Pay for Success Feasibility Study - Green Infrastructure Implementation
Enviro Social Capital is a partnership initiative led by the Green Building Alliance that brings stakeholders from different sectors together to assess specific challenges in the Pittsburgh Green Infrastructure system. The Green Building Alliance is a Pittsburgh-based nonprofit that provides education, technical assistance, and programming to create environmentally, socially, and economically vibrant places in the built environment.
THE CHALLENGE & OUR APPROACH
Fourth Economy Consulting partnered with Enviro Social Capital to gauge the likelihood of implementing green infrastructure in Pittsburgh through Pay for Success financing. Fourth Economy developed the feasibility study and created a framework for a potential transaction. Building on the Living Waters of Larimer cost/benefit analysis and PWSA’s Green First Plan, Fourth Economy created a 50-year cost/benefit analysis for a highly impacted sewer-shed, Negley Run (A-42). The feasibility study included this 50-year cost/benefit analysis and cash flows showing the relationships between the stakeholders, including the expected return on investment (ROI) under various conditions. As part of the study, we analyzed the potential ROI based on a single outcome; the reduction of combined sewer overflows (CSOs). We also examined additional triple bottom line benefits alongside a reduction in CSOs, such as a reduction of air pollution caused by vegetation, increased recreational value, increased property value, and flood risk reduction. We considered these additional benefits to attract more potential payers to the transaction, outside of just PWSA.
Ultimately, Fourth Economy deemed the project feasible based on the information available and created three models, with their likelihoods of success, that could be the foundation for a potential Pay for Success transaction. This material was combined with additional background information provided by Enviro Social Capital to form the feasibility study. Enviro Social Capital submitted this study to BNY Mellon, a potential investor in the transaction.