World Resource Institute

North Little Rock, United States

Both Little Rock and North Little Rock, Arkansas’ twin cities, seek to take concrete steps in preserving their urban forests.

“North Little Rock sits on the Arkansas River, which is the lifeblood of our city. But frequent floods threaten our roads, schools, and homes. That is why we are investing in protecting trees and forests, both inside our city and upstream through our first-of-a-kind green bond. This ‘green infrastructure’ not only helps protect us against surging floods, but also brings clean air, wildlife, and beauty into our city.”

Terry C. Hartwick, Mayor, North Little Rock, United States

Success Story

Arkansas’ twin cities of Little Rock and North Little Rock are leaders in protecting and enhancing their urban forests. Little Rock, for example, uses nearly 35 percent of a city sales tax to fund improvements across the city’s 63 forested parks and green space. North Little Rock invests in controlled burns and the removal of invasive species in their urban forests.

But these cities have gone beyond a focus on their urban trees to protect the forests around their cities that are so crucial for their residents. The oak, hickory and short-leaf pine forests surrounding Lake Maumelle in central Arkansas are crucial for filtering and regulating drinking water for the region’s half a million people. But the area has long been threatened by development encroachment and unsustainable timber harvests. Recognizing this threat, the two cities have worked with Central Arkansas Water (CAW), the regional water utility, to institute a watershed protection fee to raise funds to acquire and protect the forest land. But to acquire forests at a larger scale, they needed to raise more capital from the private market.

CAW partnered with green finance experts Encourage Capital and World Resources Institute (WRI) to pioneer the first-ever certified green bond to acquire forests for watershed protection. The $31.8 million bond will allow CAW to borrow money from investors to acquire and protect forest land and pay them back over time using revenues such as the sale of sustainable timber, carbon credits, recreational fees, the surcharge on water bills, and savings on water filtration. Morgan Stanley purchased the green bond at a premium, which unlocked additional loan opportunities at historically low interest rates. This not only will help Little Rock, North Little Rock, and Central Arkansas Water potentially supply clean drinking water for their residents for the next 100 years but will also serve as inspiration to other cities and water utilities around the world.