Detroit Urban Garden - Image via Flickr
This post was originally published on the Meeting of the Minds website.
As an outdoor enthusiast, I've always been fascinated by Central Park in New York; the feeling one gets in the middle of the park when all urban chaos disappears and the array of outdoor activities it offers make it a truly unique place. That is the true magic of 'green infrastructure,' a broad term used to describe parks, waterways, gardens, trees, and other natural aspects of the urban environment.
New York is not the only city benefiting from such infrastructure. In Detroit, the rise of urban gardens has already proven to have a strong positive impact on the local population and social cohesion.
So the question is: why has green infrastructure not become mainstream, what's keeping it from being scaled in all urban centers across the country?
Historically, like most urban infrastructure, green infrastructure has been the responsibility of local governments. Green infrastructure is rarely seen a priority for local governments because its value is not always obvious or quantifiable. Growing pressure on municipal budgets, and many competing priorities for funds, has decreased the focus on green infrastructure. An additional challenge for local governments to scale the implementation of green infrastructure is the ability to invest in it in the first place, as green infrastructure depends almost entirely on public financing. The quantity, quality, and maintenance of green infrastructure is directly linked to the affluence of a neighborhood. This means that mainly wealthier areas can afford to implement sustainable urban infrastructure, widening the socio-economic gap between neighborhoods much more visible.
The biggest roadblock for implementing and scaling green infrastructure is the financing. We urgently need innovative financing solutions that will alleviate the financial burden of the public sector by strategically involving the private sector. The private sector can drive the uptake of green infrastructure through capital investments and implementation support, while reaping the social, environmental, and financial benefits. These actions from the private sector can help mainstream infrastructure that is smart, sustainable, and resilient to a changing climate. This is why EIT Climate-KIC and South Pole have come together to launch the City Finance Lab, a platform supporting the development of innovative, replicable, and scalable financing solutions that increase investment in climate-resilient, low-carbon, and green urban projects for sustainable cities.
The core aspect of innovating to find new sources of financing for green infrastructure is identifying the multiple beneficiaries and monetizing their benefits. Green infrastructure in a city benefits all citizens' well-being, but certain citizens, businesses, investors, and public departments will have additional financial benefits from well-designed green infrastructure. By capturing a small portion of these benefits that result from public investments, local governments can partly or entirely finance the investment and maintenance costs of green infrastructure.
Examples of these financial benefits in practice:
To inspire local authorities and local communities to innovate with dedicated business models, the European Union's Naturvation program has developed a comprehensive catalogue of innovative solutions for nature-based solutions in cities. We hand-picked four highly promising models
Green infrastructure adds economic value to neighboring real estate, and this added-value can be financially captured to pay for the construction and/or maintenance costs. This can be done in several ways:
It is crucial, however, that these innovations do not negatively impact landowners who do not have the capacity to pay the taxes stemming from this increased value.
Local businesses and stakeholders enter into an agreement with the local government to finance improvements to green infrastructure in a specific area. The engagement of local stakeholders in the creation and maintenance of green infrastructure is crucial to ensure it matches their needs and will stimulate the sense of community.
In a vacant space model, the local government takes a detached approach to the implementation of green infrastructure, offering unused public space to local initiatives and entrepreneurs that have socially and environmentally viable projects.
Green infrastructure is well known for its environmental and social benefits. It can also have a range of clear co-benefits, including improved physical and mental health, improved resilience of the city against extreme weather events, reduced criminality, and more.
One way to scale the development of green infrastructure is by capturing the added value that these co-benefits entail, such as reduced public health costs, reduced police budget needs, and reduced disaster relief budgets or insurance premiums. By capturing this value, more public funds can be redirected to green infrastructure.
The City Finance Lab is currently exploring the full range of innovative financing solutions for the Northern Gateway project with the Greater Manchester Authority and the City of Manchester, U.K. This ambitious renovation project has a strong emphasis on green infrastructure and is a perfect testing ground for these innovative solutions, seeking to mobilise more than USD 60 million dedicated to green infrastructure. If this project is a success, the City Finance Lab will actively share knowledge and stimulate the replication of these solutions in other cities in Europe and worldwide.
The more cases we have like Manchester, the more these innovative financing solutions will be mainstreamed and replicated, and the faster the transition to greener cities.
If you are working on implementing an innovative financing solution for urban green infrastructure, or you are interested in replicating existing financing solutions in your city's context, the City Finance Lab can support you in this process. Please contact us at firstname.lastname@example.org.