Pilot program aims to cut nutrients and sediments that impact Newark’s water supply

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The City of Newark, Delaware, and the Revolving Water Fund announced the closing of the first-ever pay-for-success transaction that will fund on-farm agricultural restoration activities to reduce nutrients and sediment flowing into surrounding waterways.

The City of Newark pay- for-success transaction (PFS) is being conducted as a pilot program to examine whether investment in agricultural best management practices on farms can achieve pollution reductions that meet regulatory compliance requirements under the Clean Water Act while also achieving watershed conservation goals.

The PFS provides the City of Newark with a financing technique for the up-front costs of installing green infrastructure. The costs are paid in part by the Revolving Water Fund, with the City of Newark repaying such costs only upon achievement of regulatory approval by the Delaware Department of Natural Resources and Environmental Control (DNREC).

This approach shifts regulatory compliance risk from the municipality to conservation funders and also allows for innovation, a release states

The Revolving Water Fund seeks to create a replicable funding mechanism that other municipalities can readily adopt to advance the use of green infrastructure as a stormwater management solution for their communities. The Revolving Water Fund, a partnership between The Nature Conservancy and i2 Capital, aims to provide a self-sustaining pool of capital for watershed conservation.

Tom Coleman, the City Manager for Newark and former director of the Newark Public Works and Water Resources Department, said, “As both a water purveyor and MS4 permittee, I’m excited by thepotential benefits for our residents and ratepayers from this partnership. It is not often you have an opportunity to accelerate ecological restoration in your watershed while also saving money. Agreements like this should serve as the model for source water protection and MS4 compliance.”

The PFS pilot was financed in part by a project development grant from the Bunting Family Foundation to The Nature Conservancy – a proxy for private capital.

The transaction was aided with operational funding from i2 Capital, the William Penn Foundation, and the Natural Resources Conservation Service, as part of its Conservation Innovation Grants program. The transaction also benefits from in-kind contributions from i2 Capital, Environmental Incentives, Stroud Water Research Center and Quantified Ventures.

Proceeds from the transaction will fund a portfolio of agricultural conservation projects, including a 750-square-foot bioswale, on-farm nature-based stormwater infrastructure, a riparian buffer and fencing along 3.6 acres of streams that are critical sources of drinking water for the City of Newark.

“We’re thrilled to partner with the City of Newark to help pioneer this innovative financingmechanism,” said Richard Jones, Delaware State Director for The Nature Conservancy. “This is a bold example of a municipal-nonprofit-private partnership that aims to increase the amount and velocity of funding for watershed conservation efforts. ”

Ashley Allen, CEO of i2 Capital, said, “The Revolving Water Fund strategy represents a pioneering approach to financing watershed conservation. It aligns scientific, financial, economic and regulatory forces behind a conservation solution that delivers maximum pollution reductions. We’reenthusiastic about our partnership with The Nature Conservancy and other key contributors to architect and execute this innovative transaction. This effort could not have been realized without the significant investments made by the NRCS Conservation Innovation Grants program and the William Penn Foundation.”

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