem Ser- hydropower filter biological and chemical impurities, as well as trap sediment, reducing erosion vices to Support Hydropower Operations and associated reservoir sedimentation. Brazil: Targeted Green Infrastructure for Source Water Protection* Coastal flood Natural coastal barriers: Reefs (coral or oyster), coastal wetlands, and mangroves The Netherlands: Piloting Mega management and protect coastal assets against flooding and erosion by dissipating wave energy, while Sand Nourishment for Coastal Flood erosion control dunes serve as a barrier to protect developed areas from waves and storm surges. Management Vietnam: Using Mangroves and Sea Dikes as First Line of Coastal Defense* River flood Floodplains: Natural components of riverine systems (such as floodplains, riparian United States: Integrating Green management areas, river meanders) dissipate flood energy and serve as storage reservoirs that and Gray Infrastructure for River Flood attenuate flood flows, and allow water to slowly infiltrate and replenish soil and Management ground water. Upstream forest cover intercepts and slows floodwater. Poland: Combining Green and Gray Infrastructure for Flood Risk Management at the River Basin Scale* Stormwater Urban retention and infiltration: Complementing gray infrastructure with pervious United States: Innovative Financing for management surfaces (such as green roofs, porous pavements) and green, open spaces (such as Urban Green Infrastructure wetlands, bioswales, rain gardens) allows precipitation to slowly infiltrate the ground, instead of quickly running off impervious surfaces or overflowing gray infrastructure. Sri Lanka: Conserving Wetlands to Enhance Urban Flood Control Systems* Drought Aquifers and wetlands: Groundwater can be enhanced by maintaining natural Ecuador: User-financed Ecosystem management recharge areas, such as floodplains or engineered percolation ponds. Forests, Conservation for Water Security wetlands, and floodplains can also improve surface water availability by increas- ing storage capacity, improving base flows, and enhancing water quality. These Somalia: Recharging Aquifers to Combat approaches can be used to augment water supplies during dry periods. Drought* Irrigation and Soils: The more water the soil layer can hold, the more water is available to support India: Community-led Watershed drainage crops and reduce irrigation demands. Soil water levels can be augmented by Restoration reducing evaporation through techniques such as furrow diking, reducing tillage, and maintaining mulch cover. The soil’s water holding capacity can also be increased by China: Active Soil Management for Water improving its organic content and minimizing compaction. Conservation* Notes: *Projects from the World Bank’s portfolio. Sources: Adapted from Cohen-Shacham et al. 2016; Faivre et al. 2017; World Bank 2017a; WWAP 2018. Integrating Green and Gray 25 IMPROVING SERVICE DELIVERY WITH GREEN INFRASTRUCTURE ▪▪ Identifying green infrastructure opportunities usually begins in the upstream planning process, for example through regional, urban, land-use, or master plans. ▪▪ Predicting technical performance is often imprecise because of the adaptive nature of ecosys- tems—but this very characteristic also contributes to resiliency. ▪▪ New tools and methods have emerged to better predict how green and combined green-gray infrastructure performs, but monitoring and evaluation during operations is critical. ▪▪ The expected environmental cobenefits, as well as potential negative impacts, are often central to a project’s overall viability and should be carefully assessed. Integrating Green and Gray 27 Service providers typically evaluate infrastructure Table 2.1 highlights some key issues for service opportunities through technical assessment, judg- providers to focus on in assessing natural systems ing infrastructure’s performance on criteria such and their relation to associated gray infrastructure. as service levels, costs, and resilience. However, This chapter then examines how to identify green assessing green infrastructure projects on these infrastructure opportunities in the broader plan- grounds, as well as taking into account their unique ning context, and to design, monitor, and evaluate features, requires utilizing environmental and such projects. contextual information that may be new to project developers and evaluators. Table 2.1 | Issues to Include in Green Infrastructure Technical Assessment, Examples by Service SERVICE ILLUSTRATIVE ISSUES EXAMPLES OF PERFORMANCE METRICS Water supply Watersheds: Conservation of existing forests or reforestation, land terracing, etc., Reservoir storage capacity and hydropower in the upper watersheds. A key technical assessment issue is to what extent these Energy production capacity and firm power interventions will reduce sediment in rivers that flow into reservoirs or are used for production drinking water supplies. For hydropower reservoirs, watershed conservation can influence the hydropower infrastructure life span and operating costs; for water sup- Turbidity at water intake point ply, it can influence the performance requirements of water treatment facilities. Fire risk reduction Land area restored/protected* Coastal flood Natural coastal barriers: Conservation or enhancement of mangrove forests, coral Decrease in wave/storm surge height management reefs, and sand dunes. A key technical assessment is to what extent these interven- Sand accumulation and erosion tions will reduce wave energy and associated storm surges, thereby reducing coastal control flood risk and erosion. The effectiveness of natural systems can influence the design Length of coastline protected from storm of sea walls and embankments, coastal groynes, and beach sand replenishment. surge/waves* River flood Floodplains: The maintenance or enlargement of natural floodplains to serve as Magnitude of flood without damage management retention areas for flood waters. A key technical assessment is to what extent these Floodplain storage capacity interventions will reduce flood flows and water levels, thus reducing flood risk. The effectiveness of natural floodplains will influence the location and size of flood control Risk of damage to facilities and infrastructure embankments. Floodplain area connected* Urban stormwa- Urban retention and infiltration: Flood retention zones in urban areas, such as lakes Decreased runoff ter management and riparian zones, as well as efforts to promote rainwater infiltration—for example Annual number of sewer/stormwater overflows through permeable pavements and green roofs. Key technical assessments are to determine the extent to which these interventions reduce stormwater peak flows, as Regulatory incompliances well as the impact on water quality. The effectiveness of green areas will influence the size of stormwater pipes and associated pumps, as well as the need to treat combined storm and wastewater flows. Drought Aquifers: The management of groundwater aquifers in coordination with surface Quantity of water saved/stored management water to enhance resiliency. In some cases, aquifer recharge can be facilitated Depth to groundwater through engineered percolation ponds or check dams. A key technical assessment is to determine the extent to which the storage function of aquifers can be optimized. Dry season stream flows The effectiveness of aquifers will influence the design and operation of surface water Lost use of facilities and infrastructure (i.e., reservoirs. downtime) Irrigation and Soils: Improving soil water retention capacity through agronomic practices, such as Reduction in irrigation demand drainage furrow diking, reducing tillage, maintaining mulch cover, and improving soil organic Reduction in drainage flows content. A key technical assessment is to determine the extent to which these mea- sures will improve the soil water retention capacity and nonbeneficial evaporation, Increase in crop yields/diversity and thus reduce the need for supplemental irrigation. The effectiveness of on-farm Water use efficiency practices will influence the design of irrigation and drainage infrastructure, including the requirements for storage, canals, and pumps. Land area under improved management* Note: *Intermediate or proxy indicators that do not explicitly link actions to outcomes. Source: Authors; examples of performance metrics adapted from Gray et al. (in review). 28 WRI.org Identifying Green Infrastructure As they ponder strategic pursuit of green infra- structure, planners should be aware of the range Opportunities in Planning Processes of contributions it can make to better service and Opportunities for enhancing gray infrastructure other outcomes. For example, green infrastructure with natural systems are not always easy to identify can do the following: ▪▪ within the context of normal planning processes, as sectoral responsibilities and administrative Reduce gray infrastructure require- jurisdictions may complicate efforts to identify and ments: In the United States, the filtration incorporate such projects. These challenges can be services provided by the healthy forests sur- addressed by adjusting both regional planning and rounding water supply in Portland, Maine, infrastructure master planning. substituted the need for a water filtration plant, saving the city an estimated $97 to $155 mil- Regional planning processes: A wide variety lion over 20 years (Gartner et al. 2013). Box of regional and/or sectoral planning processes, 2.1 provides another example where green has such as land-use master plans, coastal zone plans, substituted for gray infrastructure. Very rarely, forest management plans, national or state-level however, will an entire infrastructure project water resources plans, and river basin plans can meet service standards through green infra- be used to identify potential green infrastructure structure alone. opportunities. Good practice entails identifying—at least at a conceptual level—the linkages between forests, wetlands, agricultural land use, and water ▪▪ Complement gray infrastructure compo- nents, enhancing overall service provi- sion: In Colombo, Sri Lanka, urban wetlands infrastructure functions, such as those related to and flood retention parks complement the gray this report’s six service areas. For water resources stormwater system by allowing for the slow plans, potential linkages should naturally emerge infiltration and filtering of stormwater into the through due diligence. Regional planning processes ground, decreasing the volume of water that are an ideal mechanism for identifying project moves through the gray system (see Appendix opportunities that service providers could further A, case 4.B). ▪▪ analyze in terms of feasibility. Safeguard gray infrastructure assets, Infrastructure master planning: Agencies acting as a first line of defense and/ responsible for water services undertake periodic or system redundancy in the face of master planning exercises, typically on a five- a changing climate: In the Philippines, year cycle with annual updates, to formulate their mangroves, reefs, and other natural systems investment program and financial needs. These annually avert more than $1 billion in dam- agencies include water utilities, water resource and ages to residential and industrial infrastruc- agricultural agencies, power companies, and oth- ture (Tercek and Beck 2017). Including green ers. Good practice would entail including potential infrastructure components as added layers of green infrastructure investments in their menu protection may be especially applicable for sec- of options, with these ideally having been identi- tors or projects with low tolerance for failure or fied during the regional planning process. Master that face high climate risk. plans typically consider investments at either the prefeasibility or feasibility level. Given their relative complexity, investments in green infrastructure would probably fall under the first category. But if such opportunities can be confirmed as feasible at this stage, then resources can be directed to undertaking detailed feasibility and design stud- ies and explicitly considering linkages with gray infrastructure. Integrating Green and Gray 29  UBSTITUTING GREEN FOR GRAY BOX 2.1 | S ever, upon analyzing the root cause of sediment INFRASTRUCTURE: LESSONS FROM pollution, the Bank and its partners realized SOMALIA that upstream investments to prevent erosion would avoid the need to build another water treatment plant. This analysis led to the state- Successfully integrating nature-based infrastructure solutions requires understanding not only the region’s socioeconomic run Reflorestar Program, which pays upstream status and its development challenges, but also the ecological landowners to reforest and manage their land context and knowing how to pinpoint the appropriate project in ways that help curb erosion. location. The experience of the Somalia Water for Agro- Pastoral Livelihoods Pilot Project, and the Somalia Emergency Drought Response and Recovery Project illustrates these ▪▪ Which green infrastructure is applicable to the ecological context? necessities. In the context of a fragile state, often hit by Green infrastructure planning must be based droughts and famines, the project developers considered on the site-specific ecological context and options for tapping subsurface water supplies. Deep the challenge the intervention is expected to groundwater wells were rejected due to their high capital and address. For example, increasing cloud forest operational costs and a lack of domestic expertise to develop and maintain such wells. cover in the humid tropics can increase water supply and combat drought risk because of Instead, the government agency, working with the World Bank, adopted a “sand dams” approach. Simple check forests’ unique ability to capture fog. However, structures were built across nonperennial streams called widespread afforestation in semiarid climates wadis. When water flows in the streams, it carries sediments, has been shown to have a negative impact mainly sand, which is then trapped at a considerable distance on annual water availability (Filoso et al. behind the check structure. Water is retained within this sand 2017). While harnessing natural systems is dam and in a surrounding shallow aquifer, where it is stored often broadly applicable, the success of one for easy access with minimal evaporation loss. This low- technology solution can be operated and maintained by local project does not guarantee its success in other communities and fits well within Somalia’s ecological context. ecological contexts within the same region or in another similar region. For example, restoring For more information, see Appendix A, Case 5.B. mangrove plantations in Vietnam has been quite successful (IFRC 2011). However, in the neighboring Philippines, replanted mangrove Key Questions for Stakeholders Assessing Country forests only have a 10 to 20 percent chance of Contexts surviving a decade or more, due to the use of inappropriate species and poor site selection Green infrastructure’s functional performance var- (Primavera and Esteban 2008). Figure 2.1 ies among country and local settings, sometimes shows the diversity of mangrove species across to a large extent. To effectively plan the optimal world regions. mix of green and gray solutions, stakeholders must assess the contextual features that could influence performance. Key questions to address include the following: ▪▪ What are the forces driving the develop- ment challenge? Having a clear understand- ing of these forces is essential to identifying effective opportunities. In the case of Brazil’s Greater Vitoria Metropolitan Region, the World Bank financed investments in gray water infrastructure over several decades to provide potable water (see Appendix A, Case 1.B). How- 30 WRI.org Figure 2.1 | Mangrove Species Only Thrive in Specific Eco-regions 40°N 20°N 0° 20°S 40°S Mangrove Species 1-2 3-4 5-8 9-12 13-16 17-20 21-25 26-35 36-40 41-47 Source: Deltares 2014. ▪▪ What is the appropriate siting location and scale for the project? Planning pro- High-Level Assessment Tools Large-scale and coarser resolution assessment tools cesses should identify the general location and can relatively quickly perform a high-level assess- spatial extent to produce desired outcomes, as ment that agencies can use to identify and prioritize well as identify priority areas to focus efforts. areas with green infrastructure potential during the For example, proper siting of groundwater planning process. Table 2.2 contains examples of recharge mechanisms requires considering tools with global or countrywide coverage that have factors such as slope, drainage, land use/land the capability for this type of reconnaissance-level cover, lithology, geomorphology, and soil char- survey. These may be useful for national or regional acteristics. A technical assessment of these fac- decision-makers seeking locations where harnessing tors in Somalia identified 15 priority sites in the natural systems might deliver suitable solutions for beds of ephemeral rivers on which to develop sand dams (see Appendix A, Case 5.B). addressing development challenges. ▪▪ What is the socioeconomic status of the region? As Box 2.1 illustrates, in fragile and underresourced countries, technical and capacity limitations may cause project develop- ers to rely more on local communities, rather than draw on government agencies or private industry. Green infrastructure projects that are managed by communities often have an advantage in such settings over more complex built solutions. Integrating Green and Gray 31 Table 2.2 | Tools for General Identification of Green Infrastructure Opportunities SERVICE EXAMPLE OF LARGE-SCALE TECHNICAL ANALYSIS TOOLS Water supply and hydropower Global Forest Watch–Watera combines global data on water stress with near real time, high-resolution data on tree cover change, enabling users to view where ecosystem change may be having adverse impact on water resources. It helps users identify which of their sites are exposed to water risks because of loss and degradation of natural infrastructure. Coastal flood management Coastal Resilienceb is an approach and web-based mapping tool designed to help communities understand their and erosion control vulnerability to coastal hazards, reduce their risk, and determine the value of green infrastructure. The tool’s apps enable planners and decision-makers to visualize current and future risk and then identify a suite of infrastructure solutions that reduce social and economic risks, while maximizing the benefits and services provided by nature. Cur- rently, the Coastal Resilience apps encompass 17 coastal states in the Caribbean, Mexico, and Central America. River flood management Aqueduct Global Flood Analyzerc provides users with an open-access online platform to quantify and monetize river flood risks worldwide. The tool estimates current and potential future effects on GDP, the affected population, and urban damage from river floods for every state, country, and major river basin in the world. Urban stormwater management Urban Water Blueprint Mapd estimates the level of conservation of permeable areas needed to achieve a reduction in sediment and nutrients for more than 500 cities worldwide. Drought management Aqueduct Water Risk Atlase is a global water risk mapping tool that helps companies, investors, governments, and other users understand where and how water risks and opportunities are emerging worldwide. It uses the best available data to create high-resolution, customizable global maps of water risk but does not evaluate options for green infrastructure. Irrigation and drainage Soil Moisture Active Passive (SMAP)f measures—and produces global maps of—soil moisture every two to three days over a three-year period. This soil moisture information is key to understanding the flows of water and heat energy between the surface and atmosphere and the potential role of green infrastructure in retaining soil moisture. Sources: a WRI 2016; b TNC 2016; c WRI 2015; d TNC 2014; e WRI 2013; f NASA 2017. Green Infrastructure Time Frames about four decades for a restored tropical forest to fully recover its structure and ecosystem functional- Identifying and incorporating opportunities into ity. Assuming that green infrastructure’s functional- national or regional planning processes entails ity develops at similar rates, restoring forests may careful sequencing of natural and gray components. yield some infrastructure benefits in the short term, For example, solutions that involve restoration or but will likely not reach full potential for 40 years. change in management of natural resources may Not all projects, however, need to reach 100 percent require a longer time horizon than built solutions of their potential to meet baseline goals for service before benefits reach their intended threshold (Fig- delivery. Likewise, some green infrastructure sys- ure 2.2). For example, it takes coral reefs at least tems may have higher functionality during grow- two to five years to grow and reproduce, and longer ing seasons and less functionality in winter or dry before they reach a size and maturity to stabilize seasons when plants are dormant; service providers shorelines. Similarly, by some estimates it takes must take these fluctuations into account. 32 WRI.org Figure 2.2 | Varying Time Frames for Achieving Benefits with Green or Gray Components Restored green infrastructure Built infrastructure Benefits Time (years) Note: For illustrative purposes. Source: Adapted from Bloomberg and Holloway 2018. Assessing Technical Performance green infrastructure are more probabilistic and require much larger-scale inputs, such as land use, Once relevant agencies have identified opportuni- hydrological conditions, and ecosystem responses, ties through a broad planning process, service among others. providers and their development partners can design and appraise specific green infrastructure A growing set of models and software tools are now projects. Key considerations in the design process available to support such modeling, as shown in include prioritizing high-impact interventions and Table 2.3. In combination with modeling, or where areas, evaluating technical performance, assessing modeling is not feasible, the technical merit of cobenefits and environmental impacts, and under- green infrastructure can be evaluated using expert standing risk and uncertainty. opinion, and local stakeholder guidance solicited to develop solutions and estimate likely outcomes. At the project level, green infrastructure designers Since use of green infrastructure is closely aligned often use modeling tools that can quantitatively with traditional and local knowledge of ecosystem assess site-specific biophysical performance metrics functioning and nature-society interaction, includ- to develop an optimal green infrastructure strat- ing this knowledge in technical evaluations can be egy. While gray infrastructure engineering models invaluable (WWAP 2018; Nesshöver et al. 2017). mainly tend to be deterministic, models that assess Figure 2.3 | Integrating Communities’ Local Knowledge Enhances Modeling Tools for Green Infrastructure Planning Image: WOTR/Flickr. Integrating Green and Gray 33 Table 2.3 | Tools for Technical Analysis of Proposed Green Infrastructure Projects SERVICE EXAMPLES OF PROJECT-LEVEL TECHNICAL ANALYSIS TOOLS Soil and Water Assessment Tool (SWAT)a predicts the environmental and hydrological impact of land-use change at a watershed scale. Forest Service Water Erosion Prediction Project (FS WEPP) Modelb is a set of interfaces designed to allow users to quickly evaluate erosion and sediment delivery potential from forests. The model predicts erosion rates and sediment delivery using input values for forest conditions developed by scientists at the Rocky Mountain Research Station, part of the U.S. Forest Service. Water supply and hydropower Spreadsheet Tool for Estimating Pollutant Load (STEPL)c calculates nutrient and sediment loads from different rural land uses and best management practices on a watershed scale. The tool provides a user-friendly interface to create a customized spreadsheet-based model in Microsoft Excel. It computes watershed surface runoff; nutrient loads, including nitrogen, phosphorus, and five-day biological oxygen demand; and sediment delivery. The annual sediment load is calculated based on the Universal Soil Loss Equation and the sediment delivery ratio. The sediment and pollutant load reductions that result from implementing best management practices are computed using the relevant known efficiencies. Xbeachd is a two-dimensional model for wave propagation, long waves and mean flow, sediment transport, and morphological changes of the near-shore area, beaches, dunes, and back-barrier during storms. Coastal flood management and erosion control; Hydrologic Engineering Center Flood Damage Assessment (HEC–FDA)e software provides the capability to perform an integrated hydrologic engineering and economic analysis when formulating and evaluating flood risk management plans. river flood management MIKE FLOODf includes a wide selection of specialized 1D and 2D flood simulation engines, with the ability to model flooding involving rivers, flooding in streets, floodplains, drainage networks, coastal areas, dams, levee and dike breaches, or any combination of these. MIDS Calculatorg is an Excel-based stormwater quality tool to predict the annual pollutant removal performance of low-impact development best management practices. The calculator will compute the volume reduction associated with infiltration practices, plus the total suspended solids and total phosphorus reductions for practices including permeable pavements, green roofs, bioretention, bioretention with underdrain (biofiltration), infiltration basin, tree trench, tree trench with underdrain, swale side slope, swale channels, swales with underdrains, wet swale, cistern/reuse, sand filter, constructed wetland, and constructed stormwater Urban stormwater pond. management System for Urban Stormwater Treatment and Analysis Integration (SUSTAIN)h assists stormwater professionals in developing and implementing plans for stormwater flow and pollutant controls on a watershed scale. SUSTAIN contains seven modules that integrate with ArcGIS. Hydrology, hydraulics, and pollutant loading are computed using EPASWMM, Version 5. Groundwater and Surface-water FLOW (GSFLOW)i is a coupled groundwater and surface-water flow model based on the USGS Precipitation-Runoff Modeling System (PRMS) and Modular Groundwater Flow Model (MODFLOW). GSFLOW can be used to evaluate the effects of factors such as land-use change, climate variability, and groundwater withdrawals on surface and Drought management subsurface flow for watersheds that range from a few square kilometers to several thousand square kilometers, and for time periods extending from months to several decades. Agricultural Production Systems Simulatorj simulates biophysical processes in agricultural systems, particularly as they relate Agriculture, to the economic and ecological outcomes of management practices in the face of climate risk. irrigation, and drainage Source: a USDA-ARS and Texas A&M 2018; b USFS n.d.; c USEPA 2018a; d Deltares et al. n.d.; e USACE n.d.; f DHI n.d.; g Minnesota Pollution Control Agency 2017; h USEPA 2018b; i USGS n.d.; j APSIM 2018. 34 WRI.org BOX 2.2 | ADVANCED MODELING AND MONITORING: THE NETHERLANDS SAND MOTOR To prevent shoreline erosion, the coast of southern Holland has long required constant maintenance—through the deposit of new sand in small, targeted locations along the coastline, which is an expensive operation. An innovative approach to reducing costs harnesses the natural power of the sea for depositing sand along the coastline. The Sand Motor project, launched in 2011, off the Delfland Coast, applies a large volume of sand (21.5 million cubic meters) in a single operation and relies on natural ocean currents to distribute the sand across the coast. Over 20 years, the Sand Motor will be fully incorporated into the coastline, making communities safer and providing more space for nature and recreation. To receive approval, this project required a comprehensive technical assessment based on sophisticated cost-benefit marine modeling (Taal et al. 2016). The ultimate design was determined by comparing the Sand Motor’s predicted economic and environmental effects to business as usual. Researchers mapped the expected environmental impacts with a qualitative ranking system and used quantitative modeling tools to predict the coast’s morphological changes under the proposed project. Design workshops brought together experts from several disciplines, including morphologists, ecologists, and dredging operation specialists. This integrated approach was instrumental in achieving the Sand Motor’s multifunctional design. Since there is always uncertainty in modeling natural systems, an extensive monitoring and evaluation program was also implemented. The photos below show the coastline’s development over the project’s first five years. July 2011 August 2016 Source: De Zandmotor 2018. For more information, see Appendix A, Case 2.A. Images: Zandmotor/Flickr. The sophistication of the model that stakeholders When analyzing how to improve watershed water choose should align with the project scale and costs. quality in the U.S. city of Portland, Maine, local For example, the Sand Motor project in the Nether- stakeholders helped identify five forest-based solu- lands required enlistment of the consultant Deltares tions that would help water quality over the next to develop complex modeling tools on coastal mor- 20 years. These included riparian buffers, upgrades phology, aeolian transport, and fresh groundwater to culverts, third-party sustainability certification resources, to help ensure that the costly investment of future timber harvests and forest management, would perform optimally (see Box 2.2). reforestation of riparian zones, and conserva- tion easements. The local water provider and civil Smaller-scale projects, such as community-led society partners then consulted specific studies and watershed restoration in India (see Appendix A, data sources to determine the extent to which each Case 6.A) have been undertaken, based only on a green infrastructure option would be available and qualitative understanding of benefits and project feasible (Talberth et al. 2013). performance, without any quantitative modeling. Integrating Green and Gray 35 BOX 2.3 | THE MANY USES OF GREEN Assessing Cobenefits and INFRASTRUCTURE: LESSONS OF Environmental Impact A CALIFORNIA FLOOD RETENTION Careful design of green infrastructure projects PROJECT can ensure that they not only serve their primary protective objective, but also deliver a wide range The Yolo Bypass is a 240 square kilometer wetland area along of ancillary benefits. The latter may include a natural depression near Sacramento and an important increased biodiversity, carbon sequestration, feature of California’s flood containment infrastructure. A set improved livelihoods and welfare among vulnerable of weirs diverts water from the Sacramento River into the Yolo Bypass. One weir passes floodwaters by gravity once it people and communities, decreased heat island reaches a certain level, while the other is actively managed effect, increased resilience and adaptive capacity, using floodgates operated by the state’s Department of Water improved public health, and much else (WWAP Resources, according to regulations established by the U.S. 2018). Delivering these wide-ranging and impactful Army Corps of Engineers. All water exits the Yolo Bypass cobenefits through infrastructure projects can be through its “toe drain” into the Sacramento–San Joaquin Delta. The bypass floods as early as October and as late as June advantageous for governments and development each year and can store as much as 80 percent of floodwaters partners that have a mission to alleviate poverty during large events. and achieve sustainable development. However, while such cobenefits can be substantial, The system was completed in 1924, and over time multiple it is not guaranteed that all environmental impacts cobeneficial uses have emerged. Approximately two-thirds of will be positive. For example, green infrastructure the area is privately owned by farmers who take advantage of the rich and moisture-laden soils during the dry season. that utilizes nonnative trees could displace habitat, The basin also includes a 64 square kilometer designated and may be ill-suited to resisting local pests and wildlife area managed by the state’s Department of Fish and diseases, resulting in broader tree cover loss and Wildlife. This sustains nearly 200 species of birds and one of habitat degradation. Avoiding or minimizing such the highest salmon populations in California, and provides a negative impacts can be achieved relatively easily haven for recreation and bird watching. by conducting a technical assessment of a proposed For more information, see Appendix A, Case 3.A. project’s natural elements and its predicted interac- tions with the surrounding environment. In addition, green infrastructure’s cobenefits can be enhanced, and negative environmental impacts avoided, through intentional design. A thorough assessment of benefits and trade-offs allows project developers to design a master plan of infrastructure solutions that takes advantage of nature’s regenera- tive processes to generate multiple benefits. Holistic technical analyses necessitate interdisciplinary work across domains such as ecology, economics, engineering, sociology, tourism, and urban plan- ning, to coordinate the most effective strategies. Such interdisciplinary assessments can also be used to adjust project design in ways that equitably bal- ance the distribution of benefits while minimizing negative trade-offs. Box 2.3 provides an example of how multibenefit analysis can determine a path forward to achieve optimal impacts. 36 WRI.org Understanding and Managing However, both green and gray infrastructure face risks of damage and destruction by natural hazards. Uncertainty Pests and disease may wreak havoc on wetlands Uncertainty is not a new concept to engineers and designated for flood control, for example. An oil decision-makers, who must often develop strategies spill may harm oyster reefs for coastal protection, to minimize risks of project failure. Green infra- or an uptick in global commodity prices may incite structure design, however, must manage dynamic development of a watershed designated for source sources of uncertainty due to the adaptive nature of water protection. The current lack of site-specific ecosystems, thus requiring perceptive approaches empirical data on green infrastructure performance to characterize and minimize project risks (Seastedt also contributes to high uncertainty levels. As et al. 2008). For example, human-induced distur- more performance data are collected, this source of bances can degrade coral reefs, causing grazers to uncertainty will be reduced. leave the habitat and algae to replace hard coral. Even if restoration efforts are subsequently under- Traditional approaches to managing uncertainty, taken to cultivate coral reefs for coastal protection, such as building excess capacity or redundan- the degraded system may have already shifted to cies into the system, apply to both gray and green a new state that cannot be restored to its previous options. Whereas gray infrastructure redundancies condition (Suding et al. 2004). may include having backup technologies at the ready in case of failure, nature-based “redundan- Risk and uncertainty assessments can mitigate such cies” may include intermixing tree species with risks by accounting during project design for site- different drought tolerances or utilizing multiple specific constraints and the interconnected dynam- interventions. Combining green and gray infra- ics of the local environment. At the same time, structure can also increase project resilience to green infrastructure solutions generally offer great uncertain and changing conditions. For example, potential to naturally regenerate after a hazard, and both the Yolo Bypass and Poland’s Raciborz Dry to adapt to changing climate conditions, providing Polder system operate as one of several nature- added value in terms of project resilience. based flood retention basins within larger systems, and total flood retention capacity is greater than In the future, projects designed to harness the that of the storm size they are designed to protect regenerative properties of nature could easily against (see Appendix A, Cases 3.A and 3.B). require less maintenance than built solutions. Figure 2.4 | Restoring Meanders Alleviates Flooding by Giving Room to the River Image: World Bank. Integrating Green and Gray 37 Recently, the deep uncertainty associated with ris- essential that service providers and their develop- ing global temperatures and ongoing socioeconomic ment partners develop, finance, and implement a pressures has led to increased focus on resilient and robust monitoring and evaluation plan. Tracking robust strategies that perform reasonably well over long-term monitoring data allows stakeholders a range of future conditions. As a result, research to identify needs for adaptive management and organizations, governments, and development opportunities to improve performance. A growing banks have developed new evaluation approaches evidence base for green infrastructure’s techni- in recent years to assess the robustness, rather than cal performance, linking actions to outcomes, will the optimization, of development projects under help to inform its appropriate usage and determine climate change. These include decision-scaling when and how such projects meet the needs of the (Brown et al. 2012), eco-engineering decision-scal- development community. ing (Poff et al. 2016), robust decision-making (Lem- pert et al. 2003; Lempert and Kalra 2011; Sayers et Many development projects, in general, do not al. 2012), info-gap theory (Hall and Harvey 2009), invest heavily in monitoring and evaluation, and others summarized in Garcia et al. (2014) and primarily due to a lack of funds and/or inadequate Ray and Brown (2015). appreciation of its crucial function. This is espe- cially problematic for green infrastructure, which For example, one strategy for robust and resilient cannot be fairly assessed without long-term moni- green infrastructure might involve the selection toring since it can often take much longer to yield of a diverse range of native plant species whose benefits, compared to gray infrastructure, which climatic range covers both current conditions and can begin full operation soon after construction. climate change projections. Another might develop Ozment et al. (2016) found that watershed invest- floodplains to accommodate projected increases ment programs in the United States often overlook in the size of extreme storms, while also providing the importance of monitoring until a project is well benefits for recreation, agriculture, and habitat, under way. By establishing a monitoring program whether or not flood magnitude increases. that fits the temporal scale of nature-based solu- tions, project developers will be able to appease Monitoring and Evaluation investors and other stakeholders, who may feel Due to the dynamic nature and inherent uncer- uneasy about the slower gains. tainty of green infrastructure described above, it is Figure 2.5 | New Technologies Can Support Green Infrastructure Planning and Monitoring Image: David Godwin, Southern Fire Exchange/Flickr. 38 WRI.org  SING REMOTE SENSING FOR GREEN INFRASTRUCTURE MONITORING: BOX 2.4 | U LESSONS FROM CHINA China’s government recently conducted a conservation project to reduce water use by controlling evapotranspiration from cropland. The North China plains rely on groundwater for irrigation, and any excess that does not evaporate returns to the aquifer for reuse. Hence, the green infrastructure project sought to reduce nonbeneficial water loss from cropland by maximizing water retention in the soil alongside the use of supplemental gray irrigation provided by groundwater pumps. Project managers used new technologies based on remote sensing techniques and complex algorithms to estimate evapotranspiration, and then achieved reductions through agronomic measures including land leveling, maintaining soil cover, reducing tillage, and wind breaks. Results included increasing kilograms of wheat produced per cubic meter of evapotranspiration from 1.01 to 1.84—almost a doubling of water use efficiency. For more information, see Appendix A, Case 6.B. As an example, after eight years in existence, the Monitoring green infrastructure that covers large Quito Water Fund (Fondo para la Protección del geographical areas may require data collection and Agua, FONAG) in Ecuador began implementing analysis at the local, regional, national, and even a hydrologic data management program in 2008 international scales. As solutions at various geo- with a long-term monitoring horizon of 30 years graphic levels are not exclusive, effective evaluation (see Appendix A, Case 5.A). FONAG now includes may also necessitate upscaling and downscaling funding for monitoring in its budget and expects monitoring results, as well as coordinated process- the fund to be able to cover future associated costs ing and communication among agencies at different (Encalada et al. 2015). Though there is no analy- governance levels (Nesshöver et al. 2017). Newer sis of the project’s direct impacts during its first technologies, such as remote sensing, can support decade, project managers are confident that future stakeholders by providing faster and more cost- performance will be evaluated to guide adaptive effective information for monitoring large-scale management going forward. projects (Box 2.4). Figure 2.6 | Flood Risk Monitoring Image: U.S. Geological Survey/Flickr. Integrating Green and Gray 39 THE SOCIAL FOUNDATION OF GREEN INFRASTRUCTURE ▪▪ Green infrastructure typically has a significant land footprint, which can be a complicating factor due to the need to acquire property or modify land-use practices, which increases transaction costs. ▪▪ Communities are often responsible for long-term operation, and thus their support is critical to a project’s viability. ▪▪ Water-related service providers must typically work with other key stakeholders, including local governments and civil society organizations, to broker and sustain green infrastructure. ▪▪ Properly implemented, green infrastructure may generate significant social cobenefits in terms of community empowerment. At the same time, service providers and their partners must apply social safeguards to ensure no negative impacts occur. Integrating Green and Gray 41 Social dimensions are key to the viability and In addition, community stewardship of projects sustainability of infrastructure projects that harness is often necessary to ensure long-term viability of natural systems such as forests, floodplains, aqui- the investment. While all of this requires a large fers, and soils. Most importantly, such interven- investment of time and resources, the right types of tions typically have larger land footprints than gray engagement can bear significant dividends. infrastructure and require extensive consultations and buy-in from affected communities to secure As the examples in Table 3.1 suggest, many green land-use agreements. infrastructure interventions can help empower local communities and promote inclusion, while provid- Establishing social safeguards involving land acqui- ing valuable contributions to broader infrastructure sition and indigenous peoples, and paying atten- service objectives. tion to social inclusion issues, especially gender, are also requirements that yield positive benefits. Table 3.1 | Engaging Communities: Key Social Issues by Type of Intervention SERVICE ILLUSTRATIVE SOCIAL ISSUES AND APPROACHES Water supply and hydropower Watersheds: Upper watershed areas often include indigenous peoples who rely on forests for their livelihoods. Tailored consultation processes that are culturally suitable for indigenous peoples are indispensable for ensuring local communi- ties are engaged in sustainable forest protection activities. Watershed protection interventions often face the issue of illegal logging by outsiders. Special attention should be paid to gender as women’s livelihoods may be affected differently than men’s. Coastal flood management Natural coastal barriers: Maintaining natural coastal defenses requires close collaboration with local communities. and erosion control Maintaining reefs often involves working with fishermen and divers to avoid activities that cause damage. Sustaining or creating new mangroves typically involves working with the aquaculture industry; while maintaining buffer zones often involves working with developers and local farmers. River flood management Floodplains: Typically boasting rich soils and found on prime agricultural land, natural floodplains are usually main- tained by limiting new development while working with farmers to allow for temporary inundation of farmland. Urban stormwater Natural retention: Flood retention areas in urban settings are often inhabited by poor communities’ informal settle- management ments. Maintaining and expanding such areas typically involves preventing families from building on or near flood-prone areas, and relocating households. Drought management Aquifers: Maintaining or increasing groundwater recharge areas often requires limiting land use. Service providers may face many of the same social issues encountered in river flood management and urban stormwater management. Agriculture, irrigation, and Soils: Improving soil water conservation requires working directly with farmers and incentivizing them to adopt new drainage agronomic practices, either through education or economic incentives. Source: Authors. 42 WRI.org The social dimensions of green infrastructure neces- provide downstream water benefits. In addition, com- sitate a very different approach than gray infrastruc- munity members and private landowners are often ture, due to two key considerations discussed below: responsible for regular maintenance and adaptive ▪▪ management. This can include tasks such as replant- Communities are typically critical to project ing trees, maintaining water retention structures, or success since they steward the land and habitats thinning forests for fire management. The resilience being harnessed as infrastructure solutions. of projects to environmental and social risks also ▪▪ Service providers need support from govern- ment agencies and civil society organizations in frequently relies on local knowledge of the land and communal stewardship. This raises the stakes for addressing the social aspects of effective green ensuring that community buy-in is durable, that com- infrastructure projects, which represent a new munities have the capacity to take on such roles, and approach to doing business. that legal contractual obligations are well-understood and agreed upon. Communities Are Key to Success Making this happen depends on comprehensive Gray infrastructure requires long-term operations social analysis that carefully considers the willingness and maintenance, which is typically the direct respon- and capacity of local stakeholders to participate in a sibility of the service provider. Effective green infra- planned project over the long term. A social inclusion structure, on the other hand, often requires the active strategy capable of facilitating two-way communica- support of dynamic local communities, which gener- tion is advisable to inform project design and ensure ally depends on close collaboration with the service communities have fair deciding power over design provider. and implementation. This approach also benefits proj- While both gray and green infrastructure projects can ect developers by homing in on the features and ben- raise tough decisions for local communities about efits that are most important to ensuring long-term land use, livelihoods, and even way of life, communi- community buy-in. Education and capacity-building ties often take on central roles in delivering nature- are also more common features of well-planned green based project outcomes, and therefore face different infrastructure projects, compared with built solutions. decisions. For example, source water protection Box 3.1 showcases an exemplary community-owned projects often contract landowners to implement new project in India that has driven development and farming practices or restrict farming on their lands to social inclusion. BOX 3.1 | COMMUNITY-LED RESTORATION DRIVES LONG-TERM SUCCESS: LESSONS FROM INDIA A participatory watershed development project across the Kumbharwadi Basin in Maharashtra State, led by the Watershed Organization Trust (WOTR), illustrates how extensive stakeholder engagement can secure community ownership and buy-in for green infrastructure projects. All villagers underwent hands-on training, and learned about conservation, sustainable land management, and green infrastructure maintenance practices before any interventions were implemented. In integrating social dimensions of the project, special attention was paid to the different roles of men and women in the community through the use of WOTR’s Participatory Net Planning methodology. The villagers formed a community committee with proportional socioeconomic and gender representation of households. In addition, local youth were trained to work on the project, which proved crucial for the sustainable management of land and water resources and to secure long-term community support. Between 1998 and 2012, the collective net agricultural income of affected villagers increased from $69,000 per year to $625,000 per year, due to better crop yields, more land under cultivation, and the ability to shift to more valuable crops (Gray and Srinidhi 2013). The cumulative benefits were nearly three times the total costs of the program. Due to its success in capturing the complexity of equitable social inclusion, WOTR’s Participatory Net Planning tool has become widely used by state governments in India as well as by the National Bank for Agriculture and Rural Development (Kale and D’souza 2014). For more information about this project, see Appendix A, Case 6.A. Integrating Green and Gray 43 Water Service Providers Need Second, interacting with a large number of local landowners and communities demands special Government and Civil Society Support skills that service providers often lack. Even local Water-related service providers such as water governments, with their typically close connec- utilities, urban stormwater departments, flood tions to their constituencies, sometimes struggle to management agencies, irrigation districts, and sufficiently engage local communities in decision- power companies are typically ill-equipped to making processes about land use, which can lead engage independently in the complex community to distrust, backlash, or practical challenges in interactions green infrastructure requires. Service operationalizing projects (Moses 2017). Often, a providers usually have established procedures and good approach to overcoming these challenges is to extensive experience in developing gray infrastruc- work closely with a local civil society organization ture but face two key challenges in harnessing motivated to achieve broader objectives, such as natural systems. community empowerment and/or environmental sustainability. First, service providers may not have legitimacy or even legal standing to engage with communities Water-related service providers, in particular, must and landowners regarding land ownership or land also establish strong social units capable of inter- use. Although expropriation laws exist in many acting directly and strategically with landowners, countries, their application is often notoriously communities, local governments, and civil society difficult even for gray infrastructure. As a result, organizations, if they wish to develop and sustain use of expropriation for the large tracts of land green infrastructure successfully. Conceptually, a often needed for green infrastructure is often not service provider’s social unit plays the same critical feasible. Typically, local governments have jurisdic- role for green infrastructure that its engineering tion over land-use regulations and are the formal unit plays for gray infrastructure, necessitating interface between local stakeholders and the service significant investment. provider. Service providers must typically convince either the local or regional government that their Once communities are on board, and service pro- proposed projects will both improve public service viders have the needed stakeholder support, green and enhance community well-being by generating infrastructure projects can proceed in ways that income and cobenefits to society. enhance social well-being, establish social safe- guards, and promote social inclusion. Figure 3.1 | Communities Are at the Heart of Green Infrastucture Operations and Maintenance Image: Texas Living Waters Project. 44 WRI.org Harnessing Cobenefits to Enhance BOX 3.2 |INCENTIVIZING SHRIMP FARMERS TO Social Well-being MODIFY THEIR PRACTICES: LESSONS Through community outreach, engagement, and an FROM VIETNAM inclusive decision-making process, social assess- ment can help identify and seize opportunities to Successful implementation of green infrastructure projects improve the welfare and well-being of disadvan- may require farmers to modify their agricultural practices. This requires an extensive outreach program demonstrating taged groups for any development project. Socially that farmers can benefit economically. The Vietnam Mekong inclusive projects and policies improve social well- Delta Climate Resiliency and Sustainable Livelihood Project being, taking into account not only present society, illustrates this point. In Vietnam, coastal shrimp farmers but also future generations (World Bank 2018). are encouraged to shift from intensive shrimp farming—a risky business, given the potential for shrimp diseases and As mentioned in Chapter 2, well-designed green storms that disrupt operations—to a combination shrimp- infrastructure can achieve multiple benefits that mangrove system. The reconstruction of a mangrove belt can help reduce the impacts of storm surges and flooding contribute to community well-being. For example, along the coast. Converting to a shrimp-mangrove system urban parks designed for flood control can also creates opportunities for farmers to become internationally provide air quality control, combat the heat island certified as a sustainable seafood operation, which can effect, and provide space for community gardens or fetch a premium price in the market and therefore increase playgrounds. Or, service providers can issue pay- farmer revenue. In addition, the less intensive and more ments for ecosystem services that facilitate much- natural shrimp cultivation reduces disease and provides for a steadier income. A shift into certified organic mangroves needed shifts to more sustainable and productive was estimated to generate an annual net benefit of $992 per natural resource–use paradigms. For example, hectare per year over current practices at the time of project payments can enable landowners to shift from appraisal. overgrazing pasturelands to agroforestry systems, For more information, see Appendix A, Case 2.B. or fishermen to adjust their practices (see Box 3.2). However, it takes careful understanding of local social dynamics, as well as thoughtful program practitioners have begun to look to other fields design, to deliver such benefits. Research has to get a more complete picture of relevant social shown that some programs have not only failed to factors (Nesshöver et al. 2017). Approaches include deliver positive social benefits of green infrastruc- pairing established social safeguards, such as the ture, but unintentionally had deleterious impacts World Bank’s Environmental and Social Frame- on local communities, highlighting the importance work (World Bank 2017c), with additional analytic of thoughtful program design (Hove et al. 2011; Pit- frameworks developed to specifically assess topics tock and Xu 2010). This raises the question of how related to the social dimensions of environmental best to collect social information to inform design projects. This represents an important step toward in ways that maximize positive social outcomes. creating higher-quality assessments, strength- Even though no specialized tools for conducting ening the foundation for improved community social analysis of green infrastructure currently engagement and participation. Box 3.3 highlights exist, adapting social analysis frameworks from approaches specifically designed to evaluate social- similar projects, such as landscape restoration environmental interactions in landscape gover- initiatives, has shown promise. Recognizing that nance, while Figure 3.1 provides an example from green infrastructure requires special attention, Rwanda. Integrating Green and Gray 45  DAPTING SOCIAL ANALYSIS FOR GREEN INFRASTRUCTURE: SELECT ASSESSMENT BOX 3.3 | A APPROACHES Several approaches have been specifically formulated to develop an understanding of the socioecological landscape. These approaches were not developed with green infrastructure in mind per se, but could be used in combination with existing social safeguards, and may improve the quality and use of social assessments in planning and implementing green infrastructure. ▪▪ Social Landscape Mapping: The guidebook, “Mapping Social Landscapes,” takes a new approach to environmental governance by focusing on the networks of actors within landscapes. It centers on two main approaches: first, mapping actors’ resource flows, and second, mapping actors’ priorities and values. This method has been tested in Brazil, India, Indonesia, Kenya, Mexico, and Rwanda. In a step-by-step process, practitioners are invited to use the methodologies, analyze the results, and develop a strategy for change. By considering actor networks, restoration practitioners can be more efficient with resources, collaboration, and outreach, and better anticipate potential conflicts and bottlenecks (Buckingham et al. 2018). ▪▪ Participatory Approach to Landscape Governance Assessment: The landscape governance assessment methodology was developed by the Green Livelihoods Alliance as a two-day workshop to help give agency to communities facing land-use decisions and to help them identify development priorities. The workshop focuses on the following four criteria: inclusive and equitable decision-making; social cohesion and collaboration in the landscape; coordination among actors, sectors, and scales; and sustainable landscape thinking and action. The method was designed to be cost-effective and manageable in time and effort, yet provide a reasonable idea of the status of key aspects of landscape governance. The participant approach allows stakeholders to partake in interactive discussions to evaluate criteria, and indicators to assess social inclusivity and sustainable landscape governance (Graaf et al. 2017). ▪▪ Indicators of Resilience in Socioecological Production Landscapes and Seascapes: These indicators are tools for engaging local communities in adaptive management of the landscapes and seascapes in which they live. The indicators measure diversity and ecosystem protection, biodiversity (including agricultural biodiversity), knowledge and innovation, governance and social equity, and livelihoods and well-being. Through participatory “assessment workshops,” stakeholders evaluate current conditions across the landscape and identify priority actions. By enhancing communication and building consensus on resiliency challenges, the evaluation of these indicators can help position communities to effectively undertake green infrastructure projects (Bergamini et al. 2014). ▪▪ Participatory Watershed Management Planning Methodology: The development of this tool was funded by the Program on Forests (PROFOR) and implemented by the J/P Haitian Relief Organization, as part of the “Haiti Takes Root” National Reforestation Initiative. Stakeholders are involved in the three phases of this methodology (site selection, microwatershed assessment strategy, and intervention prioritization) to identify watershed management priorities that line up with peoples’ economic motivations, and ensure that scarce resources are allocated in a way that is effective, inclusive, and appreciated. 46 WRI.org Figure 3.2 | Mapping Stakeholder Priorities, Natural Resource Restoration in Rwanda Water NATIONAL Community Forest Products & Commodities Soil DISTRICT Food & Agriculture Climate Mitigation & Adaptation Energy (Fuelwood, Charcoal) Production COMMUNITY Note: In 2017, stakeholders in Rwanda used social landscape mapping techniques to understand which benefits of restoration were most important at different levels of governance to inform strategies for the national restoration program. Source: Buckingham et al. 2018. Establishing Social Safeguards To avoid situations such as these, development part- ners have already created effective policies and tools. Green infrastructure is not immune to the negative For example, the World Bank’s environmental and social impacts often associated with controversial gray social Safeguard Policies include approaches, guiding infrastructure projects. As a starting point, therefore, principles, and indicators for evaluating the impact of green infrastructure should be assessed in the same development projects and for developing responsive ways as gray infrastructure. Understanding both strategies to ensure social and environmental sustain- a project’s direct and indirect impacts on affected ability (World Bank 2018). Over the last 20 years, communities, and designing projects to mitigate and these Safeguard Policies have been updated continu- compensate for negative effects is critical to meeting ously to advance transparency, nondiscrimination, social safeguards and creating a successful project. and sustainable development. In particular, without mitigation efforts, green infrastructure projects may harm communities or In cases where projects may result in lost lands, individuals that depend on targeted lands or waters income, or access to natural resources, affected com- for subsistence or livelihoods. For example, watershed munity members must be adequately compensated. protection projects may restrict people’s access to land Countries often set legal requirements or guidelines or natural resources, and without proper assessment, for resettlement and compensation. Many develop- could fail to fully compensate affected communities ment partners maintain strict policies regarding the for lost opportunities or to offer superior alternatives. Integrating Green and Gray 47 resettlement and compensation of people removed the decision-making process, or deciding power is from lands and/or those whose rights are infringed concentrated among an elite few (Rinkus et al. 2017). (World Bank 2017). At a minimum, these policies It is therefore important for service providers and focus on “doing no harm” and ensuring that affected their development partners to understand which parties are no worse off after the project than before. actors have the power to influence and make decisions As green infrastructure enters the mainstream, the regarding the local environment (Graaf et al. 2017). development community has an important role to play in going beyond the minimum requirements to To this end, all relevant stakeholders in a develop- ensure that such projects improve social welfare, par- ment project must be democratically involved during ticularly among disadvantaged communities. Box 3.4 planning and implementation. Green infrastructure provides an example of a well-planned and successful stakeholder mapping, engagement, and negotiation approach. can be a more complex and laborious process than for gray infrastructure projects, though it varies Promoting Social Inclusion case to case. One reason for the complexity is that ecosystems and political/property boundaries rarely Any development project can exacerbate or help align. As a result, a project that calls for action across resolve social inequalities, such as gender issues a landscape may require customized engagement for or marginalization of vulnerable communities. In multiple individuals, groups, and levels of governance. relation to green infrastructure, the potential impact In addition, changes in ecosystem management can on women, indigenous peoples, the poor, and other trigger nonlocal impacts. For example, many reservoir disadvantaged populations should receive special sedimentation and eutrophication challenges origi- attention. For example, a project can encounter prob- nate from upper watersheds, but their impacts are felt lems if it engages with communities where property mainly by communities and other stakeholders in the rights or land-use decision-making is inequitable to lower watershed. The diverse stakeholders of green begin with, such as when women are banned from BOX 3.4 | APPLYING SOCIAL SAFEGUARDS TO GREEN INFRASTRUCTURE: LESSONS FROM POLAND To make way for a green infrastructure flood protection project in Poland, the government and the World Bank adopted a similar approach to a conventional infrastructure project in compensating communities for loss of land. Through the use of a Resettlement Action Plan, two communities with approximately 200 affected households received a choice of compensation. About 47 families were resettled in Nieboczowy—literally translated as “New Village”—with housing and services, and the rest received cash compensation and moved elsewhere. The relocation succeeded in empowering local authorities to lead the resettlement process, establishing a community committee, and assisting landowners with individualized advisory services on compensation packages. The project also delivered cobenefits by enabling farmers to continue using the land for agricultural purposes when the area is not inundated. For more information, see Appendix A, Case 3.B. 48 WRI.org infrastructure projects may also be subject to different Additionally, because project developers often use regulations and jurisdictions, requiring several levels incentive structures or compensation to promote of government involvement to carry out agreed-upon environmental stewardship, they must consider how maintenance duties. For example, the National Room to deliver such benefits, both financial and otherwise, for the River Program in the Netherlands required in ways that ensure equity across stakeholder groups. an extensive and comprehensive stakeholder process When hiring local residents to implement develop- that involved communities, municipalities, provinces, ment projects, for example, developers must consider and water boards. The process helped to identify 700 how gender affects available time and labor; for interventions from a predefined list to achieve the example, women perform more household labor than project’s goal of lowering water levels to protect 4 mil- men, and women’s market labor is often undervalued lion people from flooding. Of these 700 interventions, (Mwangi et al. 2011). In male-dominated societies, 400 were finally implemented in 2015, with stake- community leaders may prefer gray solutions, in part holder support and without delays (RfR n.d.). because local male laborers are typically contracted to carry out the work (Bettencourt 2018). Green infra- Green infrastructure projects can uniquely impact structure, on the other hand, tends to involve unpaid gender equality because of the different roles and females (community) to perform tasks, such as plant- responsibilities men and women play in managing ing and maintaining seedlings, which provide benefits natural resources and because of their differing access more difficult to monetize (Bettencourt 2018). to information and resources (Sachs and Laudazi 2009). Given that women typically play a central role in managing and safeguarding natural resources, their participation and involvement in planning and imple- menting such projects can increase effectiveness and efficiency (United Nations 2014). Project developers and partners should also look to align green infra- structure investments with other actions that increase women’s opportunities for development. Integrating Green and Gray 49 THE ECONOMICS OF GREEN INFRASTRUCTURE ▪▪ Service providers are ultimately concerned about how to deliver high service standards that are also affordable; they should look for the optimal combination of green and gray infrastructure to achieve this goal. ▪▪ Green infrastructure often has a different cost structure than gray infrastructure, and needs to be carefully evaluated to ensure proper economic analysis of options. ▪▪ The often significant environmental and social cobenefits that harnessing green infrastructure can generate should be included in the project’s economic evaluation. Such cobenefits can sometimes be a driving factor in selecting a green infrastructure component, especially when the public sector or mission-driven investors are involved. ▪▪ Since green infrastructure typically generates both monetary and nonmonetary cobenefits, a semiquantitative, multi-criteria analysis (MCA) approach is often the most suitable methodology for evaluating projects. Integrating Green and Gray 51 Economic analysis is used for infrastructure plan- Green infrastructure, as part of a combined system, ning in two very distinct ways. At the regulatory both contributes to achieving the service benefits level, economic cost-benefit analysis is often used to and is included in the costs of the service. The focus help determine the appropriate level of service. At of this chapter is not to assess appropriate service the service provider level, a cost-effectiveness eco- standards, but rather to provide guidance on how nomic analysis is typically employed to plan specific best to combine green and gray infrastructure to infrastructure components. Green infrastructure achieve the required service standard. components, however, represent a special case in that not only do they impact the cost of service Cost-effectiveness analysis and green infra- provision, they typically also have significant envi- structure: Once a service standard is set through ronmental and social cobenefits to consider. This a government decision, then it is the role of the ser- chapter explores key issues for governments, ser- vice provider to deliver the least-cost solution. Each vice providers, and development partners and other component of the infrastructure is designed to work investors to consider as they undertake economic in harmony with the overall system to minimize analysis for green infrastructure projects, including costs. As an example, a drinking water treatment estimating both costs and cost-effectiveness. plant must produce an effluent that meets a certain regulatory standard. A related cost-effectiveness Setting service standards: Typically, infrastruc- analysis will determine what is the best technology ture service levels are determined through a regula- and plant layout to meet this standard while mini- tory or planning process within a political context, mizing costs. Similarly, if a watershed management using a cost-benefit analysis. Benefits are related to program is considered in combination with a water the outcomes of the service, such as public health, treatment plant, then the service provider’s goal reduced flood damages, higher agricultural pro- is to find the least-cost combination of watershed ductivity, or healthier freshwater ecosystems. As an improvements and water treatment to meet the example, consider a stylized case of flood manage- regulatory requirements. ment, which uses flood risk, expressed in terms of frequency of flooding every 10, 50, or 100 years, Service providers should consider criteria beyond as its service standard. For each service standard, cost-effectiveness, however, if they want to capture there are benefits that can be quantified, for exam- the full impact of infrastructure investments on ple in terms of avoided damages. For each service society, or if they want to identify opportunities standard, there are also costs that can be quantified to partner with mission-driven investors. Table in terms of capital and operating costs of the infra- 4.1 provides examples of how green infrastructure structure. In addition to the economic cost-benefit components can lower costs of gray infrastructure analysis, other factors are often considered, such as in ways that can be factored into a standard cost- the ability to finance investments associated with effectiveness analysis. It also highlights cobenefits a given service standard, as well as public health to account for when considering the optimal combi- concerns or the desire to avoid loss of life. nation of green and gray infrastructure for a given service standard. 52 WRI.org Table 4.1 | Potential Cost Reductions and Economic Cobenefits Associated with Green Infrastructure SERVICE POTENTIAL SOURCES OF INFRASTRUCTURE POTENTIAL ECONOMIC COBENEFITS COST REDUCTION Water supply and Healthy watersheds extend the life of the reservoir, reduce wear Watersheds: Enhanced nontimber forest products, nature- hydropower on hydropower equipment, potentially reduce water treatment based tourism and recreation opportunities, carbon storage, plant operational and maintenance costs, and potentially biodiversity, and cultural heritage preservation. reduce water treatment plant capital investments. Coastal flood Natural coastal barriers, such as mangroves, wetlands, and Natural coastal barriers: More productive fisheries, coastal management and sandbars, lower costs for gray infrastructure, such as seawalls, tourism and recreation opportunities, carbon storage, and erosion control sea dikes, and groynes. These barriers can reduce wave energy enhanced marine biodiversity. and the height of a storm surge, which potentially lowers the cost and/or improves the resilience of the built solution. River flood Floodplains lower costs for gray infrastructure, such as flood Floodplains: Improved recreation opportunities, enhanced management control embankments, sluice gates, and pumping stations. water quality, provision of fisheries and migratory bird The floodplains store flood waters and lower flood levels, thus habitats, floodplain nutrient replenishment, groundwater potentially lowering the cost and/or improving the resilience of recharge, and carbon storage (Noe and Hupp 2005; the built solution. Opperman 2014). Urban stormwater Stormwater retention areas lower costs for stormwater Stormwater retention areas: Creation of urban amenities, management drains, pump stations, and treatment of combined storm and such as green spaces and enhanced urban ecology, has wastewater discharges. They filter pollutants and can remove increased property values by 5 to 15 percent and generates up to 90 percent of heavy metals from stormwater (LIDC 2007). health benefits for city-dwellers (Haq 2011). Drought management Aquifers: Lower or eliminate costs for new reservoirs or Aquifers: Combat subsidence, prevent salinity intrusion in desalination plants and their associated conveyance systems. coastal areas, or improve afforestation and/or vegetation cover due to higher water tables. Agriculture, irrigation, Soils: Increasing soil moisture through agronomic measures Soils: Increased agricultural productivity, reductions in soil and drainage can lower irrigation infrastructure capital and reduce irrigation loss and drainage water. requirements. Source: Authors. Integrating Green and Gray 53 Estimating Green Infrastructure Costs thus depends very much on the type of interven- tion and the characteristics of the specific site. Both A major selling point for adopting green infrastruc- green and gray infrastructure costs can generally ture is that in some circumstances it can provide be divided into four broad categories: preparation relatively low-cost solutions. However, it is difficult costs, capital costs, financing costs, and operation to generalize since such projects cover a wide range and maintenance (O&M) costs (see Table 4.2). of interventions at different geographic scales. How costs of green and gray infrastructure compare Table 4.2 | Cost Categories for Infrastructure COST COMPONENT GENERAL DEFINITION CONSIDERATIONS WHEN COSTING GREEN INFRASTRUCTURE Preparation costs Cost of planning, engineering, permitting, Costs associated with extensive training and consultations with a wide environmental and social assessments, etc. range of stakeholders to ensure participation and social acceptance. Capital costs Cost of civil works, equipment, land, and other Generally low civil works and equipment costs, but potentially high land up-front capital investments. costs due to large land footprint. Financing costs Service charges and interest payments associ- Often receives public funds on a grant or concessional basis, so financing ated with borrowed funds. costs may be lower. Operation and Labor, fuel, equipment, and civil works Requires expertise in biological systems and different kinds of interventions maintenance maintenance. to ensure maintenance, monitoring, and verification. May require recurrent payments to compensate landowners/users/com- munities for use of land. Source: Adapted from Gray et al. (in review). Figure 4.1 | Combining Green and Gray Infrastructure Can Be Cost-effective Images: Flickr (left) , thanh.ha.dang/Flickr (right) 54 WRI.org When governments, service providers, and other Standard Cost-Effectiveness Analysis stakeholders fail to fully account for the cost of for Green Infrastructure green infrastructure, this can lead to project failure. In Nigeria, a sand nourishment project for coastal In combined infrastructure approaches, most flood and erosion protection turned out to be a cost- green activities directly impact the cost of service lier option than anticipated (Niang et al. 2012). The by reducing the cost of gray components in one site required sand replenishment every two to three of three main ways: by reducing capital costs, by years, which was too costly for the government to reducing O&M costs, and by increasing climate maintain, and the operation failed due to lack of resilience. A standard cost-effectiveness approach regular maintenance. can therefore be used to evaluate a project’s specific green and gray infrastructure components. Exam- Green infrastructure often involves operating costs ples where harnessing natural systems has benefit- that are quite different than for gray infrastructure, ted service providers by lowering service costs are such as the ongoing investments needed to adap- shown below: ▪▪ tively manage natural areas in a changing climate. This can present challenges and uncertainties when Water supply and hydropower: Source estimating the costs of green components in a water protection strategies designed for wa- combined infrastructure project. When researchers ter quality benefits reduce capital costs in the applied a general costing approach (akin to that of form of bypassed water treatment processes Table 4.2) to targeted reforestation efforts in Brazil- and avoided costs. For example, New York ian watersheds, they found that the cost per hectare City’s protective management of the Catskill- ranged widely from $2,500 to $13,000 (Ozment et Delaware watershed enabled the city to “re- al. 2018; Feltran-Barbieri et al. 2018). These costs place” the up-front capital costs of building an depended on the maturity of the local reforestation expensive treatment plant estimated near $8.0 industry, the willingness of landowners to partici- billion with the comparatively cheaper green pate, the natural regeneration potential of the target infrastructure strategy that has only cost a site, and whether forest protection laws would be little over $1.5 billion since the 1990s (Gartner enforced. et al. 2013). Additionally, projects upstream of dams reduce reservoir sedimentation, extend- Around the world, the current costs of implement- ing the life of facilities and reducing dredging ing green infrastructure vary widely, and cost data and maintenance costs. In Costa Rica, siltation for specific locations can be hard to access. For of hydropower reservoirs was mitigated with example, a meta-analysis of over 76 mangrove proj- upstream forest restoration and land manage- ects for coastal flooding by Narayan et al. (2016) ment practices (see Appendix A, Case 1.A). found costs ranging from $500 to $65,000 per hectare, with a median value of $1,000. Similarly, ▪▪ Coastal flood management and erosion: In the late 1980s, rapid aquaculture expansion the cost of restoring and reconnecting floodplains along the northern coast of Vietnam caused varies with land prices, ranging from roughly significant loss of mangrove forests, which $10,000 to $800,000 per hectare across Europe in turn decreased natural defenses against alone (EEA 2017). This high variability indicates the coastal floods and erosion in an area with a importance of identifying an appropriate interven- rapidly growing population. Recognizing that tion for each specific site. Developing robust cost mangrove restoration could help mitigate the estimates that assess feasibility and opportunity impact of disasters and protect livelihoods, the costs of proposed options is essential to guide Vietnam Red Cross launched the Mangrove project planners toward more cost-effective green Plantation and Disaster Risk Reduction Project infrastructure solutions. in 1994 to enhance existing gray infrastruc- ture and reduce flood risk. By 2010, $9 mil- lion was invested to restore 9,000 hectares of mangroves along the shores of 166 communes as well as 100 kilometers of dike lines. This natural bulwark cut the cost of damages to the Integrating Green and Gray 55 dikes by $80,000 to $295,000, and saved an Beyond Cost-Effectiveness Analysis additional $15 million in avoided damages to The objective of combining green and gray infra- private property and other public infrastructure structure is to improve service, lower costs, and/ (IFRC 2011). ▪▪ or improve resilience. Cost-effectiveness analysis The city government of Portland, Oregon has can help shed light on whether a green component struggled to handle growing volumes of sewage meets that threshold, but it does not reveal the full and stormwater runoff from impervious sur- picture. Green infrastructure may also generate faces. From 1990 to 2011, the city implemented ancillary social, economic, and environmental cobe- a combined sewer overflow (CSO) control nefits related to human health and livelihoods, food program that expanded gray infrastructure, and energy security, ecosystem rehabilitation and including tunnels and treatment facilities, to re- maintenance, climate adaptation and resilience, duce its CSOs and clean up local waterways. In and biodiversity (WWAP 2018). 2007, it introduced a complementary program to spur the use of green infrastructure for urban Although these cobenefits may not be the direct stormwater management. Since 2007, service concern of the service provider, they are of inter- providers have installed permeable pavements est to the general public, the government, affected and bioswales throughout the city, reducing communities, and civil society organizations. peak flow by 80 to 94 percent in target areas. For some projects, other factors may come into Portland officials estimate that their $9 million play—such as uncertainty and the desire to make investment in green infrastructure has yielded decisions that may not be optimal but can help to a savings of $224 million in stormwater costs avoid bad outcomes. Box 4.1 presents an example of related to repairs and maintenance (USEPA the multiple factors an expanded cost-effectiveness 2010). analysis can include, to provide a more robust and ▪▪ A cost-effectiveness analysis of infrastructure options in New York City, shown in Figure 4.2, complete picture of a project’s potential benefits. found that a combined green-gray approach would not only meet stormwater management targets more cost-effectively, but also attract more private investment, relieving pressure on the city’s budget. Figure 4.2 | Reducing Cost by Mixing Green and Gray Infrastructure*, New York City $8 $6.8 Cost ($ Billions in 2010 Dollars) $6 $5.3 $0.03 $3.9 $0.9 $4 $1.5 $2.4 $2 $2.9 $2.9 $0 Green strategy Gray strategy Cost-e ective gray investments Green infrastructure — private investment Green infrastructure — public investment Potential tanks, tunnels, and expansions Optimize existing system Note: *Combining green and gray infrastructure cost 22 percent less than gray alone. Source: Bloomberg and Holloway 2018. 56 WRI.org BOX 4.1 | E XPANDED COST-EFFECTIVENESS ANALYSIS FOR WATERSHED RESTORATION PROGRAM IN BRAZIL An economic analysis of the São Paulo Watershed Conservation Plan (Ozment et al. 2018) revealed that green infrastructure, in the form of watershed restoration, was a worthwhile investment. Two scenarios were considered: the first was restoring the watershed; and the second, continuing “business as usual” (BAU), dredging the water supply reservoir and incurring high water treatment costs. The cost-effectiveness analysis below reveals that watershed restoration is $4.5 million cheaper than the BAU case over a 30-year period using a 9 percent discount rate. However, the decision-making process includes several additional important considerations. ▪▪ TIME AND UNCERTAINTY: Figure 4.3 shows restoration costs are incurred in the first 10 years, while the BAU costs are still relatively low during this time. Thus, the restoration program could be considered a precautionary “robust” invest- ment to avoid a potentially bad outcome—high levels of reservoir siltation and increased treatment costs, which lead to increased risk to public health. In addition, the payback period, shown around year 23, indicating a low rate of return, would be unacceptable to investors. However, in addition to making a “robust” decision—that is, avoiding a bad outcome—po- tential cobenefits should be considered. When using the “social discount rate” for Brazil recommended by World Bank, the project’s payback period is 18 years. ▪▪ COBENEFITS: Though the project’s cobenefits were not monetarily valued, their identification sheds light on the analysis. The project would likely increase dry season water flows, an important factor given São Paulo’s growing water stress. A preliminary but conservative estimate of climate benefits found that the project would sequester enough carbon to more than offset projected carbon emissions due to land-use change in the state of São Paulo. In addition, the project is expected to make over $30 million available for rural communities to restore forests over 30 years, which would have posi- tive impacts on rural livelihoods and enable farmers to shift to more environmentally sustainable production systems that integrate forestland. Finally, the project would bring back a mosaic of the rare Atlantic Rainforest, one of the most biodi- verse—but also among the most threatened—forest types on the planet. The project was broadly considered to be economically viable by water managers and other key stakeholders in the region, and as of 2018, project plans are being refined and a financing plan is under discussion. Figure 4.3 | Cost-Effectiveness Analysis for Watershed Restoration Program, Brazil 8 4.55 4 0 USD Millions -4 -8 - 12 0 5 10 15 20 25 30 Years NPV (9% discount rate) Restoration costs Benefits (avoided costs of sediment pollution) Source: Ozment et al. 2018. Integrating Green and Gray 57 Economic valuation of cobenefits is a well- from $344,000 to $6.7 million (IFRC 2011) (see established practice in environmental and natural Appendix A, Case 2.B). resource economics (e.g., Atkinson et al. 2018; Freeman III et al. 2014). While it is beyond the ▪▪ Soil water conservation: Green infrastruc- ture that increases agricultural productivity scope of this report to examine the many economic yields increases in farmers’ incomes and food methods available for assessing green infrastruc- security, and can improve soil conditions and ture cobenefits, a brief overview is provided below. increase soil moisture and nutrients. This in Some valuation methods can produce highly turn reduces the need for external inputs, such reliable quantitative results, while others are more as irrigation water and fertilizers. ▪▪ indicative. Water supply: The substantial value of cobe- Benefits that have market prices, or near-market nefits from green approaches to water supply equivalents like increased agricultural and aquacul- can even surpass a project’s intended benefits. ture production, recreation and tourism, reduced For example, New York City’s Green Infrastruc- sedimentation of hydropower reservoirs, and lower ture Plan aims to reduce sewer management water treatment costs can be readily valued using costs by $2.4 billion over 20 years. In addition, market-based approaches. However, valuing cobe- every fully vegetated acre will also provide nefits can be challenging when there are no market total annual benefits equivalent to $8,522 in prices in play, or when the biophysical measure- reduced energy demand, $166 in reduced CO2 ment of benefit is uncertain. Carbon sequestration emissions, $1,044 in improved air quality, and can be valued using a range of internationally estab- $4,725 in increased property value (Bloomberg lished prices, while biodiversity protection, which and Holloway 2018; Foster et al. 2011). is difficult to measure, may be evaluated using nonmonetary approaches. As with all economic Employing Multi-criteria Analysis analysis, understanding the distribution of benefits Given the importance and range of green infra- and costs among different stakeholders is critical to structure cobenefits, some of which do not have designing a successful infrastructure solution. clear market values, service providers and their partners can consider using multi-criteria analysis In many cases, the value of these additional benefits (MCA) to evaluate the rationale for going ahead can be substantial, and can make green infrastruc- with projects. This methodology allows assessment ture projects attractive investments for govern- of options against several broad criteria that have ments or impact investors that value improved different units (both quantitative and qualitative). community welfare (Cohen-Shacham et al. 2016; These criteria are weighted according to their Gartner et al. 2013; Ozment et al. 2016). Some con- relative importance and used to “score” infrastruc- crete examples for flood management, water sup- ture options. By using MCA, decision-makers can ply, and soil water conservation are listed below: rank infrastructure options not just by economic ▪▪ Coastal/river/urban storm and flood management: Green infrastructure objec- efficiency, but also by their ability to deliver other desired outcomes, such as equity, biodiversity, tives typically focus on reducing the likelihood public acceptance, and quality of life (Gray et al., of damage and loss of life during storms, but in review). This approach is most appropriate for such solutions can also make less likely storms assessing projects with substantial, and perhaps negatively impacting nature-dependent indus- even greater, additional benefits beyond the pri- tries such as tourism, recreation, and fisheries. mary infrastructure purpose. For example, the economic value created by Additionally, as noted in Chapter 2, the deep restoring mangroves in Vietnam came from uncertainty associated with climate change and both disaster risk reduction and enhanced socioeconomic pressures has led to increased focus community livelihoods. Coastal communities’ on resilient and robust strategies that perform rea- income rose due to increased yields rang- sonably well over a range of future conditions. Box ing from 200 to 800 percent of aquaculture 4.2 shows how decision-making under uncertainty products like shells and oysters. Estimates of was factored into an economic analysis for valuing the direct economic benefits from the govern- wetlands for flood control in Colombo, Sri Lanka. ment’s combined green-gray strategy range 58 WRI.org  ECISION-MAKING UNDER UNCERTAINTY: LESSONS FROM SRI LANKA IN VALUING BOX 4.2 | D WETLANDS FOR URBAN FLOOD CONTROL To evaluate the viability of restoring wetlands as a natural barrier in the flood-prone city of Colombo, Sri Lanka, the World Bank and partners applied an approach known as Decision-Making under Uncertainty. The figure below depicts an analysis of the trade-offs between urban development and wetland protection, comparing five scenarios ranging from 0 to 100 percent of target wetlands conserved by 2030. Since many variables, such as economic growth or climate change, affect both the value of urban development and the value of wetland protection, a sophisticated computer model was developed to randomly analyze hundreds of different scenarios, reflecting the inherent uncertainty of each variable as well as of the combination of variables. The potential benefits were monetized and included flood protection, recreation, carbon sequestration, and water quality improvements. The potential costs included loss of revenue from property development on wetland areas. For each scenario, the result is represented as a point in Figure 4.4 below, indicating the wetland benefits (blue lines), the opportunity cost due to lost land rents (red lines), and the net value of conservation (yellow lines). Since the analysis is based on the concept of uncertainty, there is a broad range of potential outcomes, including where the “net value of conservation” is below zero. However, in most scenarios, the net value is positive. Moreover, as more wetland area is conserved, the general trend is for net values to increase. This type of analysis can provide planners with some degree of confidence to proceed with wetland conservation efforts, while still signaling that there is risk involved. For more information on this project, see Appendix A, Case 4.B. Figure 4.4 | Wetlands Conservation Cost-Benefit Analysis for Colombo, Sri Lanka 200 Annual costs and benefits in 2030, RS billion 150 100 50 0 -50 -100 -150 0% 30% 50% 90% 100% Percent wetland coverage Costs Benefits Net Present Value Range of certainty Integrating Green and Gray 59 CREATING NEW FINANCING OPTIONS WITH GREEN INFRASTRUCTURE ▪▪ The financing demands for global infrastructure are large and growing. ▪▪ Governments and service providers struggle to finance infrastructure needs because of constrained budgets and low tariffs. ▪▪ Green infrastructure can be packaged and marketed as “green investments,” thus helping to ease financing challenges. ▪▪ Governments, the private sector, and development agencies are often willing to provide grants or concessional loans for green infrastructure because it both improves services and supports broader environmental and social goals. Integrating Green and Gray 61 Infrastructure Finance Models Figure 5.1 shows a typical general infrastructure finance model that utilizes the 3Ts. It demonstrates General Finance Model for Service Provid- how service sustainability relies on a sufficient flow ers: All infrastructure services require an adequate of funds from any combination of the 3Ts to make stream of revenue or budget over the long term to capital investments, cover operation and mainte- ensure their sustainability. Service providers that nance costs, and meet any debt service require- operate in a commercial manner, such as water ments. From a private investor’s perspective, the utilities or hydropower companies, typically refer model shows that to finance service providers, to these finance streams as revenues, while govern- investors must have confidence they will be repaid ment entities, such as flood management agencies, with a return commensurate to the risk. This typically refer to them as budgets. Usually, these requires that some combination of the 3Ts will be funds come from one of three main sources, collec- sufficient to cover both debt service and the costs tively known as the 3Ts (OECD 2009): associated with providing the service. ▪▪ Tariffs: A source that comes from users pay- ing for a specific service. For example, power Using this model to finance much-needed infra- structure improvements poses a fundamental companies charge customers for the amount of problem for many service providers in developing electricity used, or water companies charge for countries. The challenge they face is that access the quantity of water provided. ▪▪ to funding through the 3Ts is often insufficient to Taxes: A source that comes from the govern- make the necessary capital investments and/or ment—either through the general budget or a provide the necessary operation and maintenance dedicated tax, to help pay for a service within resources to meet desired service levels. This its jurisdiction. For example, a municipal or shortage of funds is typically caused by tight public state government may provide funding to a budgets. department to provide flood management services. In some cases, funds are also constrained by low ▪▪ Transfers: A source that comes from outside the government that is providing the service. tariffs, driven by affordability concerns and political constraints. Accessing finance to cover these fund- ing gaps is a severe challenge in the infrastructure For example, a state government may receive a sector. The OECD (2018) estimates that global grant from the federal government or an inter- financing needs for water supply and wastewater national development agency. Figure 5.1 | General Infrastructure Finance Model Tariffs Gray Infrastructure Green Infrastructure Taxes O&M Transfers Debt Service Funds flow Repayment Private finance Source: Authors. 62 WRI.org infrastructure alone (not including irrigation or This model highlights four potential sources of flood control) will be $6.7 trillion by 2030—more finance, each aimed at funders with different moti- than three times current investment levels—and vations for backing green infrastructure: ▪▪ may reach $22.6 trillion by 2050. Public finance: Governments are often moti- Green Infrastructure Finance Model: vated to provide grants for green infrastructure Although service providers should view green infra- components both as a recognition of its contri- structure as part of their overall asset base, such bution to service provision, but also because projects have special characteristics in the form of its potential environmental and social of cobenefits that can be exploited to open up new cobenefits. The latter imply greater impact and financing options. Thus, there are advantages to create additional political constituencies for the moving these projects outside the standard service investment. provider finance model shown above, and market- ing them instead to governments, the private sector, ▪▪ Private finance: A growing pool of individu- als or companies is looking for global oppor- or development agencies as stand-alone investment tunities to make green investments. These opportunities. Figure 5.2 provides a conceptual individuals or entities are typically willing to financing model of such an approach. provide finance at concessional rates through Figure 5.2 | Green Infrastructure Finance Model Government Service Provider Public Finance Private Finance Development Finance Green Infrastructure Funds flow Repayment Source: Authors. Integrating Green and Gray 63 specialized instruments, such as climate bonds The following sections provide specific real or green bonds. Some individual companies are world examples of green infrastructure financing also looking to support green infrastructure approaches to inform and help steer service provid- through concessional loans or grants as part ers and other key stakeholders. of their corporate stewardship policies or to benefit directly from the investments. Green Infrastructure Investment Levels ▪▪ Development agencies: Many agencies seek to invest in such projects on a grant or Currently, $52 billion per year flows to conservation projects, some of which is for green infrastructure concessional loan basis because nature-based (Credit Suisse and McKinsey & Co. 2016). To date, solutions align with their core mandates, such there is no comprehensive, stand-alone global as climate resilience, poverty reduction, and assessment of green infrastructure investments. environmental sustainability. However, Forest Trends has analyzed global water- ▪▪ Service providers: Service providers them- selves are often willing to invest directly in shed conservation and restoration efforts, identify- ing at least 419 programs that invest approximately $25 billion per year (Bennett and Ruef 2016). The combined green-gray projects, using their bulk of these funds comes from public and phil- normal “3T” channels, such as revenue from anthropic sources, with more than 95 percent of tariffs, based solely on the potential for im- total transaction value for watershed investments proved service performance. delivered through direct government subsidies For service providers, tapping into this demand for (Bennett and Ruef 2016). Figure 5.4 shows the green investments can help address their finance global breakdown. challenges at multiple levels, since such projects can often lower overall service costs. Even when providers need to borrow funds, they can often do this on a concessional basis, thus reducing debt service, as governments are often responsible for the debt servicing. Figure 5.3 |  angroves Stabilize Coastlines by Trapping Sediment in Their Roots and Reducing Wave Impacts with Their M Dense Vegetation Image: Adam Fagen/Flickr. 64 WRI.org Figure 5.4 | Global Investments in Watershed Conservation, by Region Number of Programs (419 total) 169 107 71 47 16 6 Total Transaction Value (24.6b total) 65.9m 14.2b 3.8b 6.4b 52.3m 117.8m Area in 2015 (486.7m ha in total) 26k 426.6m 8.9 47.7m 135k m 84k Latin America & Asia North America Europe Africa Oceania Caribbean Notes: k= thousands; m=millions; b=billions; ha=hectares. Not shown: 3 programs crossing multiple regions worth 2.6m in transaction value. Source: Bennett and Ruef 2016. Project developers often take advantage of multiple Public Finance financial instruments and funding sources over Governments play an important role in funding the course of a project. For example, a study of green infrastructure, both as the main financier and 13 watershed investment programs in the United as the entity responsible for setting policies that States found that grants and philanthropic dona- enable private investment. Some common public tions often provided seed funding for projects to get funding sources that service providers can tap into off the ground (Ozment et al. 2016). Once service are described below. providers could demonstrate results, they were bet- ter able to engage larger-scale investors looking to General revenue funds: Governments at the receive direct, long-term benefits from the program. national or subnational level may draw upon These later funders included local water utilities, their general tax revenues to finance green infra- water-dependent businesses, and the U.S. Forest structure programs. This approach is particularly Service. appropriate for projects that require large up-front investment. Moving forward, the growing movement to main- stream “conservation finance” and unlock private Earmarking government revenue: Some capital for conservation efforts that have monetiz- governments have dedicated revenue from existing able benefits should help increase the flow of funds sources to fund green or green-gray projects. For to green infrastructure (Credit Suisse and McKinsey example, Costa Rica funds its Payments for Ecosys- & Co. 2016; Hamrick 2016). Private investment in tem Services Program by dedicating revenue from conservation more than doubled between 2005 and fuel and water taxes, along with grants and loans 2015 (Hamrick 2016). from bilateral and multilateral donors (Blackman and Woodward 2010). Box 5.1 provides an example of a state government in Brazil that supports green infrastructure. Integrating Green and Gray 65 Dedicated service fees: Service providers, with Environmental mitigation/compensation the consent of regulators, sometimes create a dis- funds: Fifty-seven countries have developed tinct fee or charge for green infrastructure users. or are developing national environmental or For example, some U.S. utilities levy watershed biodiversity mitigation policies that mandate protection fees or surcharges to reinvest in water- compensatory mitigation (offsets) for unavoidable shed protection measures. Similarly, a federal law impacts to natural ecosystems (McKenney and in Brazil established a fee that water users must pay Wilkinson 2015). The resulting funding sources to the local water company, which then passes the raised through mitigation requirements are key funds to local watershed committees for reinvest- enablers of conservation and restoration activities ment in watershed maintenance. Some of these globally, some of which is directed toward green committees have decided to invest in reforestation. infrastructure. In the United States, for example, compensatory mitigation generates $3.8 billion a Municipal bonds: In the United States, local year from companies that must pay for unavoidable governments have used dedicated municipal bonds ecosystem loss or degradation (BenDor et al. 2015). to quickly raise capital and jumpstart watershed The money is channeled into activities that enhance investments to protect water supply. Municipal or restore more watershed services—such as water bonds allow government agencies to borrow money filtration—than were destroyed. In Brazil, the from investors and repay it over time, using tax or National Environmental Conservation Law gener- other revenue. However, while bonds can provide ated approximately $200 million in its first decade up-front capital, they offer a fixed amount of (Villarroya et al. 2014). To direct these funds into funding that eventually runs out and may not be green infrastructure, São Paulo has created an sufficient for watershed maintenance (Ozment et al. online registry, where compensators match up with 2016). restoration project proposals that provide natural infrastructure benefits (State Government of São Paulo n.d.).  UBLIC PROGRAMS AND BLENDED FINANCE PAY FOR GREEN INFRASTRUCTURE: BOX 5.1 | P LESSONS FROM BRAZIL The state of Espírito Santo in Brazil has a long history of supporting green infrastructure stewardship, with many key players already committed to this agenda (Kissinger 2014). In 2008, the state was the first in the country to pass a law mandating payments for ecosystem services (PES). It also established a State Water Resources Fund, FUNDAGUA, to support PES programs, targeted to protect watersheds. The law stipulated that a small portion of oil royalties received by the implementing agency through FUNDAGUA, should go to finance PES and land stewardship. The World Bank also provided cost-sharing funds to the program, and the state government is exploring options to leverage additional funds from beneficiaries, such as the water sector and watershed committees (Kissinger 2014). Leveraging additional funds will help the state of Espírito Santo progress from payments for green infrastructure that rely on state and World Bank International Development Association funds, to a model where downstream water users support upstream communities. For more information, see Appendix A, Case 1.B. 66 WRI.org Private Finance BOX 5.2 | FINANCING URBAN GREEN This section covers finance from a variety of INFRASTRUCTURE: LESSONS FROM THE sources, including commercial finance, private UNITED STATES companies, and the insurance sector. In some cases these players are investors; in others, they are beneficiaries, agreeing to pay for services provided. DC Water, the public water utility in Washington, DC, issued a municipal environmental impact bond in 2016, structured to In 2015, for example, cities, companies, and water share performance risks associated with green infrastructure, utilities collectively invested $657 million in water- rewarding investors if the green project’s performance exceeds shed restoration or protection. expectations, and limiting financial risk to DC Water if it underperforms. The 30-year, $25 million tax-exempt bond was Environmentally focused bonds: Increased placed with two private investors, and its proceeds are providing interest in making investments that generate social all the up-front capital needed for construction of three green or environmental benefits alongside a financial infrastructure installations to improve the incidence and volume of combined sewer overflows by better managing stormwater in return has spurred the development of environ- Washington, DC. mentally focused bonds. (Green, blue, climate, and environmental impact bonds are collectively The bond has an initial 3.43 percent interest coupon payable semi-annually for the first five years. At the five-year mark, a referred to here as “green bonds.”) The green bond one-time $3.3 million contingent payment may be made to market has grown more than 10-fold since 2013, investors or DC Water, based on performance evaluation and U.S. with $389 billion in labeled green bonds issued in Environmental Protection Agency determination of the success 2017 (Filkova 2018). In 2018, the Climate Bonds of the installations, as follows: Initiative released new bonds that explicitly seek to target green infrastructure components as part ▪▪ If the installations reduce stormwater runoff more than ex- pected, DC Water makes an outcome payment to investors. of water projects—including water supply, flood management, and climate adaptation (Gartner and ▪▪ If the installations reduce stormwater runoff less than ex- pected, investors make a risk-share payment to DC Water. Matthews 2018). These fixed income investments ▪▪ If can be helpful in engaging risk-averse beneficiaries the installations reduce stormwater runoff as expected, of green infrastructure projects as bonds spread the just the basic principal and interest is due from DC Water to cost over a project’s useful life rather than require a investors. large up-front investment from beneficiaries. This model encourages investors to do due diligence, as Pay-for-success (also referred to as pay-for-per- they have a financial stake in the performance of the project; formance, environmental impact bond, or conser- investors funding sustainable, innovative water management vation impact bond) is an approach to contracting solutions such as this may also gain reputational benefits. that ties payments for service delivery to the For more information, see Appendix A, Case 4.A. achievement of measurable outcomes that support natural infrastructure investments. Washington, DC’s, Stormwater Bond represents one of the first applications of a pay-for-success model, with inter- est rates paid to investors according to how well the green infrastructure performs (see Box 5.2). Integrating Green and Gray 67 Corporate stewardship: Many multinational Insurance payments for risk reduction: companies invest in green infrastructure to pro- Conservation-focused insurance products, such as tect their source waters. For example, Coca-Cola flood mitigation bonds, offer promise for financing has systematically implemented “Source Water green infrastructure as a risk mitigation strategy. Vulnerability Assessments,” which gauge risks to For example, in 2018, insurance and reinsurance the watersheds where they operate and determine brokerage Willis Towers Watson launched a Global suitable corporate responses. The beer company Ecosystem Resilience Facility, which utilizes risk Anheuser Busch InBev has set a goal to support pooling and financial instruments, such as catas- watershed protection at all its facilities located in trophe bonds, resilience bonds, grants, and loans, those countries that are key for its business. to promote nature-based programs such as coastal restoration (Artemis 2018). Water funds: Water funds pool income from mul- tiple water-dependent companies and public sector Public-private partnerships: Public-private stakeholders, with each small contribution adding partnerships (PPPs) involve the private sector to the cumulative impact. For example, in Quito, through a contractual agreement that enables their Ecuador, the local water company established a participation in project financing, planning, design, Water Fund to leverage water users’ willingness to construction, operation, and maintenance. For pay for conservation efforts on a voluntary basis. example, landscape degradation in the upper Gil The nondeclining, 80-year delimited trust fund González watershed in southwest Nicaragua led to receives financial contributions from the govern- increasing water scarcity and deterioration of water ment, private companies, public utilities, and civil quality. In response, the Belén local government society (Arias et al. 2010; Coronel and Zavala 2014). and a private sugar company, CASUR, whose busi- ness relies heavily upon irrigation water during the dry season, entered into a payment for hydrological ecosystem services scheme. Both the local govern- ment and the company were service buyers, with the German Development Agency (GIZ) acting as facilitator (Hack et al. 2013). Figure 5.5 | Integrating Nature into Infrastructure Designs Can Create Room for Rivers and Reduce Flood Risk Image: Roger Veringmeier. 68 WRI.org Development Partner Finance Multilateral development banks (MDBs), includ- ing the World Bank and African, Inter-American, Development partner financing generally focuses Asian, and European development banks typically on “public good investments,” while helping to provide such finance through loans to national facilitate private financing for “private good invest- governments at either market rates or on conces- ments.” Since many green infrastructure projects sionary terms. Box 5.3 provides an overview of the offer strong public good elements, as well as gener- World Bank’s green infrastructure portfolio. Some ally high levels of risk and uncertainty, develop- donor governments also offer bilateral financing for ment partners are ideally placed to finance green green infrastructure on either concessional loan or infrastructure, which helps complement invest- grant terms. ments by the private sector for more conventional gray infrastructure. MDBs typically have specialized financing arms, such as the World Bank Group’s International Development partners can finance specific projects Finance Corporation, that promote private invest- that include green components. This can take the ments in developing countries through financial form of either conventional project financing where instruments such as equity, debt, and guarantees. loan disbursements are made against payments In addition, specialized financial mechanisms that to contracts, or through approaches akin to the can provide grant or concessional financing for “pay-for-success” financing models discussed in the green infrastructure projects include the Global previous section. The World Bank’s Program for Environment Facility (GEF), the Green Climate Results (PforRs) is one example of this mechanism, Fund (GCF), and Climate Investment Funds. in which loan disbursements are made against actual results. Integrating Green and Gray 69 BOX 5.3 | WORLD BANK NATURE-BASED SOLUTIONS PROJECT PORTFOLIO, 2012–2017 In total, 81 World Bank–financed projects with green infrastructure or more broadly nature-based approaches were approved between 2012 and 2017. A project was included if it had a component that uses nature-based solutions, to contribute either directly or indirectly to delivery of infrastructure services. Among the Bank’s Global Practice (GP) sectors, Environment and Natural Resources (ENR); Social, Urban, Rural and Resilience (SURR); and Water naturally have the highest number of projects, followed by Agriculture, Transport, and Information and Communication Technology (ICT). Figure B5.3.1 | World Bank Projects with Green Infrastructure Components Number of projects 0 5 10 15 20 25 30 Social, urban, rural and resilience Environment and natural resources Water Agriculture Transport and information and communications technology Social protection and labor Soure: Authors. What the World Bank achieves with green infrastructure The World Bank is acknowledging the vast potential of the next generation of infrastructure to tackle the above-mentioned development challenges (source water and reservoir protection, coastal flooding and erosion protection, etc.). For example, in this portfolio review, the restoration or creation of mangrove forests was used in 23 projects, in many cases along with other built infrastructure components to enhance coastal flood protection. Similarly, reforestation and afforestation in watersheds and floodplains has been used extensively for flood protection and erosion control along with other gray components. Urban green spaces, coral reefs restoration, and aquifer recharge have also been used in World Bank projects to enhance storm protection or water supply services. Where the World Bank works with green infrastructure In terms of number of projects, the regional frontrunner in the use of these approaches is Africa, accounting for more than 60 percent of projects together with East Asia and the Pacific (EAP), followed by South Asia, Latin America and the Caribbean (LAC), and the Middle East and North Africa (MENA), as depicted in Figure 5.6. EAP and MENA host the largest number of efforts to manage water quality and quantity. Coastal challenges, like flooding and erosion, are mostly located in East Asia and the Pacific, and increasingly Latin America and the Caribbean. “Inland” challenges, such as landslides and urban flooding as well as drought, are found mostly in projects across the Africa Region. 70 WRI.org Figure 5.6 | World Bank Green Infrastructure Projects, by Region Europe and Central Asia 5 projects MNA 1 project East Asia and the Pacific 26 projects Africa South Asia 29 projects 11 projects Latin America and the Caribbean 9 projects Source: Authors’ World Bank Internal Portfolio Review. Philanthropic Funds and Grants mixed with loans to fund green infrastructure. For example, in China, the World Bank’s Water Con- Many conservation projects rely on seed funding servation Projects team leveraged a GEF grant to in the form of grants to cover start-up costs and fund a new, untested pilot monitoring approach to demonstration projects, and only engage larger- measure project outcomes (see Appendix A, Case scale investors when a project is already proven and 6.B). The Bank’s resulting loan financed the devel- fully operational. Most grants and donations cannot opment of new infrastructure, including innovative be depended upon for long-term funding, however. approaches to improve soil water conservation. For green infrastructure projects expecting a low or long-term return, grants or donations and program- Program-related investments (PRIs): Some related investments (PRIs) can be mixed with other foundations have started offering loans or equity funding sources to help “de-risk” projects seeking stakes at below-market interest rates (1 to 2 per- multiple investors. cent) for projects aligned with their mission, and there has been a steady rise in such PRIs for social Grants and donations: Public sector and and environmental projects. However, this has also philanthropic donors currently support the major- created some difficulty in transitioning from the ity of green infrastructure test beds and pilots pilot phase—usually supported by grant-based seed worldwide. For example, the U.S. Department of funders—to larger-scale investments backed by Agriculture’s Natural Resources Conservation private beneficiaries. This is because foundations Service (NRCS) operates a grant funding category and government funders often do not require per- dedicated to conservation finance–related projects, formance monitoring to be tied to a development which aims to jumpstart private investment in con- objective, opting instead for simple implementation servation activities. The World Bank has also uti- checks (Bennett and Ruef 2016). lized Global Environmental Facility (GEF) grants Integrating Green and Gray 71 ENABLING POLICIES FOR EFFECTIVE GREEN INFRASTRUCTURE ▪▪ Compared to gray infrastructure, green solutions face many constraints, and so require proactive policy interventions. ▪▪ Legal changes are often required to unlock investments by service providers. ▪▪ Development systems. partners can play an important role in enabling projects that harness natural Integrating Green and Gray 73  HANGING POLICY TO FACILITATE BOX 6.1 | C Compared to gray infrastructure, green solutions SERVICE PROVIDER INVESTMENT IN face many constraints, which require proactive THE QUITO WATER FUND policy interventions. As a result, supportive institu- tions and robust and effective policy frameworks are essential for implementing high-quality projects Sometimes simple changes in policy and legal frameworks and catalyzing wider adoption on the global scale. can create major pathways for green infrastructure. The Most relevant policies worldwide were developed formation of the Quito Water Fund provides such an example. without green infrastructure in mind and can Quito’s drinking water comes from mountain ecosystems, inadvertently hinder or even prevent consideration which, despite protection efforts, have faced degradation of green infrastructure strategies. (Box 6.1 provides from urban encroachment and unsustainable farm practices. an example.) This in turn threatened both the quantity and quality of water flowing to the city. In the 1990s Ecuador’s park service was responsible for protecting these areas, but the trickle Proactive Government Support of available public funds to cover these efforts proved Is Essential insufficient to meet conservation needs. To guide efforts to create enabling conditions for Quito’s water utility and other key stakeholders recognized the need to establish a long-term ecosystem conservation effort systematic use of green infrastructure, these chal- to secure water supply. Stakeholders agreed that the creation lenges and others must be addressed (Credit Suisse of a mutual fund with the voluntary participation of multiple and McKinsey & Co. 2016; Bennett and Ruef 2016; water users, especially the water utility itself, was the ideal Ozment et al. 2016): ▪▪ approach to create a sustained source of funding to support conservation efforts well into the future. High transaction costs: Nature-based solu- One barrier to creating the fund was a law that prohibited tions inherently require collaboration across government organizations such as the water utility from sectors and sometimes across jurisdictions for investing in private financial mechanisms. However, with a implementation. These projects typically entail crucial change in the law governing public financing in 1999, more partnership and capacity-building efforts Quito’s water company was able to establish the Quito Water Fund (Fondo para la Protección del Agua, FONAG)—the first than gray infrastructure before being “shovel water fund in Latin America. ready,” since they often cross jurisdictions and Creating the fund unlocked significantly more finance for sectors and rely on untrained communities. green infrastructure than had been available through public Sectoral divides in policymaking and planning environmental funds alone. The fund launched with an initial can also increase the cost of implementing investment of $20,000 from the Quito water utility and $1,000 green infrastructure and reduce its viability. As from The Nature Conservancy. It has since grown to $12 a result, stakeholders must make a large finan- million, with an annual budget of approximately $2 million. cial and human investment in “soft” activities Quito’s electric company and beer and water companies have also contributed. The Quito Water Fund has protected 33,000 to protect the investment. hectares of key ecosystems and restored 2,500 hectares of degraded areas, and is now investing heavily in evaluating the hydrological impacts of these efforts. ▪▪ Jurisdictional spending restrictions: Many government departments and agen- cies don’t have the authority to spend money For more information, see Appendix A, Case 5.A. outside their jurisdictions. Yet, optimal green infrastructure project design follows ecosystem boundaries, not jurisdictional ones. For exam- ple, proposals to provide payments for a forest restoration project designed to improve water quality may be hindered because the project’s location does not fall within the jurisdiction of a single water utility or city. Brazil has over- come this challenge by establishing laws to facilitate cross-jurisdictional, statewide pay- ments for ecosystem services (see Appendix A, Case 1.B). 74 WRI.org ▪▪ Risk-reward profile: Many institutional investors, and even development partners, may Examples of Enabling Policies and Programs consider green infrastructure to be high risk and low reward. Despite the potential benefits Since green infrastructure is a relatively new con- of such projects, service providers charged cept, supportive national and subnational policies with securing water supply or managing risks are lacking in most areas of the world (Shames et al. to communities may default to better known 2017). However, several countries, including Peru, and tested solutions until more and better the United States, and China, are introducing policy long-term green infrastructure performance efforts that blaze a trail for other governments to data become available. Lack of systematic data follow. This chapter does not provide a compre- collection and data sharing at regional and hensive review and evaluation of these policies, but national levels can therefore inhibit planning rather points to some promising examples. and investment for much-needed solutions that For instance, Peru has dealt with water crises complement hard-pressed gray infrastructure related to El Niño for centuries, but climate change by harnessing natural systems. ▪▪ is exacerbating these challenges. Recognizing this Unpredictable cash flows and long lock- increased risk, in 2016, Peruvian lawmakers passed in periods: As discussed in Chapters 2 and a Sanitation Sector Reform Law. This requires 4, green infrastructure benefits involve some water utilities to earmark revenue from water tariffs inherent ecological uncertainty, are not easily for watershed conservation and climate change predicted, and sometimes require more time to adaptation, and to consider these strategies in offi- reach full functionality than gray infrastruc- cial budgeting and planning processes (Jenkins et ture. These characteristics can create chal- al. 2016). To date, this policy change has generated lenges with setting a payment schedule among $30 million for green infrastructure projects via beneficiaries. They can also pose challenges payments for ecosystem services, and an additional to investors seeking short- or medium-term $86 million for climate change mitigation and returns, since projects that involve ecological disaster risk management (Momiy 2018). restoration may take years for benefits to ac- crue. In a similar move that paired policy reform with enabling financing mechanisms, California passed As highlighted in the previous chapter, these kinds a bill that classified source watersheds as integral of challenges can be overcome through innovative components of water infrastructure. The law financing and by mission-driven investors who can represented a major change in the state’s legal and tolerate long payback periods. However, progres- financing landscape by allowing the use of green sive policies and/or regulator buy-in also underpins infrastructure projects to support source water- these successful finance innovations. More gener- sheds with the same types of financing typically ally, effective policy and finance strategies for green reserved for gray infrastructure (State of California infrastructure often go hand in hand. 2016). This innovation may motivate more invest- ments from utilities and other beneficiaries, as well as the state, in watershed health. One such early project is the Forest Resilience Bond, which utilizes investor capital and cost-sharing among beneficia- ries, including water utilities, to pay for benefits created by restoration activities, including a drop in the risk of severe wildfires. Integrating Green and Gray 75 China’s approach, through the National Program on and rangeland conservation and enhance America’s Sponge Cities, is to inspire public-private partner- natural capital (USDA 2016). The Conservation ships (PPPs) that unlock private finance for urban Title of the federal Farm Bill provides public fund- green infrastructure (Li et al. 2016). Under the ing for this program. program, the government provides funding and technical support to cities implementing urban A growing number of international agreements, green infrastructure to address growing water including the Paris Agreement, High Level Panel on scarcity and flood hazards. The program invests Water, Sustainable Development Goals, and Sendai between $59 and $88 million a year in each of its Framework for Disaster Risk Reduction, all include 30 pilot cities for three consecutive years as start-up high-level commitments to promote ecosystem- capital for introducing green roofs, permeable pave- based solutions, such as green infrastructure (see ments, and wetland restoration. China’s Ministry of Appendix B for more information). These commit- Finance created a PPP model by soliciting private ments are intended to result in country-level action, investment in construction projects and formalizing creating a window for more policy changes like the the government procurement process for PPPs. ones featured above. For example, among signa- tories of the Paris Agreement, 102 countries have Other countries have developed enabling condi- committed to restore or protect natural resources as tions for green infrastructure through research and an adaptation measure in their Nationally Deter- operational guidelines. For example, in 2016, the mined Contributions (NDCs) (IIED 2018). Nature- European Commission developed a green infra- based solutions were most commonly mentioned structure research and innovation policy agenda, in the NDCs submitted by low- and lower-middle- which called for targeted large-scale projects. income countries. Research and Innovation actions at the EU level are expected to foster an interdisciplinary stakeholder Since green infrastructure–support policies have community to build a stronger evidence base to typically been in place for a short time, and some guide green infrastructure activities (Faivre et al. have yet to be implemented, very few have been 2017). rigorously tested and proved effective. Where experiences with legislation have been monitored, Similarly, in 2009 the U.S. Department of Agricul- the results show that green infrastructure policy ture created the Office of Environmental Markets implementation requires substantial adaptation (OEM) to catalyze the development of ecosystem over time to achieve its goals (see Box 6.2). Fol- services. OEM aims to support uniform standards lowing the progress and outcomes of these policies and market infrastructure that will facilitate will provide better insights on how to improve their market-based approaches to agriculture, forest, impact. Figure 6.1 | Agroforestry Can Boost Farm Productivity While Conserving Soil and Water Image: WRI/Flickr. 76 WRI.org General Principles for Governments BOX 6.2 | POLICY INNOVATION SUPPORTS To facilitate the needed global transition toward GREEN INFRASTRUCTURE IN national enabling conditions that support green as COSTA RICA well as gray infrastructure, public policy should ide- ally include the following elements (adapted from Historically, land-use changes in Costa Rica were primarily Shames et al. 2017; Ozment et al. 2015): driven by clearing lands for agricultural needs and for the ▪▪ development of transportation infrastructure networks. While Incorporate sustainable landscape vi- forest covered nearly 80 percent of the country’s land area in sion into strategies and policies. A high- the 1940s, forested area had dropped to roughly 40 percent level vision can help mediate common conflicts by the 1980s. By 2013, however, Costa Rica’s forest cover had between economic growth and conservation rebounded to approximately 50 percent of the country’s land interests. Governments can act by first creating area (Porras et al. 2013). This was the result of a policy mix that evolved over the course of the past century, including, a shared vision of the multiple goals of sus- for example, secure land titles for landowners (Thacher et al. tainable landscapes and then embedding that 1996); legally protected lands (Porras et al. 2013); deforestation vision into relevant jurisdictional strategies. bans; and an evolution of efforts to provide financial ▪▪ Harmonize sectoral plans to incorporate multiple goals for harnessing natural incentives for restoration (Daniels et al. 2010; Bennett and Henninger 2010). As one component within this suite of policies, Costa Rica systems. Sector-siloed government plan- set up one of the first national Payments for Ecosystem ning processes often hinder projects that seek Services programs in the world. In this program, water users to achieve multiple, cross-sector objectives. such as hydropower companies pay upstream landowners Development partners can help policymakers within the same watershed to manage land in a way that recognize potential synergies by supporting the supports water management goals. This program enabled alignment of green infrastructure objectives, the country to move beyond relying solely on tax revenue funds to incorporate user/beneficiary finance for ecosystem budgets, and capacities across agencies respon- services stewardship. Between 1997 and 2017, more than sible for different sectors, and by facilitating 17,000 contracts were signed with landowners to carry out a and rewarding interagency collaboration. To range of forest restoration and conservation practices on a operationalize such approaches, governments cumulative 1.2 million hectares. should promote interagency coordination that Costa Rica’s PES program has adaptively managed its minimizes red tape. implementation strategy to achieve the intended goals. ▪▪ Several years ago, program evaluations critiqued that PES was Create incentives for local actors to doing little to slow deforestation. As a result, the program has participate through policy and public adopted new approaches, utilizing more advanced tools and finance. Governments can earmark public mechanisms to prioritize efforts in high-impact regions and to funds for explicit green infrastructure pro- better ensure green infrastructure performance (Porras et al. grams or set policy that generates funds from 2013; Blackman and Woodward 2010). other sources, such as land value capture, water For more information, see Appendix A, Case 1.A. tariffs, and insurance. This can include align- ing public incentives with local or privately led projects to maximize benefits, as well as establishing national payments for ecosystem services or land acquisition programs. ▪▪ Encourage or require decision-makers to consider green infrastructure op- tions in planning processes. This could take the form of new guidance or policy, such as providing criteria for infrastructure projects to include evaluations of green options, or the adoption of building codes or zoning laws that require dedicating space to green elements. Integrating Green and Gray 77 ▪▪ Empower civil society to build partner- ships. Effective green infrastructure projects ▪▪ Participate directly in green infrastruc- ture partnerships. In most successful need locally legitimate multistakeholder bodies cases to date, governments play a variety to negotiate conflicts and trade-offs, identify of important roles in green infrastruc- opportunities for synergistic action, and de- ture partnerships. These include hosting termine the most appropriate spatial-targeting stakeholder meetings, engaging key stake- and sequencing of investments. Effective public holders, bridging inputs from public agencies, policy should empower all relevant stakehold- advising on policy options, using their outreach ers, particularly the less powerful ones, to mechanisms to raise public awareness, and participate in these local decision-making legitimizing support for the multistakeholder processes. platform. ▪▪ Recognize land and resource rights and responsibilities. Governments can play an ▪▪ Build the knowledge and technical capacity to implement green infrastruc- important role in recognizing and enforcing lo- ture. Planning and managing projects that cally legitimate systems of rights and responsi- harness natural systems requires a unique bilities that govern who can initiate and benefit body of knowledge and technical capacity. Col- from green infrastructure projects. It is also lecting baseline data on ecosystem health and important to set policy that protects communi- following trends in environmental degradation ties and landowners to ensure they receive fair like deforestation, drought, and restoration, compensation for the marketable ecosystem makes it easier to determine the suitability of services they provide. green infrastructure in meeting local needs and ▪▪ Develop a regulatory framework that supports green infrastructure in plan- priorities, as well as to monitor project impacts and promote shared learning. To support this ning processes and as a compliance process, governments can develop and dissemi- mechanism. These frameworks need to nate information through research and data support green infrastructure broadly, and collection programs, as well as generate and provide enforceable and well-coordinated rules share information on implementation. Other at landscape scale. To accomplish this, govern- important investments include building the ments can work to ensure that land-use zoning capacities of service providers, governments, and planning reflects agreed landscape goals; development partners, and other stakeholders provide the resources and capacities to imple- to facilitate collaborative processes, and devel- ment and enforce laws and regulations; and oping metrics that measure multiple outcomes. coordinate regulations across sectors. Gov- ernments can signal, for example, that green infrastructure can be used to comply with environmental requirements of building codes for urban settings, safety regulations for water supply, and environmental impact mitigation plans for all services. 78 WRI.org Role of Development Partners atic Country Diagnosis” and “Country Partnership Framework.” This type of high-level analysis and Development partners can support enabling policy dialogue can help highlight the linkages environments for green infrastructure by promot- between green and gray infrastructure. ing the above principles to partner governments. In addition, the development community can help Sector strategies and master plans: Develop- governments overcome barriers to implementation ment partners often finance national-level stud- by supporting the following: ies that focus on strategic sector-level planning. ▪▪ Joint investment planning among stakeholders Relevant examples include national environmental, ▪▪ agricultural, and water plans. In addition, they Development of supportive market and trade often support the formulation of infrastructure rules master plans; for example, for water or power utili- ▪▪ Knowledge and technical capacity to implement green infrastructure ties. These studies—which are often formulated and overseen by development partners—provide ideal ▪▪ Development of fiscal policy to incentivize such solutions opportunities to promote the adoption of support- ive policies. Development partners can deploy specific instru- Policy financing: Development partners can also ments to help promote reforms: promote supportive policies and financing mecha- nisms using policy finance instruments. These Country program documents: Development instruments release financing to a country’s general partners typically prepare national program docu- budget based upon government adoption of specific ments to guide their interventions with client coun- agreed-upon policies and often focus on policies tries in collaboration with national governments. related to the environment, agriculture, and other For example, the World Bank prepares a “System- natural resource management issues. Figure 6.2 | Green Roofs Help Control Urban Flooding While Also Reducing Heating and Cooling Needs for Buildings Image: DJANDYW.COM/Flickr. Integrating Green and Gray 79 THE WAY FORWARD The general value proposition for integrating green and gray infrastructure is clear: a “triple-win” of being good for the economy, good for communities, and good for the environment. By opening new financing opportunities, seeking to engage coalitions of active citizens and engaged institutions, and harnessing nature’s assets, the development of next-generation infrastructure can play a role in building a better future. Integrating Green and Gray 81 Until now, a key bottleneck to its widespread use ments, service providers, and development partners has been the need for guidance and information should begin to routinely consider opportunities to to design and evaluate green infrastructure on the identify and integrate green infrastructure options same footing as gray infrastructure. This report in the planning process. They can use the frame- moves beyond the common discourse of nature- work provided in Chapter 1 of this report to under- based solutions in isolation, showing how com- stand key questions to ask when screening for green bining green and gray infrastructure often offers infrastructure opportunities in high-level planning technical, social, and economic advantages. In processes, such as river basin plans, urban master providing such guidance, this report should enable plans, or infrastructure master plans. governments, service providers, and their develop- ment partners to adopt more effective green-gray Utilizing advanced tools and guidelines to project strategies. design and assess the performance of green infrastructure. New technology is reducing the The lessons extracted from the case studies and the cost of data collection and improving the perfor- robust literature base provided in this report can mance of modeling and monitoring tools; this can help inform their infrastructure programs and spur help increase confidence in the performance of development of new projects. Using the framework green infrastructure. At the same time, the formula- provided will enable stakeholders to undertake a tion of new operational guidelines and best practice structured and objective appraisal of project risk manuals will provide tools to guide the formulation and return, so that a more vigorous case for invest- of green-gray approaches. This report points out ment in combined approaches can be made. some limitations in current tools and guidelines— especially in ensuring that social support for green While this guidance has immediate use, more infrastructure is prioritized, as well as for consis- work must be done to ease the process of planning, tent and high-quality reporting on observed green appraising, and implementing green infrastructure. infrastructure costs and performance. Consistent The level of complexity and uncertainty, together monitoring and reporting of green infrastructure with the need to prioritize social support for green performance would enhance the evidence base, infrastructure and engage in broad multisector improve design, and result in better projects and partnerships, can be unchartered territory for more widespread adoption. service providers and their development partners. The most suitable approach depends largely on the Leveraging partnerships to bring resources specific context. For example, a green infrastructure and skills to the infrastructure planning approach may be technically optimal in one context process. While this report was led by the World and ineffectual in another. Likewise, the social Bank and the World Resources Institute, many dynamics in one community may allow for win-win more organizations have contributed to the dis- green infrastructure, while another community course and many more still need to join in. These could reject the same proposal. stakeholders include approving bodies, civil soci- ety organizations, project beneficiaries, potential In addition to the guidance provided in this report, co-investors, and technical experts. Integrating governments, service providers, and development green and gray infrastructure requires buy-in from partners can together facilitate accelerated adop- engineers, economists, financial experts, environ- tion of green infrastructure by undertaking the mental and social specialists, and most importantly following: policymakers. As a first step, the discourse on green infrastructure must be expanded beyond the envi- Routinely considering opportunities to ronmental sustainability realm to include engineer- integrate green infrastructure approaches ing circles, and it must permeate policy discussions. in the planning process. As a first step, govern- 82 WRI.org Engaging policymakers to promote green- gray approaches through policies, laws, and ▪▪ Better monitoring of project performance, along with improved scientific knowledge regulations. Toward this goal, an important step is crafting policy statements that explicitly recog- ▪▪ Better documentation of experiences to deter- mine what works, what doesn’t, and what’s the nize the role of natural systems in safeguarding and fastest way to make progress ▪▪ enhancing infrastructure at the national, regional, municipal, and utility/company levels. While Better economic analysis that incorporates en- this report highlighted several examples of policy vironmental and social cobenefits, as well as the reforms aimed at unlocking investments, these values of resilience and reversibility types of policies are still relatively rare, and their New efforts that build on this report will in turn effectiveness has not been systematically studied. reveal additional lessons that further enhance green Such policy evaluations are necessary to define infrastructure design and assessment practices. best practices and inform future efforts around the Ideally, future projects will draw on the guidance in world. this report to consistently assess costs and benefits of green infrastructure in ways that can be syn- Building capacity within development part- thesized to inform future projects. These projects ner organizations, planning agencies, and will also generate new lessons on financing green service providers to understand the poten- and gray infrastructure, develop best management tial of green infrastructure. For example, the practices, and provide insights on how best to World Bank, with funding from the Global Facility pursue combined solutions. for Disaster Reduction and Recovery, is developing targeted communication materials that describe Project developers should plan performance nature-based solutions to address common hazards, monitoring and evaluation early in the process, and and providing guidance to countries on where to account for monitoring costs in their budget. Devel- apply these solutions (World Bank 2017b). opment partners can share practical case studies of both successful and unsuccessful experiences that Looking Ahead: Learning New Lessons help others understand why and how to consider and Closing Knowledge Gaps green-gray approaches. Other key stakeholders such as civil society and government researchers As policymakers, service providers, and their devel- can help address these bottlenecks by targeting opment partners start to mainstream green-gray research to fill knowledge gaps identified through approaches, they are likely to encounter additional existing project experiences. bottlenecks that will need to be addressed. An important issue is the need to develop a more com- As more governments, service providers, and their prehensive and robust body of scientific knowledge development partners draw on lessons learned, to inform the selection and design of green infra- the integration of green and gray solutions will structure strategies. The report points to key data herald the next generation of infrastructure, which and research gaps that may prevent widespread performs better, generates multiple benefits, and adoption of green infrastructure. Plugging these increases climate resilience. gaps requires the following: Integrating Green and Gray 83 APPENDIX A | Services That Can Integrate Green Infrastructure and Related Case Studies APPENDIX A: SERVICES THAT CAN INTEGRATE GREEN INFRASTRUCTURE AND RELATED CASE STUDIES This appendix features green infrastructure in the context of the Table of Contents infrastructure services listed below. For each service, two case 86 1. Water Supply and Hydropower studies are provided—one from the World Bank portfolio (denoted by an asterisk) and one from outside the World Bank portfolio. The cases 88 1a. Payments for Ecosystem Services to Support Hydropower illustrate how projects have integrated green infrastructure into gray Operations in Costa Rica infrastructure systems, or substituted gray infrastructure components 90 1b. Targeted Green Infrastructure for Source Water Protection with green infrastructure in a wide variety of contexts and geogra- in Brazil* phies across the world. 92 2. Coastal Flood Management and Erosion Control Gretchen Ellison led the development of Appendix A with support from the authors and contributions from field practitioners and World 94 2a. Piloting Mega Sand Nourishment for Coastal Flood Bank specialists. Management in the Netherlands 96 2b. Using Mangroves and Sea Dikes as First Line of Coastal Defense in Vietnam* 98 3. River Flood Management 100 3a. Integrating Green and Gray Infrastructure for River Flood Management in the United States 102 3b. Combining Green and Gray Infrastructure for Flood Risk Management at the River Basin Scale in Poland* 104 4. Urban Stormwater Management 106 4a. Innovative Financing for Urban Green Infrastructure in the United States 108  onserving Wetlands to Enhance Urban Flood Control 4b. C Systems in Sri Lanka* 110 5. Drought Management 112 5a. User-financed Ecosystem Conservation for Water Security in Ecuador 114 5b. Recharging Aquifers to Combat Drought in Somalia* 116 6. Agriculture, Irrigation, and Drainage 118 6a. Community-led Watershed Restoration in India 120 6b. Active Soil Management for Water Conservation in China* Integrating Green and Gray 85 OVERVIEW | Water Supply and Hydropower 1. WATER SUPPLY AND HYDROPOWER The Challenge What Role Can Integrating Green and Gray Service providers and government agencies respon- Infrastructure Play? sible for water supply and hydropower often face Targeted protection, restoration, or management of disruptions and management challenges due to watersheds and natural landscapes in headwaters upstream ecosystem degradation. These challenges upstream of water intake points can help improve include the following: water quality, sediment control, and timing and ▪▪ Siltation and pollution, which can occur when catchment areas are unsustainably man- seasonal flows of water (Gartner et al. 2013). Examples include the following: aged and lack protective vegetative cover, such as with overgrazing or wildfires. Surface water ▪▪ Forests, wetlands, and riparian buffers. Conservation or restoration of these ecosystems runoff and erosion carries increasing amounts can help stabilize soils and combat erosion; of sediment, nutrients, pesticides, fertilizers, preserve their ability to store water and aug- and other pollutants or debris into rivers and ment flows; and filter pollutants, preventing reservoirs. Resulting turbid waters can create their entrance into the water supply. costly wear and tear on hydropower dams and turbines, and even require dredging because of reduced reservoir storage capacity. ▪▪ Active forest management practices. Re- turning a forest to healthy conditions through ▪▪ active management, such as mechanical thin- Impaired quantity and timing of flows, ning, removal of small trees and brush, and which can occur when a watershed’s ability to prescribed burning can help reduce overgrowth capture, infiltrate, and store water is inhibited, and wildfire risk. Burned lands reduce vegeta- such as with deforestation. Landscape deg- tion and expose soil, resulting in an increased radation can damage the natural sponge-like risk of flooding and erosion. characteristics of forests, grasslands, wetlands, and riparian areas, causing surface water runoff and reduced water storage. Groundwater ▪▪ Reconnecting rivers to floodplains. Set- ting back or removing levees at the edge of river channels can help increase channel capacity recharge, maintenance of stream flows during and reduce exposure to floodwaters and erosion dry seasons, and flood risks can be affected risk. Providing more room for meandering and (McDonald and Shemie 2014). healthy floodplains enables the creation of for- These challenges can be costly. Watershed degrada- est and wetland habitats that store water and tion impacts drinking water for more than 700 mil- decrease sedimentation downstream (UNEP et lion people, and costs global cities US$5.4 billion in al. 2014). water treatment annually (McDonald and Shemie Green infrastructure can provide hydrological 2014). Worldwide annual costs to replace lost reser- benefits with significant savings in avoided cost. For voir storage capacity due to sedimentation—in the example, New York City has avoided building a new form of constructing new or raising existing dams— filtration plant that would have cost the city $8 to are estimated to be $10 to $20 billion (Palmieri et $10 billion by making a $1.5 billion investment in al. 2003). Cost-effective, sustainable management its 2,000 square-mile upper watershed. This invest- of watersheds and reservoir catchment areas to help ment has also resulted in the injection of $100 prevent reservoir sedimentation from occurring million into the rural economy through supple- may be more economically desirable. mental income to farmers and landowners involved in efforts to conserve the watershed (UNEP et al. 2014). 86 WRI.org Considerations Ensuring a diverse funding base is important for securing sufficient initial and long-term funding for Programs to preserve upper watersheds for source these programs (Ozment et al. 2016), and requires water protection and the longevity of hydropower understanding barriers to scaling watershed invest- reservoirs and facilities involve a range of stake- ments (Bennett and Ruef 2016). Projects that can holders. Stakeholders can include downstream demonstrate both the quantifiable ecological ben- beneficiaries such as communities, businesses, and efits received as well as financial returns for dollars utilities that buy or make payments for watershed invested can help leverage a larger pool of dollars services; upstream landholders that represent (Bennett and Ruef 2016). public, commercial, collective, and private inter- ests; and investors that contribute initial capital to design and begin projects. Figure A1 |  Riparian Buffer Offers a Natural Filtration System That Helps Prevent Pollutants from Reaching A the Water Stream Source: USDA NRCS Texas/Flickr. Integrating Green and Gray 87 Payments for Ecosystem Services to Support Hydropower CASE STUDY 1A Operations in Costa Rica LOCATION: Nationwide Through national policy, Costa Rica implemented a voluntary payment for an ecosystem services program that directly incentivized landowners to restore and conserve forestland, preserving downstream reservoirs and the health of the country’s hydropower generation infrastructure. Background The vast majority of Costa Rica’s land area was once forested. In 1943, 77 percent (3.9 million hectares [ha]) of the country was forestland, but by the late 1980s this figure had fallen to 41 percent—less than 2.1 million hectares—and Costa Rica had one of the highest deforestation rates of any nation in the world (Buckingham and Hanson 2015a; Bennett and Henninger 2010). The primary causes of deforestation were clearing land for crops and livestock, and the country’s rapidly developing road network. Deforestation upstream of hydro- power dams was resulting in soil erosion and sedimentation of reservoirs, threatening reservoir capacity and the deterioration of hydropower turbines in a country that was relying upon hydropower for three-quarters of its electricity (Buckingham and Hanson 2015a). In 1996, Costa Rica’s Forestry Law 7575 established a National Fund for Forest Financing (Fondo Nacional de Financiamiento Forestal, FONAFIFO) overseen by the Ministry of Environment and Energy (Ministerio de Ambiente, Energía y Telecomunicaciones, MINAET) to facilitate payment for ecosystem services (PES) for forest conservation and restoration. Monitoring of compliance by landowners participating in the FONAFIFO PES program is the responsibility of MINAET and the National System of Protected Areas (Sistema Nacional de Areas de Conservación, SINAC). Integrating Green and Gray Infrastructure Between 1997 and 2017, more than 17,000 contracts were signed with landowners to carry out a range of for- est restoration and conservation practices (FONAFIFO 2018). At the end of 2017, more than 280,000 hectares were enrolled in the program (Table A1). As of 2005, 35 percent of lands participating in the PES program were in a watershed with downstream users of hydrological services—drinking water and hydropower facili- ties—and thus classified as important for water benefits, while 30 to 65 percent were in biodiversity priority areas (Pagiola 2008) country-wide program of payments, the PSA program. The PSA program has worked hard to develop mechanisms to charge the users of environmental services for the services they receive. It has made substantial progress in charging water users, and more limited progress in charging biodiversity and carbon sequestration users. Because of the way it makes payments to service providers (using approaches largely inherited from earlier programs. 88 WRI.org Table A1 | Hectares Enrolled in the Payment for Ecosystem Services Program (by Activity) ACTIVITY HECTARES ENROLLED AT END OF YEAR 2017 Forest conservation 252,673 Forest management 1,800 Forest plantation 13,235 Natural regeneration 12,617 Agroforestry (trees) 8,044 Total hectares              288,369 Source: FONAFIFO 2018. Payments for Ecosystem Services Costa Rican efforts to finance forest restoration and conservation have evolved over time, from tax deductions, to special loans, to direct payments (Daniels et al. 2010; Bennett and Henninger 2010). Today, FONAFIFO pays private landowners annually per hectare—in accordance with negotiated rates based on the type of green infrastructure implemented over a contracted period of time—to conserve or restore forest cover for the hydrological, biodiversity, and other environmental services benefits they provide. For example, landowners upstream of hydropower reservoirs and dams are paid by FONAFIFO to conserve and restore their lands to avoid the costly consequences of downstream siltation, reservoir dredging, and wear and tear on hydropower facilities. The 2012 annual payment/ha was $50 for forest management activities, but was $80 for forest conservation activities in zones classified as important for water benefits (Porras et al. 2013). Between 1997 and 2012, FONAFIFO distributed approximately $340 million (Porras et al. 2013). FONAFIFO has received financing from a variety of sources since 1997. This includes grants and loans from bilateral and multilateral donors such as the German International Development Bank, the Global Environment Facility, and the International Bank for Reconstruction and Development; voluntary payments from downstream beneficiaries like hydroelectric facilities; and dedicated revenue from the Government of Costa Rica’s fuel and water taxes (Blackman and Woodward 2010). For example, to support contracted forest conservation pay- ments in 2009, the hydropower company Enel contributed $16 per hectare/year to FONAFIFO, and fuel and water tax revenues contributed $57 per hectare/year to FONAFIFO (Porras et al. 2013). Insights for Advancement The FONAFIFO PES program has improved watershed health, helped encourage the longevity of hydropower facilities, increased farmer income, and promoted sustainable agricultural practices (Porras et al. 2013). However, program evaluators have questioned the additionality of the program—that is, would these forestry efforts have happened anyway without incentive payments—and pointed to the need to improve targeting of payments to halt deforestation and circumvent threats to hydrological services. The large majority of land enrolled in the program has been determined ill-suited for agriculture, pasture, and other cleared land uses, calling into question whether the land would have remained forested absent the PES (Blackman and Wood- ward 2010). Furthermore, analyses of forest cover data from satellite imaging have shown that the program has done little to slow deforestation, largely due to the fact that land considered to be at “high risk of defores- tation” is not being volunteered into the program (Blackman and Woodward 2010). Voluntary PES programs provide incentives, but do not mandate that beneficiaries or landowners protect green infrastructure in the interest of long-term planning horizons. Costa Rica’s experience sheds light on the opportunity to improve program effectiveness by targeting areas that provide important environmental services and are at significant risk of deforestation. Integrating Green and Gray 89 Targeted Green Infrastructure for Source Water CASE STUDY 1B Protection in Brazil LOCATION: State of Espírito Santo, Brazil Struggling with poor water quality, the state of Espírito Santo implemented green infrastructure on target watersheds to restore and protect upstream forests through a range of interventions, including Payments for Ecosystem Services (PES) and improved land management. Background The state of Espírito Santo (SES) is trying to keep pace with rapid urbanization in the Greater Vitória Metropolitan Region (GVMR), which holds close to half of the state’s 3.5 million people and generates 62 percent of its GDP. This growth has left the state struggling to provide adequate access to water and sanitation services, and to ensure the quality of water resources. Vulnerabilities upstream are drivers of the current water gap: watershed degradation is resulting in high levels of erosion, while insufficient coverage of sewerage collection and treatment is resulting in contamination. As a response, the Reflorestar Program began in 2012 under the Espírito Santo Biodiversity and Watershed Conservation and Restoration Project. It continues under the current Espírito Santo Integrated Sustainable Water Management Project, approved in 2014 and expected to close in 2021. The project focuses on select criti- cal watersheds in south-central Espírito Santo: the watersheds of the Jucu and the Santa Maria da Vitória Rivers, which comprise 9 percent of the state’s territory, and the Mangarai River subwatershed, a major source of silt loads affecting water quality at nearby treatment plants. The Espírito Santo Integrated Sustainable Water Management Project aims to improve sustainable water resources management, and to increase access to sanitation in the state territory. The project focuses on strength- ening the state’s water sector institutions; providing increased wastewater collection and treatment services; sup- porting reforestation and sustainable land management practices; and improving the state’s capacity to identify, monitor, and prepare for disaster risks. Integrating Green and Gray Infrastructure The Espírito Santo Integrated Sustainable Water Management Project implements activities focused on informa- tion and institutions, infrastructure development and connectivity, and green infrastructure solutions. The bulk of its green infrastructure solutions are comprised in Project Component 3: Watershed Management and Restoration of Forest Cover, which aims to improve the quality of surface and coastal waters through coordinated interventions in selected watersheds. These interventions aim to ultimately result in better quality drinking water in the GVMR, as a large portion of the areas proposed for intervention are upstream sources of water supply to the region. 90 WRI.org Sediment Reduction The Watershed Management and Restoration of Forest Cover project component supports two key programs to reduce sedimentation and improve water quality: ▪▪ Reflorestar Program ($16.2 million): The Reflorestar Program implements a Payments for Ecosystem Services (PES) scheme to encourage conservation of forest cover and restoration of degraded ecosystems in the watersheds upstream of the GVMR. The land uses supported by Reflorestar tend to increase infiltration, reduce runoff, and limit access to rivers by livestock, thus reducing erosion, and hence sediment loads. ▪▪ Mangaraí River Pilot Project ($7.4 million). The Mangaraí River subwatershed is a major source of silt loads affecting the water quality at its Santa Maria and Carapina treatment plants. The Mangaraí River Pilot Project seeks to reduce silt loads originating in this subwatershed through a holistic approach that combines reforesta- tion and improved land management with a range of other interventions, such as improvement to roads and sanitation in the watershed. The Secretariat of Water and Environment for the State of Espírito Santo (Sec- retaria de Estado do Meio Ambiente e Recursos Hídricos, SEAMA) estimates indicate that recovering forest cover in 10,000 hectares could result in 20 percent of sediment reduction lost (SEAMA 2018). This project component has an estimated net economic benefit of $13 to $18 million, and an internal rate of return ranging from 12.7 to 16.8 percent. Its main beneficiaries are landowners, who receive payments for environmental ecosystem services, achieve regulatory compliance, and generate higher income from more productive practices. Further, if the intervention is able to stabilize turbidity levels, the water utilities and hydropower companies and even the port of Vitória would benefit from sediment retention upstream. While recent estimates indicate that the water utility CESAN (Companhia Espírito Santense de Saneamento) would save a total of R$15.5 million over 30 years by saving in average input costs, avoiding future investments in new filtering equipment, or reducing mainte- nance costs in Carapia alone; the port of Vitória would also save by avoiding new dredging operations (Pagiola et al. forthcoming). Subsequently, consumers also benefit from avoided costs of service providers, which could otherwise result in higher prices and tariffs. Insights for Advancement The challenges and successes of the Espírito Santo Integrated Sustainable Water Management Project have been influenced by both policies and incentives. Early on, the changing legal and political landscape generated confu- sion, leading farmers who had already signed up to the PES program to unsubscribe when they thought they would be fined for noncompliance. Once the legislation was formalized, farmers re-enrolled. In addition, the program garnered political support from both the governor and secretary of environment. Meanwhile, the multilevel incen- tive structure was another main driver for participation and success of the program. As mentioned above, landown- ers, the state, and water users all had something to gain from the program. Other drivers for success included the following: ▪▪ Targeted restoration. Although politicians wanted to avail themselves of the program funds for all of their constituents, it was important that the program focus on priority areas where they would have the largest con- servation return on reduced sediment for each dollar spent. ▪▪ Local participation. It was important to have the local population provide feedback on the program. This brought not only legitimacy, but also local ownership. ▪▪ Outreach and education. With the aim to engage citizens of all ages, the project published a successful series of comic books about watershed conservation geared toward children and distributed these in schools. ▪▪ Technical staff. A committed and capable technical staff is fundamental to obtaining results on the ground. ▪▪ Leadership. The program has a well-prepared, capable, and committed leader who is supported at the high- est level by the secretary of environment. This PES law in the State of Espírito Santo has since been used as a model throughout Brazil. With the project’s support, the SES intends to expand its Reflorestar Program to 21 municipalities and restore approximately 3,850 hectares of forest. Insights into the challenges and drivers for success from experience with this project can help inform successful applications in other geographies. For more information, see World Bank (2014). Integrating Green and Gray 91 OVERVIEW | Coastal Flood Management and Erosion Control 2. COASTAL FLOOD MANAGEMENT AND EROSION CONTROL The Challenge What Role Can Integrating Green Infrastructure Coastal areas around the world are vulnerable to Play? damages to built structures, livelihoods, and ecosys- Green infrastructure can complement conventional tems inflicted by risky development patterns, rising gray infrastructure to protect communities and buf- seas, and intensifying weather events, posing chal- fer against coastal waves and erosion. For example: ▪▪ lenges to coastal management authorities and the communities they protect. Some challenges these Mangroves and salt marshes. Mangroves service providers face include the following: and salt marsh ecosystems can help increase ▪▪ water storage, prevent erosion by stabilizing Inundation of low-lying areas, which can sediment, and decrease wave heights and veloc- occur when wind tides, coastal storms, and ity. Salt marshes have been shown to reduce surges create abnormal rise in seawater that nonstorm wave heights by an average of 72 per- ultimately submerges the coast and hinterland cent, while mangroves can achieve a 31 percent in floodwater. As sea levels rise, storm flooding reduction (Narayan et al. 2016). can be exacerbated and permanently inundate surface areas. ▪▪ Coral and oyster reefs systems. Coral and ▪▪ oyster reef systems can help break waves and Saltwater intrusion and higher water dissipate their energy before they reach the tables, which can occur as rising seawater coastline. Coral reefs, for example, are esti- pushes its way inland below the surface. Invad- mated to reduce nonstorm wave heights by an ing saltwater increases the salinity of estuaries average of 70 percent (Narayan et al. 2016). and moves into freshwater aquifers, contami- nating drinking water supplies and decreas- ing freshwater storage in aquifers. As water ▪▪ Sandy beaches and dunes. Maintaining robust beaches and dunes, for instance, with artificial replenishment, can help prevent tables are forced closer to the surface, risk for waves and storm surges from breaching inland groundwater flooding and exacerbated flooding or developed areas. Vegetation on dunes can from storm surges and heavy rainfall increases also help prevent erosion by trapping and stabi- (Barlow 2003). ▪▪ lizing sand. Shoreline and dune erosion, which can occur when waves, currents, and wind remove sand and rock from the beach system. Storm ▪▪ Seagrass. Seagrass can help stabilize sedi- ment and regulate water flow and currents that cause coastal erosion in shallow areas. Sea- surges significantly retreat shorelines and grass beds have been estimated to reduce non- challenge the integrity of dunes, carrying sand storm wave height by an average of 36 percent away to deposits offshore (USGS 2017). Surface (Narayan et al. 2016). area elevation ultimately subsides, encroaching toward the sea. Coastal wetlands in the United States are estimated to provide $23.2 billion/year in storm protection Consequences can be catastrophic. In 2005, aver- services alone (Costanza et al. 2008). Green infra- age losses from flooding in more than 130 of the structure can provide a wealth of valuable coben- world’s largest coastal cities were roughly $6 billion efits all of the time. From fishing, tourism, biodiver- per year. By 2050, losses are expected to increase sity, and recreation to water quality and storage or to at least $52 billion per year, and could be as high storm surge buffers, it presents an array of services as $1 trillion per year because of subsidence and relevant for coastal development and planning deci- climate-related impacts (Hallegatte et al. 2013). sions (Sutton-Grier et al. 2015). 92 WRI.org Considerations (Waite et al. 2015). The effectiveness of different designs in providing particular services must also Data continue to emerge that shed light on green be better understood to comprehend what level of infrastructure’s resilience and protective benefits protection can be expected, in varying contexts and against coastal challenges, and economic valua- geographies (Sutton-Grier et al. 2015). tion has contributed to better-informed decision- making about coastal resources and development Figure A2 | Coastal Mangroves that Help Stabilize Sediment and Attenuate Waves Source: WRI/Flickr. Integrating Green and Gray 93 Piloting Mega Sand Nourishment for Coastal Flood CASE STUDY 2A Management in the Netherlands LOCATION: Province of South Holland A first-of-its-kind mega artificial sand nourishment project has been constructed to pilot whether its innovative sand nourishment design can maintain the coastal equilibrium of the Delfland Coast, building primary defense dunes and requiring fewer regular nourishment operations over a 20-year time horizon. Background The bedrock of the Dutch coastal foundation is its sand stocks. The sand shoals extend seaward when sediment supply exceeds demand, and the coastline recedes when less sand is available than needed to sustain it. To stay in equilibrium, a baseline volume of sand needs to be maintained in the coastline relative to sea-level rise (Taal et al. 2016). Ensuring there is enough sand in the coastal zone prevents structural erosion of the coastal foundation as the wind, waves, and tide spread sand across the surf, beaches, and sand dunes. The coastal equilibrium is actively managed today by the Rijkswaterstaat (RWS), the Dutch Ministry of Infrastructure and Water Management, to build robust sand dunes for primary sea defense against coastal flooding in the hinterland (Taal et al. 2016). In 2011, the RWS constructed its first-ever “mega” sand nourishment pilot project on the Delfland Coast, called the Sand Motor. The €70 million project was financed by the Province of South Holland (the Province) and RWS through the EU Regional Development Fund “Kansen voor West” Program (Rijkswaterstaat 2013; Bontje and Slinger 2017). Description of Green Infrastructure and Interim Results Every year, the RWS conducts artificial sand nourishment operations to maintain the baseline volume of sand required in the coastal foundation across different stretches of the Dutch coastline. This consists of dumping required volumes of sand dredged from offshore deposits precisely when and where they are needed underwater on the foreshore (Taal et al. 2016). From 2005 to 2015, annual nourishment operations for regular coastal main- tenance on the Province coastline resulted in 15.4 million cubic meters (m3) of sand deposited (Bontje and Slinger 2017). Over eight months in 2011, 21.5 million m3 of sand was dredged from 10 kilometers (km) offshore and deposited for the construction of the Sand Motor. It was created to pilot whether dumping an excess volume of sand in a single operation is more effective at enhancing coastal protection—by growing sand dunes and the shore- line—in the long run, while needing fewer regular nourishment operations for the maintenance of the Delfland Coast over a 20-year period (Taal et al. 2016). 94 WRI.org After five years in existence, the project monitoring area still contained an extra volume of sand equivalent to 95 percent of the volume deposited at construction, with 80 percent of that sand within the contours of the sand body created in 2011. The shoreline had grown to the north and south, with the Sand Motor narrowed by 260 meters from its original two-kilometer width, but dunes in the project area had grown less quickly than in standard nour- ishment operations. This is thought to be in part because sand was getting captured by the dune’s lake and lagoon. Due to its initial performance, the Sand Motor is expected to “live” even longer than 20 years (Taal et al. 2016). Long-term Challenges It will be difficult to isolate the effects of the Sand Motor on long-term coastal protection with regard to dune devel- opment. When the Sand Motor was constructed, two regular sand nourishment operations, totaling 2 million m3 of sand deposited were also implemented on either side of the Sand Motor. Additionally, in 2010 the Delfland Coast sand dunes were reinforced and broadened with 17.6 million m3 of sand (Taal et al. 2016). The area was already considered in safe condition when the Sand Motor was constructed, and any protection benefits from the Sand Motor would be additional. But, the effects of these interventions cannot be distinguished from one another and have to be considered in conjunction. The Sand Motor’s impact on hydrology and freshwater supplies, and associated extra costs to mitigate these risks, are other effects to consider. There was concern prior to construction that the project would negatively impact groundwater flows by shifting the boundary between salt and freshwater, ultimately affecting vegetation, biodi- versity, and drinking water supplies. To prevent this, the Province and local water utility agreed to install water extraction wells and a drainage facility (Taal et al. 2016). The costs of these additional interventions to prevent adverse effects of meganourishment operations the size of the Sand Motor were not accounted for in the €70 mil- lion project price tag (Bontje and Slinger 2017). Insights for Advancement Over a 20-year period, less sand in total would have been required to maintain the baseline volume of sand needed by the Delfland Coast using regular sand nourishment operations than has been used for the Sand Motor, which is equivalent to what is needed to maintain this stretch of coastline for a period of 50 years (Taal et al. 2016). While fewer regular nourishment operations are expected to be needed during the life span of the Sand Motor, they are still expected to be needed for supplementation to some extent. This presents implications for the cost-effectiveness of meganourishment versus conventional nourishment projects, as well as for the effective use of resources. Further, it calls into question the appropriateness of a meganourishment project design in the developing context, considering countries like the Gambia and Nigeria have struggled to successfully implement regular-sized sand nourishment operations on their coastlines due to issues with cost, design, and maintenance (Niang et al. 2012). Whether this project design is cost-effective compared to other approaches is unclear, but its transferability requires significant understanding of coastline dynamics and baseline sand volume needs relative to sea-level rise; capacity for comprehensive impact assessments; robust monitoring and evaluation capabilities; and financial resources for either importing or dredging suitable supplies of sand deposits not only for a megasized project, but for supplemental maintenance needs. Integrating Green and Gray 95 Using Mangroves and Sea Dikes as First Line of CASE STUDY 2B Coastal Defense in Vietnam LOCATION: Selected provinces of Mekong Delta, Vietnam As part of an integrated climate resilience and sustainable livelihoods project, Vietnam (in partnership with the World Bank) is implementing an infrastructure design that utilizes mangroves and sea dikes to protect coastal communities from flooding and erosion. Background The Mekong Delta (Delta) is densely populated and home to 22 percent of Vietnam’s population, most of whom are near-poor households living in rural coastal areas, highly dependent upon rice or shrimp farming for their livelihoods. In the region, recent urbanization and intensification of agriculture and aquaculture production are among the rapid changes occurring that are increasing economic growth, but simultaneously creating issues of unsustainable land and water resource use. Furthermore, the region is facing increased saline intrusion, erosion, and flooding from land subsidence and sea-level rise in the southern part of the Ca Mau Peninsula that is affecting the livelihoods of Delta communities. The natural sedimentation process that occurs between the Delta and the coastline may also be impeded by upstream hydropower development in the Mekong Basin, reducing sediment load down the Delta. In 2016, the Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods (MD-ICRSL) Project was developed to strengthen integrated climate-resilient management and development across different sectors and institutional levels in the Mekong Delta. The project consists of a host of measures in different hydroecological sub- regions, and was designed to help operationalize the vision and strategy of the Dutch-financed Mekong Delta Plan that had been articulated for the different subregions. The multisectoral project required a complex arrangement of implementation across ministries, and the engagement of target provinces as well communities, research agencies, and development partners. In the coastal areas, including the estuary and peninsula, the project has prioritized modernization and increased sustainability of aquaculture by adopting polyculture-based systems, and mangrove regeneration along the outer coastline as reinforcement of the coastline and hinterland protection. Nearly $387 million from the International Development Association, the Global Environment Facility Adaptation Fund, and the Vietnam Government is financing the project. A Green and Gray Infrastructure Design for Coastline Protection The traditional approach to protecting the coastline in Vietnam consists of constructing sea dikes, many of them armed with rocks and/or concrete. Furthermore, in the peninsula area, natural mangroves play an important role in ecosystem productivity and in protecting coastal communities from storm surges and coastal erosion. However, the mangroves have rapidly declined over time, primarily due to unplanned shrimp farming and urban develop- ment; a lack of regulations and institutions that permit integrated coastal management helps exacerbate the 96 WRI.org degradation. Increased fragmentation of mangroves has reduced their capacity to withstand coastal processes, such as wave actions, coastal currents, and wind at exposed and semi-exposed coastline locations. The MD-ICRSL supports a combined green-gray approach for coastal protection that consists of a mangrove belt outside the sea dike to serve as the first line of defense, followed by sea dikes (where appropriate), and then a more extensive mangrove belt inland of the sea dike. It also supports subprojects that include the construction of coastal defenses consisting of combinations of compacted earth embankments and coastal mangrove belts. These compo- nents primarily help address coastal flooding and erosion, as well as salinity intrusion and impacts on aquaculture and mangrove systems to improve livelihoods of communities living in the coastal areas of Ben Tre, Tra Vinh, and Soc Trang Provinces. Expected Benefits The project’s main medium-term benefits will come from financing climate-resilient infrastructures and supporting livelihoods of local communities where agriculture/aquaculture production systems are affected by flooding, saline intrusion, and coastal erosion. Finally, in the overall coastal areas, benefits will accrue from reduced flood hazards and exposure because of structural and nonstructural coastal defenses that will combat increased storm intensities and rising sea levels. For each subproject, two scenarios were defined: The first, a baseline/without-project scenario, which describes the current situation and assumes that no interventions will be made by the government to solve the problems; and the second, a with-project scenario. Where applicable, a business-as-usual scenario (i.e., what would hap- pen in the normal course of development, but in the absence of the project) was defined and assessed against the baseline. Financial analyses of the alternative livelihoods estimated by the project were carried out at the farm level and based on typical/average crop budget models. The economic analysis considered shadow-priced benefits (i.e., assessed using approximate economic values for prices and wages) to farmers as well as benefits that will accrue to society, such as flood risk reduction and ecological benefits due to the retention of floodplains in the upper delta. Additionally, the economic viability of individual infrastructure investments under the with-project scenario was examined. Insights for Advancement Since the Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project is only in its second year of implementation, it is premature to extract lessons learned from implementation. However, lessons can be learned from pre-implementation experiences, including the importance of policy champions within ministries and provinces; learning and drawing from global knowledge to leverage other country experiences in combatting coastal erosion and flooding; timeliness of critical partnerships that provide key development and technical sup- port; and the importance of broad stakeholder consultations for input on paradigm shifts needed in the Mekong Delta. The Vietnam Government is strongly committed to integrated approaches to Delta management, and provinces continue to work through the design of resilient green infrastructure subprojects. If successful, the Cambodian side of the Mekong Delta could replicate approaches and designs of projects implemented within the MD-ICRSL to integrate green infrastructure into the planning of future development and investments in the Delta. Source: World Bank 2016b. Integrating Green and Gray 97 OVERVIEW | River Flood Management 3. RIVER FLOOD MANAGEMENT The Challenge What Role Can Integrating Green Infrastructure River flooding is both a natural and necessary Play? phenomenon that is critical for floodplain ecosys- Green infrastructure can complement conventional tem health. Flooding helps maintain soil nutrient built solutions that are designed to contain or regu- equilibrium for productive floodplains and replen- late river flow and water levels, helping to absorb ishes underground aquifers. However, flooding excess water, reduce velocity, and regulate peak also creates immense challenges for human health, flows. Examples include the following: ▪▪ safety, and livelihoods, including the following: ▪▪ Floodplains and bypasses. Reconnect- Infrastructure and property damage, ing rivers to floodplains or undeveloped areas which can occur when homes and buildings where they have been disconnected by gray become water-logged and inundated with infrastructure can help restore natural flood debris and sediment deposits. Debris can block mitigation properties, like water storage, and waterways, and rapidly rising, fast-moving convey water during flood events. Bypasses waters can damage built structures like roads comprise built diversions, such as weirs, to help and bridges. control water volumes, while floodplains natu- ▪▪ Floodplain ecosystem disruption, which rally absorb water (EEA 2017). can occur when larger and more frequent river flooding displaces aquatic life, impairs water ▪▪ Inland wetlands. Vegetated wetlands are sponge-like ecosystems that can help absorb the quality, and increases erosion (USEPA 2016). influx of floodwaters during wet periods, and Nutrients, fertilizer, pesticides, debris, and release water during dry periods (Strassburg volumes of sediment are transferred both to and Latawiec 2014). Storage capacity of a and from the floodplain, disrupting its balanced particular wetland depends on the type of fertility. wetland and its location. ▪▪ Water contamination, which can occur when contaminant-prone floodwaters inundate ▪▪ Riverbeds and banks. Allowing rivers to fol- low their natural meandering course can help source water supplies and community water reduce floodwater velocity. This can sometimes treatment systems with pollutants and sedi- require removing built reinforcements or ment. Turbidity increases to levels that promote revegetating riverbanks or riparian areas (Bair the growth of harmful waterborne diseases 2000). and makes it difficult to treat drinking water (USEPA 2016). ▪▪ Upland forests. Upstream areas with deep soils can help slow and retain runoff, result- River flooding can be a costly disaster. For example, ing in lower flood peaks and a longer lag time in 2011 Thailand was inundated with above-average for excess water to reach downstream areas. monsoon rainfall that caused severe river flooding Upland forest management is most effective at and estimated losses of $30 billion. Rivers over- slowing and retaining moderate floods before flowed their banks, and insufficient dam operation soil saturation (Bathurst et al. 2011). led to the release of even more water, which exacer- Natural flood mitigation properties can present bated the flooding (Gale and Saunders 2013). The cobenefits aside from flood protection. For exam- insured losses from the event ($12 billion) ranked ple, in China, opening sluice gates in the Yangtze among the highest-ever worldwide from a freshwa- River Basin to allow water to flow into previously ter flood disaster (Gale and Saunders 2013). World- disconnected lakes rehabilitated the natural func- wide, estimates suggest global GDP exposed to river tions of the wetland system and improved wild floods is $96 billion per year (Luo et al. 2015). fisheries’ species diversity and populations. Catches increased by 15 percent, and certified eco-fish farm- 98 WRI.org ing increased income of fishers by 20 to 30 percent particular green component. Detailed and compa- on average (UNEP et al. 2014). Also 448 km2 of rable cost-effective data are scarce, and cost-benefit wetlands were restored, providing an estimated 285 information is highly dependent on the geographi- million m3 of floodwater storage capacity in Yubei cal location of the measure implemented, requiring Province (Pittock and Xu 2010). site-specific analyses for accurate assessments (EEA 2017). Better tools, data collection, and analytical Considerations frameworks for comparing a spectrum of inter- The implementation of river flood prevention ventions are needed to inform decision processes measures are rarely done in isolation, making around river flood management strategies. it difficult to assess the individual benefits of a Figure A3 | Flooded Yolo Bypass, Diverting Waters from Inundating Low-lying Developed Areas and Relieving Pressure on Built Floodwater Management Infrastructure Source: Steve Martaranoo/Flickr Integrating Green and Gray 99 Integrating Green and Gray Infrastructure for River CASE STUDY 3A Flood Management in the United States LOCATION: Sacramento Valley, California Yolo Bypass, the largest contiguous California floodplain, plays a vital role in the Sacramento River flood control infrastructure system alongside a network of built overflow weirs and relief structures that divert floodwaters into adjacent basins or natural bypasses and channel them downstream, protecting communities from inundation. Background Following devastating floods in the early 1900s, a “levees only” approach to managing colossal floodwaters of the Sacramento River was deemed insufficient, and efforts to establish a comprehensive, multichannel flood-control system in the Sacramento Valley materialized (Opperman et al. 2009). The Jackson Plan, which proposed creat- ing a system of levees, weirs, and bypasses—including the Yolo Bypass—to route and control floodwaters out of the main river channel, was adopted by the California legislature in 1911 and the U.S. Congress in 1917 through the Flood Control Act (James and Singer 2008). From then, construction began on the Sacramento River Flood Con- trol Project (SRFCP), and the Yolo Bypass was finalized in 1924 (Smalling et al. 2007). The infrastructure system of the SRFCP is part of a larger integrated river basin system for water resources management in California that is responsible not only for flood control, but also for the provision of water to Southern California and throughout the Sacramento-San Joaquin Delta, and is jointly managed and financed by federal, state, and local authorities (James and Singer 2008). Integrating Green and Gray Infrastructure in the Jackson Plan The Yolo Bypass is a 240-square-kilometer (km2) wetland area (65 kilometers long) of the Yolo Basin floodplain, a natural depression along the west side of the Sacramento River. The bypass receives water from five source water- sheds with seasonally varying hydrology; its dominant land uses are agricultural fields and waterfowl management. Two-thirds of the bypass is privately owned and used for agriculture; it also encompasses the 64 km2 Yolo Bypass Wildlife Area managed by the state’s Department of Fish and Wildlife (Smalling et al. 2007; Opperman et al. 2009). 100 WRI.org The bypass floods as early as October and as late as June each year, and can hold more than 4.5 times as much water as the Sacramento River (Smalling et al. 2007), conveying 80 percent of its floodwaters during large events (Opperman et al. 2009). Although flood control is the bypass’s main purpose, it is a flourishing network of mosaic wetlands with marshes, ponds, and riparian areas that provides valuable groundwater recharge to a drought- stricken state and fosters abundant wildlife habitat, recreation, and productive agricultural lands when it is not flooded. The bypass is home to nearly 200 species of birds and sustains the highest salmon population in California (Sommer et al. 2001). The SRFCP includes approximately 1,760 kilometers of 10 overflow structures—six overflow weirs, three upstream relief structures, and one emergency overflow roadway—and bypass channels to convey floodwater downstream (Russo 2008; James and Singer 2008). The Fremont and Sacramento Weirs within this system divert floodwaters from the Sacramento River/Sutter Bypass watershed away from Sacramento and other low-lying communities into the Yolo Bypass. The Fremont Weir passes floodwater through gravity once it reaches a certain elevation, while the Sacramento Weir uses floodgates managed by the state’s Department of Water Resources, according to regulations established by the U.S. Army Corps of Engineers (Russo 2008). The bypass also receives water from four other source watersheds, which during the dry season constitute most of the water flowing into the bypass. All water drains southeast across the bypass toward its “Toe Drain,” a low-flow riparian channel, into the Sacramento-San Joaquin Delta (Smalling et al. 2007). The Yolo Bypass’s natural flood control management capacity relieves significant pressure on the gray infrastruc- ture system during overflow events. Together, the natural and built system connect the river to the floodplain and help to protect surrounding communities by reducing the extent of frequent inundations of broad lowland areas of the valley in one of the most flood-prone regions of the United States (James and Singer 2008). However, the system—in need of regular maintenance and improvement—cannot eliminate future flooding risks. Insights for Advancement Preserving the natural floodplain abilities of the Yolo Bypass wetland system and protecting it from development is indeed a successful green infrastructure story in California’s flood and water management history. These solu- tions present a wealth of cobenefits beyond flood control and add resilience to the conventional gray infrastructure system. However, such a solution is also subject to structural deficiencies that could bring costly consequences and high risk to flood management in the event the levee system fails. Furthermore, this system is a very expensive, multibillion-dollar investment in water and flood management over the lifetime of the infrastructure system, with recurring costs to ensure its stability. Approaches to reconnecting floodplains to rivers could present difficult trade- offs between flood management and existing livelihoods, such as relocation and reconstruction of communities, or in rural economies that national development depends upon, making the approach economically and politically infeasible in other contexts. Integrating Green and Gray 101 Combining Green and Gray Infrastructure for Flood Risk CASE STUDY 3B Management at the River Basin Scale in Poland LOCATION: Odra and Vistula Basins Flooding of Poland’s Odra and Vistula River Basins devastated communities in 1997, 2006, and 2010. Three consecutive projects were created to mitigate the impacts of frequent flooding and to enhance flood preparedness across the country. While the first project was an emergency recovery project, the following two projects, still under implementation today, use a mix of green and gray infrastructure to reduce peak flows and enhance flood forecast- ing during flash floods. Background The catchment areas of the Odra and the Upper Vistula Rivers cover 54 percent of Polish territory cumulatively, leaving much of the country vulnerable to frequent and large floods experienced in these river basins. In 1997, rainfall four times the long-term average caused a massive floodwater inundation, resulting in the loss of 54 lives and estimated damages of ZI8.5 billion ($2.3 billion). This disastrous flooding catalyzed reconstruction and flood protection efforts supported by the Emergency Flood Recovery Project, financed by the World Bank and European Investment Bank. In addition to reconstruction of infrastructure, additional flood protection was needed. This became clear after flooding events in 2006 and 2010 in the Upper Vistula, the Lower Odra Basin, and the Nysa Klodzka Valley. The Odra River Flood Protection Project (ORFPP) and subsequently, the Odra-Vistula Flood Management Project (OVFMP) expand upon previous efforts by enhancing flood preparedness in the Odra and Vistula River Basins. These two projects, currently under implementation, are financed by the World Bank, Council of Europe Devel- opment Bank (CEB), European Union/European Commission, and the Government of Poland for a total of $1.8 billion. The ORFPP focuses on southeastern Poland (Lower and Upper Silesia) and the economically crucial city of Wroclaw; the OVFMP focuses on the Middle and Lower Odra, and the Upper Vistula Basin, enhancing flood protection in Krakow, Warsaw, and Sandomierz-Tarnobrzeg industrial centers. Integrating Green and Gray Infrastructure Both projects emphasize a systems approach to deliver flood protection services to Polish populations using green and gray infrastructure, and were inspired by the Dutch Room for the River Program. For example, by combining the construction of a dry polder (Raciborz) to enhance upstream retention capacity in the Upper Odra and mod- ernizing the Wroclaw Floodway System, the ORFPP will safely pass a flow of 3,100 cubic meters/second (m3/s) through and around Wrocław downstream. With the combination of both the dry polder and floodway system, the city will be protected against the recurrence of a very intense flood (a 1,000-year flood), as occurred in 1997. Green infrastructure measures financed under the ORFPP and OVFMP projects include the following: 102 WRI.org ▪▪ Construction of dry polders to enhance flood retention capacity and mitigate peak flooding upstream, such as the Raiciborz dry polder under the ORPFF in the Upper Odra catchment and the Boboszów, Ro- ztoki, Szalejów Górny, and Krosnowice dry polders under the OVFMP. Polders are constructed using the topography, dikes, and drainage canals and are operated during flood events as levee systems to control flows, serving as a recreation and farming area during regular conditions. ▪▪ Opening space for the river with the retrievement of embankments, the modification of bridges, and the elevation of some areas, rather than the construction of embankments along river banks. This ultimately provides more space for the river to inundate the natural floodplain, also diminishing flood velocities. This is done in both the ORFPP and the OVFMP. ▪▪ Revitalizing urban riverfronts in Wroclaw through the ORFPP by constructing parks and walking paths along riverbanks to enhance urban green space and recreational use. ▪▪ Building the Widawa Bypass, which will contribute to passing 300 m3/s of the required 3,100 m3/s to safely endure a 1,000-year flood event around Wroclaw City, to be achieved through the ORFPP. The ORFPP and OVFMP are expected to help secure flood safety in very important Polish economic centers and protect the lives of the 15 million people inhabiting the many cities, towns, and villages in the Upper, Middle, and Lower Odra River Valley and the Upper Vistula Basin. Although some natural assets are and will be affected during polder construction, only flows over a certain threshold will be regulated, enabling the natural flow of tributaries within the polder area to help conserve the natural environment downstream of the reservoir and the protection of surrounding natural areas. Social Implications Making room for the river and increasing flood retention capacity through the construction of dry polders often has land tenure implications, including resettlement and the permanent acquisition of lands in private ownership. For example, to build the Raciborz dry polder, which spans an area of 26.3 km2 and has flood retention capacity of 185 million m3, two towns—Nieboczowy and Ligota Tworkowska—inhabited by a total of 202 households (689 people) needed to be resettled to a new village, which cost $218 million at the time of preparation in 2007. After an exten- sive consultation process with all the stakeholders involved, 47 households opted to be resettled in Nieboczowy, and the rest decided to move elsewhere after receiving cash compensation. At the same time, using a systems approach and making room for the river by retrieving embankments or building dry polders upstream of city centers is a strategy that also helps alleviate greater social impacts to communities in more populated urban centers downstream. This is important in developing countries with heavily populated cities, where informal city settlements often encroach upon the river system. Therefore, using a systems approach for flood protection can help operationalize investments to deliver flood protection services to the entire population, as opposed to stand-alone local interventions with added complexities due to social and land tenure implications. Insights for Advancement The resettlement of two villages in Poland for the construction of the Raiciborz dry polder is lauded as a very successful case of social resettlement. Empowering the local authorities to lead the resettlement process, estab- lishing a community committee with the involvement of local leaders, conducting a proper consultation process of the Resettlement Action Plan, and assisting landowners on an individual basis with free advisory services on their compensation package were all vital components of successfully resettling the 202 affected households and establishing a new village equipped with relevant municipal infrastructure. Lessons can be learned and extrapo- lated from this case not only in terms of successful relocation management, but also for how a systems approach to flood protection can leverage both natural and gray infrastructure components to mitigate social impacts locally and downstream. Sources: World Bank 2007a, 2015a, n.d.(b), n.d.(c). Integrating Green and Gray 103 OVERVIEW | Urban Stormwater Management 4. URBAN STORMWATER MANAGEMENT The Challenge What Role Can Integrating Green Infrastructure Urban stormwater runoff poses challenges for cities Play? that can threaten the livelihoods, health, and safety Green infrastructure can aid in absorbing, filtering, of communities, including the following (UNEP et al. and slowing stormwater runoff, which helps mitigate 2014): urban flooding and improve water quality. It typically ▪▪ Flooding, which can occur when volumes of rainfall exceed a city’s capacity for captur- entails lower-cost interventions that help complement the functions of gray infrastructure strategies, such as water treatment facilities, storage tunnels, sewers, ing and transporting stormwater to storage or retention or detention ponds, and stormwater convey- appropriate treatment for reuse or disposal. ance systems. Examples include the following: Densely built environments lack permeable surfaces and open space for water infiltration and absorption. Urban design and sprawling ▪▪ Green roofs. Rooftop vegetation enables rain- fall infiltration and evapotranspiration of stored development patterns contribute to enhanced water, which helps slow stormwater runoff by flooding risks when cities expand into flood- reducing the rate at which water reaches the prone areas such as floodplains or wetlands. drainage system. Green roofs can retain on av- ▪▪ Pollution of communities and water resources, which can occur when stormwater, erage 75 percent of the stormwater they receive (Scholz-Barth 2001). sewage, and industrial wastewater overwhelm drainage systems with large volumes of water ▪▪ Permeable pavements. Porous concrete, asphalt, or interlocking pavers allow water to and sewage. System overflow or sewer backup percolate through their surfaces to be treated can release untreated stormwater, wastewater, and stored in soils and rock beds below. Some and raw sewage into homes, communities, and applications have demonstrated a 90 percent surrounding water bodies. Inadequate treat- reduction in runoff volumes (LIDC 2007). ment and sanitation systems can also result in improper discharge of wastewater, polluting urban environments. ▪▪ Bioretention areas. Rain gardens or bioswales (i.e., vegetated trenches that receive rainwater runoff) collect, absorb, filter, and Globally, $120 billion per year is lost through flood store water. These improvements can help damages to urban property (PBL et al. 2014). In 2005, maintain predevelopment timing of stormwater major flooding in Mumbai resulted in $1.7 billion in runoff and control peak discharge rates (USEPA damages and 500 mortalities. A combination of inten- 2017a). sifying and changing weather patterns, disruption of natural drainage pathways, aging and polluted built drainage systems, unrestricted building in low-lying ▪▪ Open spaces. Natural areas like parks and hillsides in urban settings help with water absorption and mitigate the risk of landslides areas, and loss and degradation of mangrove forests on steep slopes. Open spaces also include con- that once helped absorb rainfall have contributed to structed parks and greenways. ▪▪ annual urban flooding events in the city. Urbaniza- tion by itself has increased stormwater runoff two- to Constructed wetlands. Creating natural three-fold (Ranger et al. 2011). areas with sponge qualities helps capture and retain stormwater, allowing for greater water infiltration. An acre of wetland can store 3.8 to 5.7 million liters of floodwater, reducing the peak load on stormwater and wastewater sys- tems (PDEP 2006). 104 WRI.org Green infrastructure that is used to address urban Considerations stormwater challenges is most effective when appro- Green infrastructure can aid in reducing the urban priately sited and designed (UNEP et al. 2014), and heat island effect, boosting property values, creating is generally a component of a city’s larger stormwater recreational opportunities, enhancing biodiversity, management program that may include a mix of built improving air quality, among other benefits (UNEP and natural components. Portland, Oregon, is one et al. 2014). Its economic values, and what makes it example. For decades the city has embraced manage- profitable and successful or unsuccessful solutions ment design that incorporates green roofs and streets, for stormwater management in urban settings, needs vegetated basins, and urban forests and wetlands, in to be better studied and understood. New project addition to expanding the drainage capacity of its built designs and concepts may otherwise fail to appeal to system to better manage its stormwater. cities that depend on proven gray infrastructure meth- ods and/or lack the knowledge, skills, and capabilities to undertake alternative solutions. Figure A4 | Green Roof Atop a Parking Garage and Rail Yard in Illinois That Helps Slow Stormwater Runoff Source: Center for Neighborhood Technology/Flickr. Integrating Green and Gray 105 Innovative Financing for Urban Green Infrastructure CASE STUDY 4A in the United States LOCATION: Washington, DC A municipal Environmental Impact Bond has been structured to share performance risks associated with green infrastructure investments, rewarding investors if green infrastructure performance exceeds expectations and limiting financial risk to the local water authority if the project underperforms. Background DC Water, the District of Columbia (DC) Water and Sewer Authority, operates the city’s wastewater collection system. One-third of Washington, DC, is served by a single-piping combined sewer system that was built over 100 years ago (DC Water 2017a). When it rains, if the capacity of the combined sewer is exceeded, excess flow (i.e., untreated sewage, industrial waste, and stormwater) gets discharged directly into DC’s waterways to prevent flood- ing in homes and streets. Approximately two billion gallons of combined sewer overflow (CSO) is discharged into local streams and rivers on an annual basis today (DC Water 2015). As the area has urbanized and the population has grown, these CSO events have become more frequent and intense, causing harm to nearby aquatic environ- ments and communities. In the early 2000s, DC Water’s CSOs grew to such a high frequency and volume that they violated the United States Clean Water Act and the terms and conditions of its National Pollutant Discharge Elimination System permit (USEPA 2015a). In agreement with the U.S. Environmental Protection Agency (EPA), a 20-year Long-Term Con- trol Plan was created in 2005 to reduce CSOs by investing in sewer and wastewater infrastructure projects, includ- ing three deep stormwater runoff tunnels under the city in the Anacostia, Potomac, and Rock Creek watersheds (USEPA 2015a). In 2015, the $2.6 billion plan was modified to allow the incorporation of green infrastructure, a roughly $100 million total investment, to handle runoff volumes produced by rainfall on roughly 200 impervious hectares to potentially reduce or eliminate the need for a storage tunnel in the Rock Creek watershed and reduce the length of the tunnel needed in the Potomac River watershed (DC Water 2015). However, using green roofs, bioswales, and green space to control stormwater runoff is still considered unproven and a risky investment compared to gray infrastructure. To show that green infrastructure can meet EPA performance standards and build investor confi- dence, the first pilot project is being implemented and financed by a novel scheme called the Environment Impact Bond, which rewards investors if performance exceeds expectations and limits financial risk to DC Water if perfor- mance is less than expected. 106 WRI.org Integrating Green and Gray Infrastructure: Description of the Component Rock Creek Project A (RC-A) will span eight hectares and employ a combination of three green infrastructure installations (DC Water 2017b; USEPA 2015a): ▪▪ Bioretention or rain gardens, which are vegetated on-the-ground basins or planter boxes that collect and absorb runoff from parking lots, sidewalks, and streets, and slowly drain excess water. ▪▪ Permeable pavements, which are pervious concrete, porous asphalt, or permeable interlocking pavers that allow stormwater to percolate and infiltrate to the soil below. ▪▪ Downspout disconnection, which reroutes rooftop drainage pipes from draining into storm sewers to drain instead into rain barrels or pervious surfaces, such as a lawn or vegetated basin. Construction began in the summer of 2017 and is expected to finish in early 2019. Partners conducted 12 months of preconstruction site monitoring to measure baseline levels of stormwater runoff without green infrastructure in place, and created performance outcome ranges for expected runoff reduction (see Table A2). From 2019 to 2020, 12 months of postconstruction sewer flow monitoring and assessment will take place to calculate the effectiveness of RC-A, measured by the percentage reduction in stormwater runoff (Goldman Sachs et al. n.d.). Financing Urban Green Infrastructure In September 2016, DC Water issued an innovative adaptation of a Pay-for-Success financing model that shares performance risk between DC Water and investors to finance green infrastructure that reduces the incidence and volume of CSOs. The environmental impact bond is a 30-year, $25 million tax-exempt municipal bond, with an initial 3.43 percent interest coupon payable semi-annually for the first five years. It was placed with two institu- tional investors, Goldman Sachs and Calvert Impact Capital, and its proceeds are providing the up-front capital to construct RC-A (USEPA 2017b). At the five-year mandatory tender, a $3.3 million risk share or outcome payment could be required—either to investors by DC Water or to DC Water by investors—based on the proven success of the project following performance evaluation (see Table A2). Table A2 | Contingent Payment at Mandatory Tender Date (April 1, 2021) PERFORMANCE OUTCOME RANGES FOR ONE-TIME CONTINGENT EXPECTED TIER RUNOFF REDUCTION OUTCOME/RISK-SHARE PAYMENT LIKELIHOOD (%) 1 Stormwater runoff reductions greater than 41.3% DC Water makes outcome Payment to Investors 2.5 of measured baseline of $3.3 million 2 Stormwater runoff reductions between 18.6% and No additional payment other than basic principal and 95.0 41.3% of measured baseline interest (3.43%) payable 3 Stormwater runoff reductions less than Investors make risk share payment to DC Water 2.5 18.6% of measured baseline of $3.3 million Sources: Goldman Sachs et al. n.d.; USEPA 2017b Insights for Advancement DC Water’s environmental impact bond structure is the first of its kind and encourages investors to seek out strong projects, while encouraging water authorities and other implementing agencies to pursue innovative methods that boast broader social or environmental impacts than the status quo approaches. It is too early to tell whether its structure is successful and transferrable to other urban settings, or whether its benefits outweigh those from other funding approaches. However, there are approximately 860 cities in the United States alone with combined sewer systems that could stand to benefit from the lessons derived from Washington, DC (USEPA 2015b). If successful, it would link financial payouts with environmental performance and could encourage other municipalities and sewer/water entities to consider adopting green infrastructure as part of their urban water management strategy, using this financing mechanism to cover the associated downside risks. Integrating Green and Gray 107 Conserving Wetlands to Enhance Urban Flood CASE STUDY 4B Control Systems in Sri Lanka LOCATION: Colombo The Metro Colombo Urban Development Project uses a mixture of green and gray infrastructure to reduce flood risks, improve drainage, and create recreation opportunities in the Colombo Metropolitan Region. The economic desirability of urban wetlands has been evaluated using a cutting-edge approach. Background Colombo is Sri Lanka’s commercial and financial hub. The surrounding Colombo Metropolitan Region (CMR)–the urban belt that encircles Colombo–is rapidly growing and accounts for almost half of the national GDP. Yet several obstacles are preventing the CMR from realizing its full economic potential: infrastructure and services are inad- equate and lack capacity, especially regarding drainage, sewerage, solid waste, and urban transport infrastructure. In recent decades, rapid urbanization in the CMR has caused steady degradation and conversion of the region’s wetlands, which are essential for storing water during heavy rains. As a result, the water-holding capacity of the wetlands in the area has decreased by about 40 percent over the last 10 years, directly increasing flood risks. At the same time, climate change and sea-level rise are exacerbating the impacts of the region’s vulnerability to flood- ing. Stormwater management strategies in the city have conventionally been engineering-based, disregarding the important flood-mitigation benefits offered by wetlands. In 2012, the Metro Colombo Urban Development Project was approved by the World Bank and included delivering support to strengthen urban wetland management and strategic planning for urban resilience through a state-of- the-art Decision-Making under Uncertainty (DMU) approach. The project is set to close in 2020. Integrating Green and Gray Infrastructure The Metro Colombo Urban Development Project uses wetlands as green infrastructure to complement a gray infrastructure investment package. The project utilizes flood and drainage management and infrastructure reha- bilitation by providing implementation support to achieve desired outcomes. Gray infrastructure measures target the drainage capacity of canals and lakes and a number of microdrainage interventions in the Colombo Municipal Council. These components aim to enhance the outflow capacity of the systems, whose limited capacity has been constrained further by solid waste, floating debris, and a lack of regular maintenance. The flood control and drain- age management program, including the green infrastructure components in the project, is estimated to benefit, directly or indirectly, about 2.5 million people. 108 WRI.org The project’s green infrastructure strategy includes creating a paradigm shift in which urban wetlands have been perceived and incorporated into city development plans, supported by high-level policy discussions and demon- stration projects of wise use of wetlands. About 2,000 hectares of wetlands were identified as an important water storage–capacity area for Colombo, which helps buffer against the impact of floods. Besides water storage, wet- lands provide cobenefits such as carbon sequestration, climate regulation through reduced use of air conditioning near wetland areas, wastewater treatment, and recreation opportunities. To design the project’s interventions, all subcomponents of the project were assessed and prioritized, based on cri- teria specific to project development objectives and technical readiness. The green and gray components for flood and drainage management were selected on technical grounds for their short- and long-term flood-risk mitigation abilities, including diverting water in the upper catchment area, limiting inflow down the basin; creating additional retention reservoirs in the project area; removing bottlenecks to maximize conveyance capacity; improving capacity of system outflows; improving overall water quality to reduce health hazards; and improving canal bank protection. Evaluating Economic Desirability To preserve water storage capacity in the CMR, it is common practice that the local flood management and land reclamation agency convert wetlands into lakes. In most cases, the lakes deliver the same flood protection as the former wetland area, but most cobenefits delivered by wetlands—biodiversity, wastewater treatment, and carbon sequestration, for instance—are lost. Although these cobenefits clearly have an economic value, uncertainties regarding climate change factors, the current-day value of cobenefits, and development patterns can inhibit quan- tification. To assess the economic desirability of wetland conservation despite these uncertainties, a World Bank study applied the cutting-edge DMU approach using participatory and quantitative methods. It found that wetland conservation is the most desirable option from a welfare economic perspective, considering trade-offs between urban development and wetland protection scenarios. Insights for Advancement The project has established Colombo’s first urban wetland park in Beddegana, while a second park in that same area is under design. Together, both parks will work to protect the historic ramparts of the ancient kingdom of Kotte in close proximity to the wetland area, while providing passive recreational space and education and ecotour- ism opportunities. At another wetland site, Beira Lake, bank protection walls have been erected, and a pedestrian promenade added on top of the protection walls, making the space accessible to and usable by the public. A third wetland site, Viharamahadevi Park, was redesigned to enhance water storage capacity. The successes or challenges of this project cannot be assessed at this stage, as the project is still ongoing. So far, implementation has shown that identification and incorporation of the cobenefits in addition to risk reduction benefits are essential to making an economic case for wetland conservation. The cutting-edge methodology applied was able to assess the economic value of wetlands in a context of deep uncertainties about future urban develop- ment and climate change. DMU methodology could also be applied to navigate uncertainties and provide decision- relevant support in similar projects. Integrating Green and Gray 109 OVERVIEW | Drought Management 5. DROUGHT MANAGEMENT The Challenge than half the country’s groundwater wells are expe- riencing groundwater decline, and more than half its Land and water management practices, growing surface area faces extremely high water stress—using water consumption patterns, and climate-related more than 40 percent of its annually available surface changes create challenges related to the availability water each year (IWT 2015). In 2016, more than 330 of water throughout the year, especially during dry million people were struck by severe drought with seasons and extreme drought conditions, including $100 billion in economic losses, including from crop the following: and livestock loss and power outages or shutdowns ▪▪ Land and watershed degradation, which can occur from unsustainable agricultural prac- (Kala 2017). tices, such as overgrazing or deforestation, can What Role Can Integrating Green Infrastructure lead to desertification in drought-prone areas. Play? Deteriorated vegetative cover increases soil ero- Artificial aquifer recharge, dams, and other technical sion and hinders the health and fertility of soil solutions like stone barriers or embankment struc- and its natural water retention capacity. tures are among the built solutions that can be relied ▪▪ Increased hunger and food insecurity, which can occur when there are insufficient upon to help an area capture, direct, and store water in soil, aquifers, or reservoirs. Green infrastructure quantities of reliable, affordable, and nutritious can also be leveraged to help maintain or enhance foods available to support healthy lives, due in the water retention capacity of soils, playing a posi- part to a lack of water available to yield suffi- tive role for water supply in dry seasons and drought cient crops and livestock. conditions. Examples include the following: ▪▪ Power sector outages, which can occur when economies are highly reliant on electricity ▪▪ Rainwater harvesting. Directly capturing rainfall using tillage or pitting practices can generation from hydropower or thermoelectric help store it in the soil to ensure water for crops power plants, and insufficient volumes of water or other vegetation (UNEP et al. 2014). Con- are available. tour trenching, for example, captures rainfall ▪▪ Reliance on supplemental water sup- plies, which can occur when inadequate in small trenches on croplands, infiltrating and storing the water in the soil to nourish crops amounts of fresh water are available during dry over a longer period of time. seasons or persistent drought to sustain a com- munity. National governments, for example, ▪▪ Cloud or humid forests and wetlands. These ecosystems have soil protection, water provide assistance by trucking or piping water infiltration, and natural storage capabilities from another location. that help in the seasonal provision of water and These challenges are costly to human lives and water flow regulation. Cloud forests can capture economies and stress the urgency of finding solu- fog and retain moisture in vegetation, slowly re- tions amid a context of growing competition for leasing it over time into the soil to help ensure water resources and a changing climate. From 1980 long-term water retention and supply during to 2010, temperature extremes and droughts caused dry periods (Eller et al. 2013). global economic losses of nearly $250 billion, affect- ing an average 35 million people annually (PBL et al. ▪▪ Aquifer storage and recharge. Maintaining the catchment areas of watersheds and aquifers 2014). In India, water supplies are predicted to fall 50 can help enhance water infiltration and storage percent below demand by 2030 (WRG 2009). More capacity of soils and geologies that recharge groundwater and aquifers below. 110 WRI.org Combining green infrastructure with technical solu- Considerations tions can further increase an area’s ability to infiltrate In some cases, implementing a single technique or and store water in soil, aquifers, or reservoirs. In measure for drought resilience or water availability Yatenga Province of Burkina Faso—one of the poorest may not be enough to achieve meaningful impact. regions in the world and long-plagued by drought— Adopting a menu of solutions can help environmental farmers used agroforestry and planting pits alongside improvements because soil, water, and vegetation technical measures such as stone bunds to restore regeneration are mutually reinforcing. Technical degraded landscapes, control surface water runoff, solutions can help increase impacts but may require and enhance water infiltration. Before implementa- intense labor and prove to be costlier because of the tion, all wells fell dry by the end of the rainy season need to purchase and transport materials. Ultimately, (Kaboré and Reij 2004). Following implementation, lessons for transferability can be drawn from regions groundwater recharge levels significantly improved that have implemented such solutions alone or in tan- and all wells held water throughout the dry season. dem about the longevity of their benefits and social/ political sustainability for ensuring water availability in times of increasing competition for dwindling supplies. Figure A5 | Sand Dam in Somalia Used as Green Infrastructure for Aquifer Recharge Source: World Bank. Integrating Green and Gray 111 User-financed Ecosystem Conservation for Water Security CASE STUDY 5A in Ecuador LOCATION: Quito, Ecuador The Quito Water Fund (Fondo para la Protección del Agua, FONAG)—one of the first water funds in Latin Amer- ica—is a financial tool that leverages water user payments for conservation efforts to ensure sustainable watershed management and quality water supply throughout the year. Background Quito’s more than 2.3 million residents depend on protected high-altitude reserves in the Andean páramos to provide their drinking water. In the late 1990s, Quito faced increasing pressure on its water resources from growing consumption and competition for available supplies, and scarce financial resources to put toward efforts to increase them. Existing water fees were failing to cover even the costs of maintaining water distribution, and at least 30 percent of water consumed at the time was not being charged for at all (Echavarria 2002). Although formally pro- tected, the Reserves were also increasingly threatened by city expansion, deforestation, and landscape degradation resulting from unsustainable agricultural and grazing practices and a network of developing roadways. The degradation was expected to damage critical functions of the watershed and its long-term capacity to provide secure water for Quito, including the timing and maintenance of water flow and quality through reduced water retention, soil moisture and groundwater replenishment, and increased erosion (Echavarria 2002). The need for secure, long-term financing for conservation and restoration of these critical ecosystems was recognized as a chal- lenge and an opportunity. As a result, Quito’s public water utility (Empresa Pública Metropolitana de Agua Potable y Saneamiento, EPMAPS) founded the Quito Water Fund as a trust fund in 2000 in partnership with The Nature Conservancy (TNC) to finance efforts to maintain provision of quality water supply, especially throughout the dry season (Encalada et al. 2015). The fund has since been joined by other user constituents and has received signifi- cant funding from other international donors and partners. Integrating Green Infrastructure into the Water Supply System Quito’s source Reserves cover over 520,000 hectares and are part of the natural páramos ecosystem in the Andes Mountains surrounding the city, characterized by sponge-like grasslands and cloud forests known for their capacity to retain humidity and regulate water flows (Echavarria 2002). When snow from local glaciers melts or low-level clouds and fog hover among the forest canopy, the precipitation is captured by the vegetation and soils of the páramos system, ensuring long-term water retention and slow release into various water bodies and wetlands. The Reserves are also part of the country’s national park system, managed by Ecuador’s Ministry of the Environment (Echavarria 2002). 112 WRI.org FONAG implements a variety of interventions aimed at maintaining and improving the function of the Reserve watersheds, including on-the-ground restoration and conservation activities, an environmental education program, and a hydrologic data management program for monitoring and evaluation (Encalada et al. 2015). Since 2005, FONAG has protected 33,000 hectares of key páramo areas from grazing and burning through park guard surveil- lance; and restored 2,500 hectares of degraded areas through riparian fencing, cattle, and fire exclusion, and the replanting of native vegetative species (Encalada et al. 2015; TNC 2018). At its present phase of consolidation, FONAG is investing heavily in generating information on the hydrological benefits of its interventions through a mixed monitoring and modeling strategy. By improving the quantification of benefits, the fund and partners can reveal how on-the-ground activities impact ecosystem integrity and water flow and quality; and evaluate return on investments (ROI) based on the hydrological benefits FONAG investments achieve—such as what was done in partnership with TNC in a recent ROI pilot project. To this end, FONAG is evolving from a general ecosystem services conservation and restoration approach toward a model that evaluates the delivery of concrete benefits in terms of water quantity and quality for specific users. User-financed Water Availability FONAG was created to serve as a long-term financing mechanism for watershed protection. It is a nondeclining, 80-year delimited trust fund that receives financial contributions from its constituents—mainly public utilities—but also private companies and NGOs. The main contribution mechanism to its capital is through the utility EPMAPS, which adds a 2 percent surcharge to monthly water bills of users in Quito’s municipal service area, under authority of a 2007 city ordinance (Arias et al. 2010; Coronel and Zavala 2014). Furthermore, the fund has leveraged gener- ous contributions from donors and partners like the World Bank, Inter-American Development Bank, USAID, German development agency GIZ, the Municipality of the Metropolitan District of Quito, and the French Institute for Research and Development (Coronel and Zavala 2014). FONAG’s terms and conditions and institutional structure are set by its enabling contract. The fund is managed by a board of directors, which consists of constituents that have contributed to FONAG, and is supervised by a techni- cal secretariat of 50 staff members—including park rangers, and technical and administrative staff—that acts as its executive director (Arias et al. 2010). The money is invested by an independent financial manager, Enlace Fondos, and the revenues generated are used to fund annual watershed protection activities directly implemented by the fund (Coronel and Zavala 2014). The fund launched with an initial investment of $1,000 from TNC and $20,000 from the Quito water company (Arias et al. 2010) and has grown to $12 million with an annual budget of approxi- mately $2 million today. Other important stakeholders have become constituents of FONAG since its inception in 2000, recognizing the importance of protecting their supply of water, including the Quito Electric Company, and private beer and water bottling organizations like Cervecería Nacional and Tesalia Springs Company, and the NGO CAMAREN (Arias et al. 2010; Coronel and Zavala 2014). Insights for Advancement FONAG has inspired the planning and development of dozens of other water funds across the region (Encalada et al. 2015). This mechanism ensures broad-based stakeholder participation, and links nature and its water quantity and quality benefits to water users, taking a long-term perspective on ensuring water availability and flow. The goal is to create well-managed watersheds to benefit downstream users, which, in turn, pay for the activities required to preserve the watershed and its ecosystem benefits. Importantly, demonstrating and quantifying the hydrological benefits of the fund is crucial to understanding local ecological relationships, how to target investments to most effectively protect watersheds, and the transferability of similar mechanisms to other contexts. Integrating Green and Gray 113 CASE STUDY 5B Recharging Aquifers to Combat Drought in Somalia LOCATION: Somaliland and Puntland, Somalia Aquifer recharge mechanisms are being applied in drought-sensitive rural settlements to improve community water resource supplies and drought resiliency throughout the year to alleviate drought emergencies and extreme poverty and tackle fragility. Background Somalia is impacted by fragility, conflict, and violence, and is one of the poorest countries in the world with 73 percent of the population living in poverty. The country has a very dry climate, marked by high variability, low precipitation, very high temperatures, and extreme weather events. Traditional water sources in rural areas often lack the capacity to sustain water supply during prolonged dry periods. These conditions make rural communities extremely vulnerable to climate stresses and shocks, as livelihoods depend on scarce water resources for domes- tic purposes and livestock, and to access fodder. Water insecurity compounds and exacerbates the fragility cycle (Sadoff et al. 2017). Investing in water-related infrastructure is therefore crucial to alleviate drought emergencies and extreme poverty, and in turn, to tackle fragility (Sadoff et al. 2017), and is a World Bank priority in line with the International Development Association’s 2018 replenishment strategy, which allocated $75 billion to combat fragility and climate change and to tackle gender inequality. The Water for Agro-Pastoral Livelihoods Pilot Project (WALPP), established in 2015, and the Somalia Emergency Drought Response and Recovery Project (SEDRRP), established in 2017, support Somali rural communities while setting examples for how to enable effective, resilient, and sustainable water investments in fragile countries. ▪▪ WALPP pilots investing in water-related infrastructure in a fragile country with the objective of improv- ing pastoral and agropastoral communities’ access to, and management of, small-scale water sources, and enhancing the capacity of the government to implement small-scale water interventions in targeted arid lands of Somaliland (SL) and Puntland (PL). ▪▪ The SEDRRP is mainly a humanitarian operation to respond to the 2017 Drought. However, it also aims at transitioning to a long-term development intervention approach in SL and PL, through a technical assistance that plans water supply investments in 15 of the most underserved population and drought- sensitive settlements in these two States under conditions of fragility. Utilizing Green Infrastructure in Place of Gray in Fragile Countries WALPP is financing green infrastructure to develop underutilized agropastoral water supplies through sand dams or subsurface dams at eight project sites across SL and PL. Adapting to the conditions on the ground, the develop- ment of sand dams in the beds of ephemeral rivers (sand rivers-wadis) in Somalia is expected to enhance water 114 WRI.org harvesting, increase soil moisture, and replenish the water table, while avoiding water losses that would otherwise result from evaporation and runoff. These methods have the potential to provide key water resources for agropas- toralists and pastoralists during long dry seasons when surface water storage, such as that in berkads, is exhausted. These developments, with an estimated extractable volume of water between 1,800 and 27,000 m3, are completed and starting to deliver water supplies to the local communities. Going forward, hydrological monitoring and com- munity surveys will test the performance and community acceptance of these investments. If proved successful, they can be scaled into larger financing initiatives. Similarly, SEDRRP has recommended investments in sand dams or subsurface dams in 15 priority areas identi­ fied through a groundwater development planning methodology that assessed where and how to intervene in the region. The methodology maximized use of existing information (including both remote sensing and ground-level data), coordination with other international agencies, and consultations with local stakeholders to identify the most underserved and drought-sensitive settlements of SL and PL, which constitute the 15 priority areas. SEDRRP was initially looking for borehole drilling sites for targeted planned investments. However, the expense, lack of capacity for operations, and maintenance required, and conditions of political fragility on the ground made traditional built infrastructure options such as these infeasible. As a result, SEDRRP has recommended nature- based solutions for groundwater resources development and resilient water interventions in the 15 priority settle- ments. Ultimately, these interventions will be financed under a third project in preparation: the Regional Ground- water Initiative in the Horn of Africa. Description of Green Infrastructure Sand dams are made of concrete and are similar in structure to low-lying, impermeable weirs. They are built across wadis or other identified red soils, retaining sediments and water flowing downstream during and after rainfall events. This empowers the accumulated and existing natural alluvial sediments to hold moisture, and infiltrate and recharge the water table for domestic and pastoral uses. Similarly, subsurface dams, prevent seepage into loose sediments, retaining the water underground and further preventing evaporation. Behind the retaining wall of the sand or subsurface dam, shallow wells sunk with caisson rings serve as reservoirs from which water is distributed for domestic water supply and livestock to standpipes, which separate human and livestock water use to enhance water quality and health. Insights for Advancement In Somaliland and Puntland, many donors, humanitarian actors, and government agencies are financing water infrastructure, and well drilling in particular, often in a poorly coordinated and unplanned manner. Lack of water-related information, partial information, and unreliable water and well monitoring capabilities are often major concerns. Data-sharing on these activities is not a common or transparent practice. Maximizing the use of existing information—including remote sensing and ground-level data—and coordinating with other agencies, the government, and the local communities is important to help ensure interventions are targeted to drought-sensitive and underserved settlements, and that investments encompass long-term sustainability to build resiliency in poor communities. Upon conclusion of the WALPP, an evaluation assessment will be performed to assess how project delivery has been sustained; whether the project has had positive or negative socioeconomic impact on communities, and nota- bly on the state of peace-building in the areas; and how the project has helped to change citizen-state relations. The investments made by this pilot project and lessons learned will help to formulate a guidance on a coordinated and systematic approach to groundwater exploration in the region, and on navigating its main challenges. The results of the socioeconomic impact analysis will also help determine whether these projects can be effectively replicated in other areas of the region through related programs like SEDRRP. Sources: World Bank 2015b, 2017d, n.d.(d), n.d.(e). Integrating Green and Gray 115 OVERVIEW | Agriculture, Irrigation, and Drainage 6. AGRICULTURE, IRRIGATION, AND DRAINAGE The Challenge and to enhance productivity. However, investment from both countries and their development partners Unsustainable land and water management practices has remained low, especially for livestock, which can damage the health and productivity of cultivable accounts for the largest area degraded. Our results land that communities rely upon for sustenance and show that conversion of grassland to cropland and livelihoods. Climatic conditions, like low precipitation, deforestation are the major factors driving land use/ heat waves, or droughts, can also play a role in exacer- cover change. bating challenges faced, including the following: ▪▪ Soil erosion and nutrient depletion, which can occur when soils become vulnerable What Role Can Integrating Green Infrastructure Play? to wind and water erosion, resulting in topsoil Green infrastructure can help improve soil condi- loss and intense weathering that can affect crop tions for growth and agricultural productivity and yields. Erosion reduces nutrient levels and soil reduce the need for costly inputs or additives, such as fertility. irrigation water, pesticides, and fertilizers. Examples ▪▪ Reduced soil moisture/water retention include the following: capacity, which can occur when vegetation is lost or damaged, such as with livestock over- ▪▪ Agroforestry and Silvopasture systems. Planting trees and shrubs on cropland or grazing or deforestation. Subsoil organic matter pastureland can help protect soil from water is affected and its ability to infiltrate and store runoff, erosion, and nutrient depletion. Using water diminished, impacting plant growth and commodity trees can also generate additional soil fertility. ▪▪ income. Desertification, which can occur when land that was once fertile ultimately turns to desert ▪▪ Rotational livestock grazing. Grazing only one portion of pasture at a time allows the rest because of deforestation, inappropriate crop of the pasture to rejuvenate. This practice can and livestock practices, or persistent drought- help forage plants rebuild and deepen their like conditions, impoverishing vegetation and roots to improve the health and longevity of the wildlife. soil. Food security is critical for human welfare and eco- nomic growth. Food production needs to increase 70 ▪▪ Farmer-managed natural regeneration (FMNR). Allowing native trees and shrubs percent by 2050 to feed future populations (FAO and to regrow from remnant underground root ITPS 2015), but some regions are struggling to pro- systems, or planting new ones, helps lock in duce even enough food for today. For example, Sub- nutrients and boost crop yields near trees. Fall- Saharan African smallholder farmers depend upon ing leaves decompose and fertilize soils, helping agriculture for their livelihoods, but often produce with moisture retention. Trees can also be used just enough food to feed their families and are unable for valuable products to supplement incomes. ▪▪ to generate enough income to make investments that can increase agricultural yields. The region has Furrow diking. Plowing ridge-like barriers suffered from the most severe land degradation in the into soil alongside row crops holds irrigation world, costing $58 billion annually, driven by defores- and rainwater longer, preventing runoff and tation and grassland conversion to cropland because enabling water to slowly soak into the soil. This of low livestock productivity (Nkonya et al. 2016). practice can help curb soil erosion and retain Countries in the region have designed a number of moisture and nutrients. policies and strategies to address land degradation 116 WRI.org Some of these measures can also diversify income Considerations streams to reduce overall vulnerability for livelihoods One-third of the world’s land is classified as severely that are primarily dependent upon agriculture. For degraded, while fertile soil is being lost at 24 billion example, since the mid-1980s, five million hectares tons/year (Dudley and Alexander 2017). Competition in the Maradi and Zinder regions of Niger have for land and food will continue to grow as the quantity been restored by FMNR (Buckingham and Hanson of productive land declines and becomes increas- 2015b). This region was once on the brink of severe ingly threatened by climate change. However, with desertification but has improved its natural environ- rates of return on investment as high as $4 for every ment to increase food security, household incomes, $1 invested in places like Sub-Saharan Africa, taking and its resilience to cope with weather-related crises action with green infrastructure can be a cost-effective impacting agricultural production. Crop yields have way to help address food insecurity in light of these increased to feed an additional 2.5 million people challenges (Nkonya et al. 2016). (Reij et al. 2009); gross income has grown by $17 mil- lion to $21 million/year (Haglund et al. 2011); farmers have tripled their incomes through sales of restoration products (WRI 2008); and during times of drought, agriculture on FMNR landscapes fared better than those without (Yamba et al. 2005). Figure A6 |  thiopia: Agroforestry on Steep Slopes Helps Prevent Soil Erosion and Improve Water Infiltration for More E Productive Farming Source: WRI/Flickr. Integrating Green and Gray 117 CASE STUDY 6A Community-led Watershed Restoration in India LOCATION: Maharashtra A participatory watershed development (WSD) program has improved agricultural yields and income generation for poor rural villagers by restoring degraded landscapes of the Kumbharwadi watershed, increasing rainwater capture, storage capacity, and soil fertility, and reducing soil erosion. Background The Kumbharwadi is a 910-hectare watershed in the arable, but low-producing rainfed regions of poor, rural India. Its lands are historically characterized by erratic, deficient, and delayed rainfall patterns; consist of hilly or moun- tainous terrain that makes improving land productivity with large-scale irrigation virtually impossible; and once suffered from severe degradation due to deforestation and unsustainable agriculture and livestock practices. Two villages and roughly 1,000 people that are highly dependent on the land for their livelihoods and sustenance call this watershed home (Gray and Srinidhi 2013). In the mid-1990s, more than 50 percent of the Kumbharwadi was categorized as wasteland because of weather- related impacts and unsustainable land-use practices (Gray and Srinidhi 2013). Village women traveled for drink- ing water and fuel wood, and agricultural production became possible for only half the year, forcing villagers to migrate the remaining half of the year for employment. Supplemental drinking water was needed from 25 to 30 government-supplied water tankers annually to sustain villagers during the dry seasons. To restore the watershed and its agricultural productivity, the Watershed Organisation Trust (WOTR) implemented a participatory WSD project from 1998 to 2002 in the Kumbharwadi. The program was financed by the German Bank for Development and the German Agency for Technical Cooperation, and funds granted through the National Bank for Agriculture and Rural Development (NABARD) and WOTR (Gray and Srinidhi 2013). Integrating Green and Gray Approaches for Inclusive Revitalization WOTR engaged all land-owning families in planning a range of interventions on their property, including the following: ▪▪ Ecosystem-based solutions, like afforestation, reforestation, agroforestry, and on-farm contour trenching, which regenerated the landscape and helped retain soil and its moisture, improving fertility for cultivation. ▪▪ Physical water management built structures, like check dams, farm bunding, and loose boulder structures, which helped slow the velocity of water runoff, increase infiltration into groundwater reserves, and regulate the timing and flows of water throughout the seasons. Both ecosystem-based and built interventions were relied upon as complementary interventions to revitalize the watershed. As part of WOTR’s Participatory Net Planning (PNP) methodology for inclusive watershed develop- ment, all villagers, beginning in 1998, underwent hands-on training in the watershed and learned about conserva- 118 WRI.org tion, sustainable land management, and maintenance of program interventions before implementation. When the project ended in 2002, ecosystem-based solutions had been carried out on 375 hectares of previous forestland, wasteland, and grassland, and farm bunding on 492 hectares, as well as one check dam and seven loose boulder structures constructed (Gray and Srinidhi 2013). WOTR’s PNP approach has also been widely successful in achiev- ing an equitable decision-making process through its prerequisite establishment of a village committee. By requir- ing proportional gender and socioeconomic household representation, even marginalized groups are integrated into project development. In addition, local youth are trained under the guidance of an expert engineer to help supervise the work being implemented, which has proved crucial for long-term management of land and water resources. Improved Agricultural Yields and Income Generation Results from this project indicate increased groundwater levels, improved soil fertility, and marked gains in agri- cultural productivity (see Table A3). Net agricultural income increased from $69,000/year to almost $625,000/ year for the watershed, which was due to several factors, including the expansion of cultivable area; crop yields ben- efitting from better land management practices and the ability for small-scale irrigation; and villagers able to switch from grain crops to cash crops with higher prices/unit sold. As crop-based incomes increased, villagers also shifted investments to higher-producing cattle varieties, which brought a corresponding increase in livestock income (Gray and Srinidhi 2013). Among the most notable ancillary benefits is the fact that villagers no longer need to rely on supplemental water supplies from the government. Table A3 | Agricultural and Ancillary Benefits from Kumbharwadi Watershed Development Program REPORTING YEAR IMPACT INDICATOR UNIT 1998 2002 2012 Total cropped area Hectares 457 510 566 Value of cropland Rupee/hectare 15,000 65,000 65,000 Variety of crops grown during Rabi season Hectares 4 14 25 Agricultural employment Months/year 3–4 8–9 12 Agricultural wage rate Rupee 25 65 225 Land under irrigation (perennial) Hectares 0.00 9.72 50.00 Average depth of water table below ground level Meters 6.5 3.5 3.0 Government supplied water tankers Number/years 25–30 0 0 Wells Number 63 85 91 Source: Gray and Srinidhi 2013. Insights for Advancement A decade following project completion, the cumulative benefits of the WSD program from 1998 to 2012 were three times the cumulative costs of the program (values adjusted to 2012, US$) (Gray and Srinidhi 2013). The project improved not only agricultural productivity, but also overall livelihoods and incomes for these communities, which motivated watershed maintenance long after project completion. The WSD project model was replicated across rainfed regions of India—over 380 projects covering almost 260,000 hectares in six Indian states. However, these communities are still highly sensitive to fluctuations in annual rainfall and temperature changes. Thus in 2014, WOTR introduced the Water Stewardship Initiative in 106 villages, including Kumbharwadi, to empower locals to actively manage the watershed over time (Samuel et al. 2015). Future projects in similar geographies and weather conditions would also benefit from active social engagement and from understanding how to optimize WSD-like interventions and investments for greatest societal benefits. However, a lack of consistency in data reporting, col- lection, and methodology has made it difficult to leverage the success of these projects for targeted optimization or to measure where similar projects have been successful. Integrating Green and Gray 119 CASE STUDY 6B Active Soil Management for Water Conservation in China LOCATION: Municipalities of Beijing, Shenyang, Qingdao; provinces of Hebei, Ningxia, Shanxi Arid northern China depends on overabstracted groundwater for agricultural productivity. The China Water Conservation Project used green and gray infrastructure to enhance the soil’s ability to store water. Activities to preserve the green infrastructure functions of farmland (such as mulching, land-leveling, improving organic soil content and forest shelterbelts) led to increased productivity and farmer incomes, and decreased groundwater pumping and consumptive water use. Background The northern plains of China are one of the great agricultural regions in the world, producing crops that feed hun- dreds of millions of people. This arid region’s dependence on overabstracted groundwater is putting agricultural productivity at risk, and resulting in low farm incomes. One culprit for low agricultural productivity in northern China is nonbeneficial evapotranspiration (NBET)—the water lost due to evapotranspiration (ET) from soil and nonagricultural plants. The World Bank-financed China Water Conservation Projects were implemented in the municipalities of Beijing, Shenyang, and Qingdao and in the provinces of Hebei, Ningxia, and Shanxi to reduce NBET. The China Water Conservation Project 1 (WC1) was implemented from 2001 to 2006. Project 2 (WC2) was implemented over the period 2012 to 2017. These projects were completed by the Hai River Basin Integrated Water Resources Manage- ment Project, which was implemented over the period 2004 to 2010 and financed through a $17 million grant from the Global Environment Facility (GEF). Integrating Green and Gray Infrastructure China’s initial attempts at improving agricultural water productivity focused on physical infrastructure such as canal lining and sprinkler systems, but were not fully successful. In contrast, the China Water Conservation Proj- ects improved physical irrigation infrastructure, while also optimizing the green infrastructure provided by the soil. The soil’s ability to store water and reduce NBET was enhanced through several agronomic measures: ▪▪ Mulching with crop residue or plastic sheets helped to maintain soil moisture and helped reduce soil ero- sion. ▪▪ Land-leveling helped rainwater evenly percolate into the soil and reduced evaporation caused by pools of water in low-lying areas. ▪▪ Improving the organic content of the soil helped to increase its water storage capacity. ▪▪ Tillage was reduced or eliminated in the dry season to maintain soil moisture, and deep ploughing was practiced in the wet season to increase water percolation. 120 WRI.org ▪▪ Forest shelterbelts were planted to reduce wind speeds over fields, which helped to reduce overall evapo- ration rates. ▪▪ Irrigation applications were improved with respect to timing and amount, based on close monitoring of soil moisture conditions. The projects also improved irrigation infrastructure through canal lining and adoption of sprinkler irrigation sys- tem. Farmers were encouraged, if there were appropriate market conditions, to move toward more profitable and less water-intensive crops—often grown in green houses. Finally, farmers were organized into Water User Associa- tions to help maintain irrigation infrastructure and manage water locally. Water Conservation through Soil Management The project’s primary goals were to increase the value-added per unit of ET and achieve groundwater sustainability. The ET was measured through an innovative remote sensing–based technology, which allowed each participating county to measure its actual agricultural ET water consumption. The approach of managing ET is often termed “real water savings,” as opposed to irrigation efficiency, which typically focuses only on the efficiency of applied irrigation water. The three key targets for the project development indicators for both WC1 and WC2 were met or exceeded. The first target focused on reducing the amount of ET per kilogram of cash crop produced (wheat, corn, and rice). For WC1, it was estimated that prior to the project, the average ET rate was 735 millimeters per hectare (mm/ha), and after the project, this was reduced to 612 mm/ha, resulting in an average water savings of 1,200 cubic millimeters/ hectare (mm3/ha). The second target focused on reducing groundwater overdraft, as measured by a reduction in groundwater abstractions. In all WC1 and WC2 areas, the rate of groundwater level decline was either significantly reduced or eliminated. For WC1, it was calculated that average groundwater pumped per hectare of farmland decreased by 30 percent, which helped to stabilize groundwater levels. The total reduction in consumptive water use was estimated at approximately 128 million m3/year. The third target focused on increases in farmer incomes, and in all WC1 and WC2 areas, farmer incomes increased, typically in the range from 100 to 200 percent. Finally, WC1 benefitted 358,088 families and had an overall quantifiable economic rate of return of 24 percent, and WC2 benefitted 594,200 farmers and had an overall quantifiable economic rate of return of 19 percent. Insights for Advancement The success of the China Water Conservation Projects shows that managing soil through better agronomic prac- tices has the potential to significantly increase both its water storage capacity and reduce NBET—the key indicator for real water savings. Researchers in this project found that remote sensing data were critical for measuring ET and monitoring consumptive water use to calculate real water savings. Future irrigation infrastructure programs can benefit from combining with agronomic practices that enhance the green infrastructure benefits provided by the soil. In addition, extensive stakeholder engagement is critical to inducing farmers to change their agronomic practices. Farmers must be convinced that their behavioral changes will result in increased incomes and reduced consumptive water use. There is real potential to scale up solutions that value soil as an important infrastructural asset. Most countries depend on rainfed agriculture, which is inherently uncertain and oftentimes puts pressure on soil health. Mapping rainwater and soil moisture, prioritizing soil health, and supplementing with small-scale irrigation can improve the livelihoods of farmers in rainfed areas (IWMI 2010). Integrating Green and Gray 121 APPENDIX B. REFERENCES ENDORSING T.S. Bridges, J. Lillycrop, J.R. Wilson, T.J. Fredette, B. Suedel, C.J. Banks, and E.J. Russo. 2013. “Engineering with Nature for GREEN INFRASTRUCTURE AND SIMILAR Sustainable Water Resources Infrastructure.” US Army Corps of Engineers contribution to 2013 PIANC Yearbook. APPROACHES This annotated bibliography presents a selection of publications that https://ewn.el.erdc.dren.mil/pub/EWNFactSheet_Final.pdf. have done one of the following: ▪▪ This fact sheet describes the Engineering With Nature (EWN) ▪▪ Made a strong general case for green infrastructure initiative of the U.S. Army Corps of Engineers (USACE), which aims to ▪▪ Tracked the rate of adoption or investment in green infrastructure enable more sustainable delivery of water resources infrastructure services. ▪▪ Showed significant support for green infrastructure or broader nature-based solutions on a global level ▪▪ The intentional alignment of natural and engineering processes can efficiently and sustainably deliver economic, environmental, and Collectively, these resources demonstrate the growing momentum for social benefits through collaborative processes. integrating green and gray infrastructure, and the increasingly clear Climate Bonds Initiative. “The Water Infrastructure Criteria: reasoning for promoting such an approach. This list is illustrative and Climate Bonds Standard.” not meant to be comprehensive. https://standard.climatebonds.net/files/files/Climate%20Bonds%20 R. Abell. N. Asquith, G. Boccaletti, L. Bremer, E. Chapin, A. Water%20Infrastructure%20Criteria%20Introductory%20Brochure%20 Erickson-Quiroz, J. Higgins, et al. 2017. “Beyond the Source: The April%202018.pdf. Environmental, Economic, and Community Benefits of Source Water Protection.” Arlington, VA: The Nature Conservancy. ▪▪ This brochure introduces the Climate Bonds Standard Water Criteria, which lay out eligibility requirements for certification for a Certified https://thought-leadership-production.s3.amazonaws. Climate Bond. com/2017/08/15/13/08/06/94ed694b-95aa-457d-a9d0-4d8695cfaddc/ Beyond_The_Source_Full_Report_FinalV4.pdf. ▪▪ The criteria cover green infrastructure. This provides an avenue for green infrastructure projects to attract the financing they need to ▪▪ This global high-level analysis demonstrates that 40 percent of source watershed areas show high to moderate levels of address growing water challenges. F. Cohen, K. Hamilton, C. Hepburn, F. Sperling, and A. degradation. Teytelboym. 2017. “The Wealth of Nature: Increasing National ▪▪ Four out of five cities can reduce sediment and nutrient pollution by a meaningful amount through forest protection, pastureland Wealth and Reducing Risk by Measuring and Managing Natural Capital.” Oxford, UK: Institute for New Economic Thinking. reforestation, and improved agricultural practices. ▪▪ One https://www.wavespartnership.org/en/knowledge-center/wealth- in six cities could recoup the costs of green infrastructure nature-increasing-national-wealth-and-reducing-risk-measuring-and- protection through savings in annual water treatment costs alone. managing. G. Bennett and F. Ruef. 2016. “Alliances for Green Infrastructure: State of Watershed Investment 2016.” Ecosystem Marketplace: A ▪▪ This report discusses natural capital accounting, providing a description of its status among policymakers and the business Forest Trends Initiative. Washington, DC: Forest Trends. community, offering recommendations on additional areas for http://www.forest-trends.org/documents/files/doc_5463.pdf. research and a series of actions to be taken immediately. ▪▪ This global survey examines transactions for green infrastructure ▪▪ The first section identifies the three challenges faced by natural capital: it is not accurately measured; it is not compatible with all for water from 2014 to 2015, including sources such as public economic models, and there are no institutions to properly manage subsidy payment programs, user-driven watershed investments, or support it. The remaining sections describe next steps and water quality credit trading, and environmental water markets. include discussion of “natural infrastructure” supporting greater ▪▪ In 2015, nearly $25 billion was spent across 62 countries on payments for green infrastructure for water. These payments prosperity. supported 419 programs. ▪▪ Public and private investment in watershed protection grew at record levels of about 12 percent per year between 2013 and 2015. 122 WRI.org High Level Panel on Water. 2018. “Making Every Drop Count: An P. Sukhdev, H. Wittmer, C. Schröter-Schlaack, C. Nesshöver, J. Agenda for Water Action.” Outcome Document. Bishop, P. Brink, H. Gundimeda, et al. 2010. “Mainstreaming the Economics of Nature: A Synthesis of the Approach, Conclusions https://sustainabledevelopment.un.org/content/ and Recommendations of TEEB.” The Economics of Ecology and documents/17825HLPW_Outcome.pdf. Biodiversity. ▪▪ Eleven heads of state and a special advisor were convened by the UN and World Bank to provide leadership and recommendations http://www.teebweb.org/our-publications/teeb-study-reports/ synthesis-report/. for the management of water in accordance with Sustainable Development Goal (SDG) 6: “Ensure availability and sustainable management of water and sanitation for all.” ▪▪ This report bridges the gap between biodiversity and the arena of international, national, and local policy—as well as with the ▪▪ The report advocates for use of green infrastructure in harmony with gray infrastructure to make water infrastructure more business community—by describing how to value the economic contribution of ecosystem services. sustainable and resilient, among other actions. ▪▪ It makes the case for the systematic appraisal of ecosystem services, and offers examples of how to do so in different settings. Natural Capital Financial Alliance. 2012. “Natural Capital Declaration.” UNEP Finance Initiative. World Business Council for Sustainable Development (WBCSD). 2017. “Incentives for Natural Infrastructure: Review of Existing http://www.naturalcapitalfinancealliance.org/the-declaration. Policies, Incentives and Barriers Related to Permitting, Finance ▪▪ More than 40 financial institutions have signed on to the declaration to acknowledge the role of natural capital in maintaining a and Insurance of Natural Infrastructure.” Geneva: WBCSD. https://www.wbcsd.org/Clusters/Water/Natural-Infrastructure-for- sustainable global economy. Business/Resources/Incentives-for-Natural-Infrastructure. ▪▪ The declaration commits to understanding how natural capital fits into the operations of financial institutions; to support ▪▪ This report documents private and public implementation of green methodologies to integrate natural capital into decision-making; infrastructure globally, focusing on three factors for implementation: to seek global consensus on how to include natural capital into permitting, financing, and insurance. private sector decision-making and accounting; and to collaborate to represent natural capital on financial reports. ▪▪ The report is prepared on behalf of the WBCSD green infrastructure platform that convenes over 30 multinational companies to advance S. Naumann, T. Kaphengst, K. McFarland, and J. Stadler. 2014. the business case for investment in green infrastructure. “Nature-based Approaches for Climate Change Mitigation and WWAP (World Water Assessment Program)/UN-Water. 2018. “The Adaptation. The Challenges of Climate Change—Partnering with United Nations World Water Development Report 2018: Nature- Nature.” Bonn: German Federal Agency for Nature Conservation Based Solutions for Water.” Paris: UNESCO. (BfN), Ecologic Institute. http://unesdoc.unesco.org/images/0026/002614/261424e.pdf. ▪▪ This https://www.ecologic.eu/sites/files/publication/2014/eco_bfn_nature- based-solutions_sept2014_en.pdf. report promotes nature-based solutions to help achieve the 2030 Agenda for Sustainable Development through NBS. ▪▪ This brochure outlines the multifaceted advantages of nature-based solutions for climate change mitigation and adaptation. ▪▪ It presents a broad perspective of the UN system on freshwater resources and sanitation issues. ▪▪ While there is presently a lack of specific funds for nature-based solutions at the European Union (EU)-level, there are several World Wide Fund for Nature (WWF). 2017. “Natural and Nature- Based Flood Management: A Green Guide.” Gland, Switzerland: potentially related funding programs and opportunities to apply WWF. such solutions. S. Ozment, K. DiFrancesco, and T. Gartner. 2015. “Natural https://c402277.ssl.cf1.rackcdn.com/publications/1058/files/original/ Infrastructure in the Nexus.” Nexus Dialogue Synthesis Paper. WWF_Flood_Green_Guide_FINAL.pdf?1495628174. Gland, Switzerland: International Union for Conservation of Nature. ▪▪ This guide supports communities at the local level to use nature- based methods for flood risk management. https://portals.iucn.org/library/sites/library/files/documents/ Nexus-001.pdf. ▪▪ The guide is designed for those responsible for flood risk management, including municipal governments, community groups, ▪▪ This paper discusses how green infrastructure can help decision- makers and infrastructure managers address interconnected and NGOs, and provides disaster response case studies and a set of adaptable tools for readers to understand their local context of flood risks and weigh different management options, both structural and challenges facing water, energy, and food systems, often referred to nonstructural. as the “nexus”. ▪▪ It highlights reasons to include green infrastructure in planning and decision-making, and reviews efforts to build momentum for increased protection and restoration of green infrastructure around the world. Integrating Green and Gray 123 World Bank. 2017. “Implementing Nature Based Flood Protection: S. Ozment, T. Gartner, H. Huber-Stearns, K. DiFrancesco, N. Principles and implementation Guidance.” Washington, DC: Lichten, and S. Tognetti. 2016. “Protecting Drinking Water at the World Bank. Source: Lessons from Watershed Investment Programs in the United States.” Washington, DC: World Resources Institute. http://documents.worldbank.org/curated/en/739421509427698706/ pdf/120735-REVISED-PUBLIC-Brochure-Implementing-nature-based- https://www.wri.org/sites/default/files/Protecting_Drinking_Water_ flood-protection-web.pdf. at_the_Source.pdf. ▪▪ The objective of this document is to present five principles and guidance for the evaluation, design, and implementation of nature- ▪▪ WRI and Colorado State University analyzed 13 watershed investment programs in the United States to identify common based solutions for flood risk management as an alternative or approaches, underlying conditions, and lessons learned. complement to conventional engineering measures. ▪▪ The report distills 10 key success factors to consider in watershed ▪▪ The first part describes key considerations for planning nature- based solutions, and the second part presents a step-by-step investment program development. United Nations Environment Programme (UNEP), International implementation timeline and required activities and outputs for Union for Conservation of Nature (IUCN), The Nature each step as a reference for disaster risk and climate adaptation Conservancy (TNC), World Resources Institute (WRI), and professionals. U.S. Army Corps of Engineers. 2014. “Green Infrastructure T. Gartner, J. Mulligan, R. Schmidt, and J. Gunn. 2013. “Natural Guide for Water Management: Ecosystem-Based Management Infrastructure: Investing in Forested Landscapes for Source Approaches for Water-Related Infrastructure Projects.” Water Protection in the United States.” Washington, DC: World Resources Institute. http://www.unepdhi.org/-/media/microsite_unepdhi/publications/ documents/unep/web-unep-dhigroup-green-infrastructure- https://www.wri.org/publication/natural-infrastructure. guide-en-20140814.pdf. ▪▪ This report is a guide and reference for professionals working in the field of water conservation and management to understand and ▪▪ This guide is an overview of three key water management issues related to water supply, water quality, and flooding, and details 12 utilize green infrastructure. green infrastructure solutions, their relevant ecosystem services, ▪▪ The report is divided into three sections starting with an outline of and estimated installation costs. the business case and proof of green infrastructure. 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Accessed November 7, 2018. Integrating Green and Gray 133 ABOUT WRI PHOTO CREDITS World Resources Institute is a global research organization that Cover photo Atelierdreiseitl; table of contents Kelly Fike/USFWS; turns big ideas into action at the nexus of environment, economic foreword Ian; pp. 2, 12, 26, 60, 72, 84, 114, 118 World Bank; p. 40 Roots, opportunity, and human well-being. Tubers & Bananas; p. 50 Marizilda Cruppe/ WRI Brasil; p. 80 GFDRR/ World Bank Disaster Risk Management; p. 88 Vilseskogen; p. 90 Agência Brasília; p. 94 Zandmotor; p. 96 -JvL-; p. 100 Robert-Couse- Our Challenge Baker; p. 102 Francisco Anzola; p. 106 DeepRoot; p. 108 Explore Sri Natural resources are at the foundation of economic opportunity and Lanka; p. 112 Diego Delso; p. 120 CIFOR. human well-being. But today, we are depleting Earth’s resources at rates that are not sustainable, endangering economies and people’s lives. 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