Testing innovative funding & finance approaches for flood and coastal resilience infrastructure
I was recently lucky enough to be invited to speak at the annual New Civil Engineer Flood Forum, held in London on 15-16 November 2017, to discuss how Coastal Partnership East and other organisations across the UK are ‘Testing innovative funding & finance approaches for flood and coastal resilience infrastructure’. My presentation can be found on Prezi here
When looking for ways to address the funding challenge for flood and coastal resilience there is lots of rich learning to draw-on both nationally and internationally, so I find that much of my time is spent understanding what has been applied successfully before (or even more usefully, what has not). The trick is to then look for ways to adapt these approaches for projects we are involved in locally, plus share insights via other groups such as the 60 Local Authorities that make up the Local Government Coastal Special Interest Group
Recently, I have been focussed on three core questions:
1. How can Local Authorities in England unlock funding by integrating flood and coastal resilience and regeneration?
2. Can traditional routes to private sector infrastructure investment be utilised?
3. What finance models are being developed to finance green flood resilience infrastructure?
I look forward to sharing my experiences exploring these as part of this blog over the coming months!
As part of the lead-up to the Forum I was asked to take part in a ’60 second interview’ to share some of my own reflections on the current challenges and opportunities facing those of us tackling flood / coastal / climate resilience in the UK. The questions and my thoughts are reproduced below.
What do you think is the greatest challenge in the flood management sector today?
It’s got to be climate change. How do we plan for the ‘new-normal’ of an even more unpredictable climate with the increased frequency and severity of severe weather events this will bring? It’s already a big challenge for our sector. But we also see it driving innovation, demanding us to look to new ways to deliver long term resilience. Taking this long view encourages us to create solutions designed to embrace and work with this change, moving towards hard and soft infrastructure that leaves a positive and sustainable legacy for future generations.
What is the biggest barrier facing local authorities in unlocking funding for flood resilience?
The challenge for Municipal Government in all its forms globally is the need to wrestle with balancing a range of conflicting priorities, usually with limited resources. How do you decide whether to invest in a new road, improved social care, school standards, or flood resilience schemes when there is not sufficient funding available to deliver all of these equally important projects? There are always tough decisions to be made by both elected Members and Officers, often with no right or wrong answers. But based on my short time working with Local Authorities, the key commonality I see is that they are all driven by a passion and commitment to deliver maximum value to the communities that they serve.
So for those of us looking to make the case for Local Authority investment in flood resilience, it’s crucial for us to understand how our schemes provide a wide range of benefits for the community and local economy as a whole, plus how they enable the delivery of Local Plans. Sometimes this can mean simply crafting and presenting better, broader business cases that evidence and articulate this value. Or it could involve reconsidering how we design and deliver infrastructure to ensure it provides a wider range of benefits, therefore boosting its ‘fundability’. Presenting a compelling, commercially sound case for public investment is especially important at a time when Local Authority finances in the UK are increasingly constrained and facing significant changes in the new future.
What is the most innovative funding approach you have you been most inspired by to date and why?
There is lots of innovative thinking emerging this space but I try to look beyond our sector for inspiration and to alternative approaches that could be applied at different scales. Our big challenge is that flood and coastal resilience is moving towards a post-grant world, so we need to look for ways to secure a mix of funding and finance from new sources. The social investment space is an interesting example of this transition.
Blended finance is playing an increasingly important role in Europe and beyond for financing green infrastructure. It does this by issuing upfront funding to enable a viable investible business model to be developed ahead of a loan being issued. The resilience bond concept is also gaining traction both the UK and US, with a range of potential mechanisms that could drive private investment towards building societal resilience. But to access these potential forms of finance we must find ways to achieve the necessary scale and – crucially – move away from a reliance on one-off grants and towards longer term income streams from public and private sources. A number of us in the UK are currently testing these approaches.
What key message will you be sharing with delegates at the Flood Management Forum?
The idea of bankability when applied to resilience infrastructure. This is a very familiar concept to those delivering and financing other forms of infrastructure globally, but is still in its infancy when applied to grey / green / blue resilience infrastructure in the UK. If we can continue to develop new ways to deliver multi-functional infrastructure that delivers a range of benefits, we will be in a prime position to capture / generate new forms of income and secure finance.
If the above has provoked any thoughts or suggestions or you would like to share your own experiences please do get in touch!