DC Water Case Study

Quantified Ventures served as the outcomes-based finance transaction intermediary to design and guide DC Water through the process of structuring and executing a $25 million Environmental Impact Bond, the country’s first. Like many cities with aging infrastructure, the District of Columbia faced regulatory and environmental concerns from its reliance on a sewer system that combined stormwater and sanitary sewage within a single system and resulted in frequent sanitary sewage overflows into the Potomac River. As a result of enforcement action, DC Water was subject to a consent decree with the EPA to address its combined sewer overflows (CSO) problem. To address this problem, DC Water developed a multi-billion dollar gray infrastructure plan to relieve the CSO problem, but it also investigated the potential benefits of using green infrastructure to achieve the same goals at a significantly reduced cost but greater level of uncertainty. Quantified Ventures worked with DC Water to create the first ever Environmental Impact Bond to finance the implementation of green infrastructure through an approach that shared performance risk with investors by linking their returns to the project’s success. This project serves as a model for water authorities globally to leverage private capital to finance innovative but uncertain solutions to stormwater management challenges.