Brandywine Christina Healthy Water Fund Draft Business Plan - PowerPoint PPT Presentation

Brandywine Christina Healthy Water Fund Draft Business Plan Presented to Stakeholders May 4, 2017 B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d www.nature.org/Delaware l www.williampennfoundation.org l www.wrc.udel.edu

B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Goal To create self-sustaining conservation finance vehicle that will restore the Brandywine-Christina watershed to fishable, swimmable, potable status in an accelerated timeframe. B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Water Fund Model B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Basic business • Water Companies Align and Expand • Municipalities Capital • Foundation/Corporate strategy • GIS-Based Targeting Strategic Capital • Leveraging Relationships Deployment • Quantifying Impact • Sustainable Funding Long-Term • Enduring Practices Freshwater Security • Profitable Farming B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

How will the Water Fund work? • Provides a mechanism to value a pound of pollution reduction • Demand – beneficiary need projections • Supply - services and accounting Brief overview of sections in plan: • Proposed governance structure • Financial projections B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Current project path Importantly, the funds are expended and investment is not fully realized. How do we monetize the conservation outcomes to generate more investment in restoration? B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

“As you go through life, take time to monetize the roses.” B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Sustainable systems Current outcomes Water Fund will tie in the economic and social outcomes to beneficiaries of conservation practices B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

How will the Water Fund work? POUNDS POSITION PRICE B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

What is the value of a pound? http://ian.umces.edu/blog/2010/03/04/hello-my-name-is-chesapeake-bay-and-i-have-a-nutrient-problem/ The value of a pound of sediment removal from the watershed can be determined through what beneficiaries’ needs are for that pound of reduction and how much it costs to provide that reduction. B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Value and services B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Needs of primary beneficiaries • Beneficiaries: MS4s and Water providers • Needs: Sediment and nutrient removal Pollution removal prices based on potential demand and cost to provide services to these two beneficiaries. B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Water Fund services - $/lb 1) Demand estimation 2) Supply strategy: project coordination, accounting, and reporting 3) Reinvestment of funds B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Projected demand (5yr) Beneficiaries Target Quantity Demanded Pollutant MS4* • TSS • Approximately 30 +/- tons/yr. (PA & DE) Water** • TSS • Approximately Providers 25+/- tons/yr. (Private & Public) *Demand will be further understood within the first year of the funds function as the MS4 communities determine their projects for reductions. **Proxy for water provider is based on current willingness to invest B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Pricing TSS service on MS4 sample urban abatement curve $45 *This is stylized. Fortunately, the BMP #6 Fund will know this abatement $40 Water Fund curve for each MS4 based on BMP #5 supplies the $35 permits submitted. Price of TSS Removal ($/lb) “last 20-25%” $30 at cost below $25 MS4’s average $20 Ave. cost of TSS removal: cost. $15 ~$13lb $10 BMP #2 BMP #1 BMP #4 $5 BMP #3 $0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of TSS reduction delivered B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Water service providers • Based on what currently paying • Value will be determined by what the public service commission and or city council is willing to approve • The Fund provides a vehicle to value the pollution removal in a manner that can be adopted by the oversight bodies B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Projected demand and price (5yr) Beneficiaries Target Quantity Price Pollutant Demanded MS4 • TSS • Approximately $4-$6/lb 30 +/- tons/yr. (PA & DE) Water • TSS • Approximately Providers 25+/- tons/yr. (Private & Public) B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Supply strategy: Agricultural BMPs B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Project coordination B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Accounting: MapSheds and DRWI B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Reporting • Coordination – Beneficiaries – Regulators – Contracts B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Leveraging existing watershed funding Over time –philanthropic is Barrier to farm replaced with market based restoration, ~30% funds. Each $1 leverages $2.33 funding shortfall of current funds 100% % total project funding 80% 60% 40% 20% 0% With Water Fund Without Water Fund Federal State Other Fund - Investor Supported Federal State Other Fund - Philantropic B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Leveraging existing watershed projects Securing, monetizing, accounting, and maintaining Pounds of sediment to meet beneficiary needs pounds removed for beneficiaries 100% 90% 80% % of TSS reduced per Plan 70% 60% Baseline 50% 40% 30% 20% 10% 0% With Water Fund Without Water Fund B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Projected services Service YEAR 1 2 3 4 5 6 # of Farms 1 3 10 12 2 2 Cum. 1 4 14 26 28 30 # of Farms TSS inventory 2 9 32 60 65 69 (TN/YR) TSS 0 0 0 54 54 67 demanded (TN/YR) Net TSS 2 9 32 6 11 2 B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Long term projections Long Term Projected Market Impact Without Water Fund New Farms Cumulative Fund Farms Projected TSS removed 180 70 160 Mature Phase 60 140 Farms implementing plans TSS removed (tons/yr) 50 120 Start up and 100 proof-of- 40 concept 80 phases 30 60 20 40 10 20 0 - 1 2 3 4 5 6 7 8 9 10 Year B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Financial projections $1,200,000 $1,000,000 $800,000 Dollars ($) $600,000 $400,000 $200,000 $0 1 2 3 4 5 6 Year Total investments Total Reveue B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Operations • An independent business organization. • Facilitate projects and accelerate scale of implementation that would not have occurred without the activities of the Water Fund. • Dedicated staff to facilitate partner projects and cultivate sustainable funding streams. • Governing body to provide guidance and expertise in aligning restoration with beneficiaries. B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Potential governance representation • William Penn Foundation • Impact investors • The Nature Conservancy in Delaware • UD Water Resources Center • Brandywine Conservancy • Brandywine Red Clay Alliance • Stroud Water Research Center • Natural Lands Trust • Christina Municipal Watersheds Partnership • City of Wilmington • City of Newark • SUEZ Water DE • AQUA PA • PA American Water Downingtown MUA • MS4 municipalities B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Challenges The Water Fund faces three challenges to effective and successful implementation: 1. Sufficient capitalization to adequately resource activities and staff. 2. Providing recognized, streamlined, and efficient process to partners. 3. Navigating regulatory uncertainties to generate sustained revenue. B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Next steps • Governing board composition and formation • Organizational setup (policies/procedures) • Build project pipeline with partners • Implement proof-of-concept • Report out (to stakeholders, regulators) for adaptive and iterative process • Multiple grants (awaiting awards) to fill the proof-of-concept phase capital needs B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d

Thank you – Questions? White Clay Creek from Wedgewood Road Bridge B r a n d y w i n e - C h r i s t i n a H e a l t h y W a t e r F u n d