Coastal Zone Resiliency Finance (CZRF) Project Update for Louisiana Water Synergy Project November 18, 2015

The Project & Core Team The CZRF Project was established to deal with challenges identified by the Louisiana WSP around: enhancing financing mechanisms … for investments in natural or hybrid infrastructure … that can scale-up coastal restoration efforts. Core Team for CZRF: Bob BeduhnHDRChristian van MaarenShell Ginny King / TBDArcadisSteve TullosEntergy Susan FernandesUS BCSDScott NadlerUS BCSD

The team has focused on: Existing financing and opportunities to attract private financing to supplement and leverage public funds; How to better understand, communicate, and measure the multiple benefits for multiple beneficiaries (“co-benefits”) Co-benefits include community flood protection, fisheries, navigation, recreation, habitat creation, carbon sequestration, and biodiversity Distributed co-benefits may leverage investment but are hard to collect, quantify and monetize in ways that satisfy either public or private funders How to make the business case for natural and hybrid infrastructure by better focusing on those co-benefits.

Challenge for industry “If natural infrastructure is so much cheaper and better than gray infrastructure, than it should already be massively deployed by industry! Why hasn’t that happened?”

BarrierIssueProposed solution EngineeringDiscipline engineers in (large) petrochemical companies and in the engineering firms they employ are not familiar with the application of coastal natural infrastructure “De-risk” the natural infrastructure approach by funding pilot projects by funding/running pilot projects to show proof of concept and communicate progress and results in a wide. PolicyLocal regulators (DNR, USACE) are not used to Natural Coastal Infrastructure projects, do not reward approach accordingly (reputational, mitigation requirements, etc.) Engage regulators Run pilot projects to socialize the idea (A change in how DNR/USACE sees NCI has been observed) BusinessAssets/business functions are reluctant to invest time, money and HR in NCI because of a bias for “business-as-usual” and uncertainty of performance of NCI. Build a case for NCI (vs. gray infrastructure) through literature reviews and (study other) pilot projects Monetization of “co-benefits” to improve the case for NCI OrganizationalThe real benefits from choosing NCI solutions is by applying it through PPP. Organizational silos make it hard to realize these benefits. Clearly identify co-benefits of NCI projects and their beneficiaries through the thorough analysis of pilot projects and by engaging the right stakeholders

Looking at NCI through an industry lens Natural coastal infrastructure has the potential to be applied both on small scale (locally) as well as large scale (landscape level/holistically) Using NCI to slow down erosion of pipeline right- aways How to safeguard community/industrial integrity in Coastal Louisiana

Scoring Matrix: Identifying the “co- benefits” Infrastructure Protection Community Storm Protection Pollutant Credit Wetland Credit Biodiversity Carbon sequestration Soil & Sediment Balance Water Flow and Supply Avoided Property Loss Business Continuity Economic Resiliency/Recreation/Tourism Biodiversity Local Fisheries Aesthetics Cultural Living Shoreline Potential

Barataria Basin Story Integrating Opportunities Can Leverage Community, Business and Ecosystem Sustainability and Resiliency Goals

1952

1/18/1999

4/15/2011

BA 0048 Bayou Dupont Marsh and Ridge Creation 10/29/2012

BA 0048 Bayou Dupont Marsh and Ridge Creation 01/27/2015

Bayou Dupont Marsh and Ridge Plus New Orleans to Venice Levee Plus Mid Barataria Sediment Diverion

Scoring Matrix Example Infrastructure Protection Community Storm Protection Pollutant Credit Wetland Credit Biodiversity Carbon sequestration CWPPRA Phase II Projects BA-0027C Barataria Basin Landbridge Shoreline Protection, Phase 3-CU7 & 8 x x BA-0048 Bayou Dupont Marsh and Ridge Creation Project xx xxx BA (EB) Mississippi River Long Distance Sediment Pipeline xx xx BA Jean Lafitte Tidal Protection xx

Team’s current thinking: The “Gap” There are important investments for coastal zone resiliency (especially though not limited to green infrastructure) for which funding will be too little, too late or both under existing mechanisms. This includes restoration projects that are ranked too low to receive CPRA funding but are important to protect business and public assets. There is a need for a business led, public-private partnership to help fill that finance gap, including: Finding ways to identify, quantify, monetize and “harvest” co-benefits; and Leveraging public funds by adding private funding for co-located work to achieve additional benefits/co-benefits.

Team’s current thinking: Options to fill the Gap Create new mechanism/model to identify critical restoration needs and attract mainstream private sector capital that's not really engaged now. Create new mechanism/model to better direct, coordinate, and leverage existing public money with private funding, especially given unique opportunity in post-BP, post-Katrina Louisiana Hybrid of the two

Team’s current thinking: Balancing several imperatives Focus: Ensuring a focus on Louisiana priorities and needs (the “Louisiana lens”) vs. Ensuring that our methodology is replicable and can be applied to CZRF challenges in other locations Speed: Thinking it through rigorously vs. Moving ahead to create real progress and results

Team’s current thinking: Plan By end of 2015 : Clear decision on path forward Committed core team with key perspectives represented Work underway to attract interim/seed funding (money to fund the effort, not yet new capital funding flowing into projects) Strong support from Louisiana WSP members. In first half of 2016: Have that next phase of the project, reflecting the answer to #3, done

Questions for WSP: 1.Are we on the right track? 2.Have you had experience with the gap between good projects with co-benefits, and existing financing? 3.Are you aware of specific projects that aren’t getting funding (or not enough or not soon enough) which might be test cases/laboratories for us? 4.Are you aware of existing financing mechanisms we may have missed that are filling those gaps? 5.Are you aware of Financial sector contacts (especially “mainstream”) who might be willing to participate?