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From Gray to Green: Investing in Natural Infrastructure to Address Water, Food and Energy Challenges

This blog post was originally published for IWA Network on August 4, 2015.

Recent extreme droughts and floods have forced an evaluation of how water infrastructure impacts other sectors, highlighting the need for a multi-disciplinary, cross-sectoral approach to balance environmental, social and economic concerns against a backdrop of climate change.

Investing in natural infrastructure to achieve food, water and energy security can be transformational in making water available for agriculture, electricity generation and water supply. The success of natural infrastructure investments depends on partnerships between sectors and the rise of champions to scale up natural infrastructure to make it part of the solution for current and future resource challenges.

Conventional engineering approaches to gray infrastructure – traditional, human-made projects such as dams, water treatment plants and the like—have many limitations. Large engineered projects require significant capital for construction, operations and maintenance, and can have devastating effects on the environment. There is often a lack of flexibility in adapting gray infrastructure to uncertainties in climatic or socio-economic conditions; once dams are built, it is extremely difficult – technically and economically—to adapt them to new flow conditions and changing socio-economic demands.

Environmental services can provide a more flexible infrastructure-like function, such as healthy watersheds purifying water or mangroves protecting the shore from extreme storms. Natural infrastructure also helps maintain gray infrastructure: upstream forests help prevent soil erosion that would otherwise sully reservoirs, limiting the space available for water and hindering hydroelectric turbines.

While gray infrastructure is often designed for a limited set of functions, natural infrastructure can be integrated into or directly replace traditional engineering solutions while performing other valuable tasks. Agricultural floodplains contain rich soils for food crops, but they can also be used to route floodwaters away from population centers, while simultaneously providing valuable habitat for fish, birds and other species. During dry periods, healthy forest areas and floodplains can store water for irrigation or drinking.

A recent McKinsey report highlights that, at current levels, the global community will invest $10 trillion in water infrastructure between 2013 and 2030. Substituting or complementing traditional gray infrastructure with natural infrastructure could provide an alternative, cost-effective solution while enhancing environmental benefits. Six U.S. cities managed to save up to $6 billion by shifting their investments from water treatment facilities to sustainable watershed management.

Comparison of green vs. gray infrastructure costs for cities to meet Water Quality requirements in the US.

There is increasing awareness of the importance of investing in natural infrastructure, especially from the private sector. Unilever Tea Kenya worked with communities that were clearing forest areas for fuel, which impacted the stream flows and groundwater needed for tea production. The company started growing native tree seedlings and donating them to the surrounding farmers and communities for planting. Between 2001 and 2009, 850,000 trees were planted to help protect regional water supplies.

Nonetheless, there is huge underinvestment in natural infrastructure relative to the scale of the opportunity, cost-effectiveness and current and future risk exposure. The energy and agriculture sectors collectively contributed less than 1 percent of all natural infrastructure investments in 2013, missing opportunities to invest in its cross-sector benefits.

The lack of investment is partly due to a lack of information needed to evaluate and compare natural infrastructure options to business as usual. Green infrastructure can also be more complex than gray infrastructure, due to longer time horizons before ecological benefits are fully recognized, and the need for multi-stakeholder involvement beyond the many downstream beneficiaries.

Addressing these issues, the Natural Infrastructure in the Nexus Dialogue Synthesis report presents case studies and best practices from different countries. It offers concrete examples of successful stories that can inspire local stakeholders to recognize and consider green solutions to solve nexus challenges.

To increase investment and harness the potential of natural infrastructure for the water, energy and food sectors, government, private sector, civil society, financial institutions and academia need to focus on four key priorities: establish enabling conditions; identify opportunities where natural infrastructure makes economic sense; develop a robust body of literature on the business case of investing in natural infrastructure; and then integrate natural infrastructure assessments into food, water and energy system design.

Our natural infrastructure report is part of the Nexus Dialogue on Water Infrastructure Solutions. To learn more, visit

What is the Nexus?

Increasing urbanization and economic growth provide significant benefits, but also pose a range of challenges especially for water quantity and quality. Water, energy and food security rely on water infrastructure. Recognition of the closely bound interaction between water, energy and food (or the management of land for food, fodder, and fuel production)—the nexus—has led to new demands for water infrastructure and technology solutions.

Key Terms Defined

  • Source Water Protection
    Refers to the protection of water quality, quantity, timing of flows, and associated benefits at the water's source—before it reaches the intake of a drinking water system. In this guide, we are most interested in source water protection through investments in "natural infrastructure."

  • Built Infrastructure
    Refers to the human-engineered infrastructure for water resources such as treatment plants and dams.

  • Natural Infrastructure
    Refers to the "strategic use of networks of natural lands, working landscapes, and other open spaces to conserve ecosystem values and functions and provide associated benefits to human populations (Allen 2012). Forests, wetlands, riparian buffers, and other natural elements on the landscape can comprise natural infrastructure when strategically used and managed to provide services for communities, such as through land acquisition and conservation easements, low-impact development, conservation practices of agricultural forest lands, and even beaver dams. As such, it is commonly referred to as "watershed protection," "land conservation," or several other more traditional terms. Natural infrastructure is also sometimes referred to as "green infrastructure"—although the latter term is also used more broadly for things such as rain gardens or even water meters and energy efficient equipment (Allen 2012). Natural Infrastructure can be secured though a variety of means. In this guide, we are primarily interested in incentive-based approaches, by which financial incentives and/or technical assistance are provided to landowners to conserve, sustainably manage, and/or restore ecosystems to provide one or more watershed-related ecosystem services. Such investments typically involve downstream beneficiaries paying upstream landowners. Use of incentives can be an efficient and viable approach to securing natural infrastructure. However, many of the successful efforts to date have used a combination of approaches, including non-incentive-based mechanisms like zoning ordinances.

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