But you could innovate a model in which the company invests even more heavily in the capex piece to get more projects going, and then there’s a payback period of that capex over time from the mitigation credits. The co-investment is a catalyst that greases the skids for those projects to get from shovel-ready to underway and done.īecause corporates are setting ESG targets, including for water, they might not need revenue generation from mitigation banks – the offset might still be enough.
#Ontour 2.0 free#
Less costs = more capital that’s free for projects filling out the pipeline.įor their investment, the investors engaged in water stewardship get a pipeline of projects. Should corporate water stewards pay for this service? Back to pipeline of projects. If the company has to report to a third party its water stewardship accomplishments, the mitigation bank can provide them an easy way to do that. They could also invest in the opex – in the maintenance of the wetland.
They can offset the capex – by doing so, they are derisking the project for the mitigation bank and making the bank’s payback period shorter and their profit higher.That’s capex and opex for the mitigation bank. The secondary expense is maintaining the ecological integrity and the value of the mitigated property as an ecological asset. The key capital expense for any mitigation bank is buying the property. But the NBS 2.0 role the private sector could play is as an investor to those projects.
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Mitigation banks already know how to monetize nature that’s what they do for business. It's like being a home builder, except that you're not building houses but wetlands and you're betting on the constant stream of credits to pay back the capex and opex of the projects.) They make money through the maintenance of the wetland - the company pays a credit to the mitigation bank every year as a cost of the project. They maintain it and get paid credits by investors in nearby development projects that are converting wetlands. (Mitigation banks buy cheap land and restore it to some ecological state that's deemed to be functional - such as making a wetland out of it. Aligning mitigation banks with companies is one way to create that pipeline. They can’t get projects fast enough they would do more if there were a pipeline. One of the things companies struggle with all the time in water stewardship is getting a pipeline of projects. When you start thinking about stacking these different revenue streams, you’ve got NBS 2.0 – multiple ways to incentivize investment in the solutions.Ĭreating a Pipeline of Mitigation Bank Projects
Other revenue streams could come from the mitigation value of the wetlands (wetlands are useful tools for carbon storage in wet soils) and the potential carbon credits you could get for that mitigation. While the capex of buying a wetland project is heavy, the opex of not having to pay for water over 20 years pays that back and then some. Of course, setting up such schemes is very complicated because they involve water rights, decisions about flood control, and the risk assessments associated with flood control.īut once the details are ironed out, combining wetlands with reservoirs for storage gives us more flexibility to think about these systems as combined, built, and natural with the water as one of the revenue streams that incentivize the projects. Why is that important for investment? Imagine if a company that invests in the wetlands could claim some portion of that extra wiggle room as a right and call on that water later, possibly at a lower rate or even free because they created it.įrom a business model perspective for a company downstream, those are foregone costs that increase profitability. And that means you’ve got some extra wiggle room in the flood reservoir to store water. That means a company can buy small parcels over time and spread out the flood pulse reduction in space and in time, building a barrier for the flood peak before it gets to the reservoir. In forthcoming research from myself and colleagues, we show that several small wetlands sometimes function as well as a single large one. So all that empty storage – couldn’t that be used to store water that we use later? On the other hand, we can't really afford to fill up the reservoir more because we need to be prepared for increasing flood extremes, right? The reservoirs also capture in some cases what’s called “conservation storage" – water for drinking, for cities, or for agriculture. How does a flood-control reservoir work? It is kept pretty empty prior to the rainy season so that, if there's a big hurricane, the reservoir can capture a lot of that flow, slow it down, and prevent bigger floods from happening.