The Story Behind the World's First Environmental Impact Bond

Published Tuesday, December 13, 2016 | by Eric Letsinger, Mark Kim

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Intrigued by the potential of the Pay for Success model, DC Water and Quantified Ventures partnered to creatively apply the model to the vexing social and health challenges of green infrastructure. With the nation's capital using a combined sewer system that allows wastewater to flow directly into local rivers during periods of heavy precipitation, an initial solution was grey infrastructure: a $2.6 billion tunnel system designed to capture the combined sewer overflow and prevent it from entering rivers. With the rise of green infrastructure, the first Environmental Impact Bond (EIB) was created in the form of a $25 million, tax-exempt bond sold in a private placement to Calvert Foundation and Goldman Sachs Urban Investment Group. Both organizations believe this EIB can serve as a replicable and scalable model not only for storm water management issues, but also across a broad range of clean energy and infrastructure projects.