The District of Columbia’s novel stormwater trading program got a piece of “The Rock” Monday, as Prudential Financial Inc. announced it would invest $1.7 million in projects aimed at reducing polluted runoff from the streets of the nation’s capital into the Anacostia and Potomac rivers.
The New Jersey-based financial services company, which claims the imposing Rock of Gibraltar as its symbol, is joining with The Nature Conservancy and Encourage Capital, a socially conscious investment firm in New York, to install permeable pavement, rain gardens and other “green infrastructure” in the District that could be used to offset stormwater impacts from development elsewhere in the city.
In a news release announcing the joint venture, Lata Reddy, Prudential's vice president for corporate responsibility, called District Stormwater LLC an "innovative approach to improving critical environmental infrastructure" that could be a model for dealing with similar problems nationally.
Marc Diaz, managing director for NatureVest, an arm of The Nature Conservancy, said the effort is inspired by the District’s trading program. He called it “a powerful opportunity to accelerate use of green infrastructure through private investment while also reducing the need for public spending on stormwater management.”
Stormwater runoff is a significant and growing source of pollution in the Chesapeake Bay watershed and elsewhere. But cities, especially older, densely developed ones like the District, often struggle to pay for costly remedies.
The projects underwritten by the new venture would be expected to qualify for marketable “credits” under the District’s trading program. Launched nearly three years ago, the program lets land-constrained developers meet some of their mandated runoff retention requirements by buying credits from pollution-curbing projects installed on other sites.
Billed as the first of its kind in the nation, the trading program approved its initial sale of credits in September 2014. Since then, just a couple transactions have occurred, but another 22 development projects are under construction and are candidates to purchase credits, according to Brian Van Wye, chief of the stormwater program for the District Department of Energy and Environment.
Though there are enough stormwater retention credits available to meet developers’ needs for now, Van Wye said the District’s program is still in its early stages and needs to grow to help restore degraded urban streams. The District government must retrofit its already developed neighborhoods, he said, and officials hope to do it less expensively by buying privately installed stormwater “credits” rather than paying the full construction cost to build rain gardens, green roofs and the like.
The District stormwater chief welcomed the Prudential-backed venture, saying “it’s exactly the kind of thing we want to see happen. I think it is going to help move the market forward.”
This is Prudential's first dip into financing stormwater projects, according to Ommeed Sathe, the company's vice president for "impact investments." But company executives hope this pilot program will be successful, Sathe said in an email, and in any case intend to share what they learn about this attempt to deal with polluted runoff.
The conservancy and Encourage Capital will oversee the effort, which will begin by identifying sites around the District for installing stormwater retention projects.