Innovative Financial Mechanisms to Promote Private Investment in New York City's Green Infrastructure

Due to inadequate infrastructure and instances of heavy rainfall, the combined sewage and storm-water exceed the capacity of water treatment plants around New York City.  The mixture of sewage and storm-water is often released into water bodies around the city. Known as Combined Sewer Overflow, this occurrence adversely impacts the environment and violates clauses in the Clean Water Act. The New York City Department of Environmental Protection (DEP) estimates that the city needs to invest $2.4 billion in green infrastructure to mitigate this problem. While the city has committed $1.5 billion to solving this problem, the City has mandated the remaining $900 million be raised from the private sector.

Considering the sheer number of combinations of solutions at hand, the Capstone team looked at multiple financing strategies and technologies independently. Through this process, the team examined the stakeholders involved and their incentives within each research area, and then combined the research to identify the points where stakeholder incentives converge and diverge.

The Capstone team studied cases and interviewed experts on Public Private Partnerships (PPP) in public infrastructure in the U.S with a special focus on investment in storm-water infrastructure. From this, the team collected information on the technology, partners, and concession model. The team also completed a comprehensive literature review to assess the economic and social benefits of storm-water infrastructure, and assessed value-generating technologies that can be integrated with storm-water infrastructure.

The team successfully created a matrix that captures the relationship between technology, financing mechanisms and incentives. It is designed as a menu of options available to DEP in its attempts to solve the storm-water situation in NYC.