Across the nation, countless cities with antiquated sewer and storm-water systems are under orders from the U.S. Environmental Protection Agency (EPA) to reduce storm-water runoff to decrease the amount of pollution entering local waterways. When Washington, D.C., faced this problem, city officials decided to experiment with green infrastructure rather than investing in expensive new pumps and pipes. Since green infrastructure had never been implemented on such a large scale, however, the city faced a huge challenge when it came to financing the project.
For the city, the solution was to launch the country’s first Environmental Impact Bond, or EIB. Considered a “pay for success” strategy, an EIB allows cities to share both the risks and the rewards of solving problems through innovative strategies with investors. They make it possible for governments, investors and other participants to focus on overall outcomes rather than specific activities, and they are proving successful.
Source: Water Finance Management - https://waterfm.com/a-closer-look-at-environmental-impact-bonds/