Urban water suppliers around the world face four major problems:
- Degradation and development of watersheds that supply their water which is resulting in higher water treatment costs.
- More extreme weather events like extreme heat days, hurricanes, and droughts that place added stress on water supply infrastructure.
- Water shortages which mean water suppliers have to come up with new ways to supply water to urban populations.
- Budgetary shortfalls that make it hard to maintain, update, or expand infrastructure to ensure a steady supply of clean water to rapidly expanding urban areas.
One cost-effective solution that is often overlooked for addressing all four of these problems: Green infrastructure. Now, we offer a method for quantifying financial, social, and environmental benefits for incorporating green infrastructure into urban water management systems.
Green Infrastructure Can Save Money and the Environment
For most large cities, the best solution for supplying clean reliable water will be a combination of green infrastructure and gray (or human-engineered) infrastructure. Green infrastructure, such as forest and ecosystem restoration in source watersheds, can save water suppliers a lot of money by reducing water treatment costs, regulating the timing of water flows, avoiding the need to install new infrastructure components, and reducing wear and tear on existing infrastructure. In addition, green infrastructure has the potential to generate numerous local to global societal benefits in the form of job creation, improvement of rural livelihoods, health benefits from improvements to air and water quality, recreation and habitat provision, and climate change mitigation.
The evidence base demonstrating these cost savings is growing. Recently, the World Resources Institute investigated the potential 30-year cost savings (a typical investment timeframe for water infrastructure) for incorporating green infrastructure into water suppliers’ infrastructure portfolios in major metropolitan areas of Brazil:
- In São Paulo, restoring 4,000 hectares of upstream forests in targeted locations could reduce sediment pollution by 36%, reducing turbidity by almost half and generating a net benefit of $69 million dollars (an almost 28% return on investment for the water company).
- In Rio de Janeiro, restoring 3,000 hectares of native forest in targeted locations would avoid costs of $79 million (a 13% return on investment) due to water treatment cost savings.
Yet, water suppliers and regulators often lack clear guidance on how to identify the best green infrastructure solutions, how to value their costs and benefits, and how to incorporate green infrastructure into their decision-making processes.
Making It Easy for Water Suppliers to Consider Green Infrastructure
A new working paper from World Resources Institute addresses this gap by providing clear step-by-step guidance on how to conduct a Green-Gray Assessment (GGA). The GGA is a six-step process to compare the costs and/or benefits of green and gray infrastructure investments. The GGA can be used to compare any combination of green and gray (or hybrid) infrastructure investments or portfolios using common decision support tools like cost-benefit analysis, cost-effectiveness analysis and multi-criteria decision analysis, so that a wise investment decision can be made. The GGA can provide a narrow financial analysis for a targeted user like a water supplier, or a robust economic analysis to examine broader social costs and benefits.
The paper walks readers through tricky issues like how to measure transaction and opportunity costs associated with green infrastructure, how to select a biophysical model to quantify water-related improvements, how to identify benefits for water suppliers, and how to address uncertainty in valuation and presentation of results. The paper also provides readers with guidance on useful preassessment steps to help strengthen a GGA study and ensure results are used by decision makers. These steps include: 1) understanding important contextual conditions of the study area, 2) engaging the right stakeholders early, often, and throughout the analysis, and 3) ensuring the analysis team is equipped with the right skillset to save time down the road.
Beyond comparing infrastructure investment options, there are several other uses of the GGA. The GGA can be used to:
- provide a consistent framing of costs and benefits to facilitate easier comparison of green infrastructure values across study sites and benefits transfer analysis;
- standardize consideration of green infrastructure in water suppliers’ existing decision support tools;
- facilitate critiques of financial and economic analyses of infrastructure investment decisions that do not properly consider green infrastructure investments;
- identify data collection needs to plan for the robust monitoring and evaluation of green infrastructure investments (that can later support a GGA); and
- better design green infrastructure interventions to address needs and concerns of relevant stakeholders, like would-be investors.
Overall, the GGA approach shows that with small changes to infrastructure investment decision-making processes, water suppliers can develop more cost-effective investment portfolios that deliver on environmental and social benefits and help meet local and national climate commitments.