Association of State Wetland Managers Webinar - October 10, 2018

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1 Feasibility of an Environmental Impact Bond for Financing Coastal Wetland Restoration in Louisiana and the Gulf: Using avoided land loss as a proxy for reduced storm damages Association of State Wetland Managers Webinar - October 10, 2018 Shannon Cunniff, Director, Coastal Resilience, EDF Carolyn dupont, Director, Quantified Ventures

2 Louisiana is in the midst of a land loss crisis Without action, another 4,000 square miles could disappear within the next 50 years.

3 What s at stake? A LIVING SANCTUARY for some of the most productive wildlife and fishery habitats in the country A LINE OF DEFENSE for coastal communities AN ECONOMIC ENGINE that feeds and fuels our nation, and a portal connecting us to the rest of the world HOME to Louisiana s citizens

4 Wetlands provide many benefits Provide habitat for birds, wildlife and fish Blunt storm and flood impacts to on-shore assets Stem land loss

5 Challenges Funding: Key barrier to protecting Louisiana s coast Coastal Master Plan requires $50B-$90B over the next 50 years Only $9B-$12B to support wetlands restoration have been identified, mostly from Deepwater Horizon settlement funds Projects get more expensive over time as seas continue to rise and land erodes Solutions Access to up-front capital to deploy restoration projects sooner New sources of capital for restoration Project Goals Fiscal efficiency Create a simple, scalable and replicable model Create benefits for all: CPRA, investors, asset owners and residents.

6 Bonds: Start projects sooner, avoid increasing costs

7 EIBs: Provide more benefits than a traditional bond

8 EIBs: Built to reward superior performance

9 Key: Defining the wetland performance outcome Avoided Land Loss Aligns interests of issuer, investors, local asset owners Performance payment 1. Paid to investors & wetland contractor if high performance achieved 2. Provided by local asset owners benefiting from earlier restoration (less flood damages) 3. Reduces state agency s (CPRA) interest rate on bond

10 Wetland Restoration: Outputs vs. Outcomes

11 Measuring Performance Method for assessing avoided land loss Exploring whether remote sensing & Artificial Intelligence works and lowers transaction costs Determining a threshold for superior performance Selecting the 3 rd party evaluator

12 Target location: Wetlands adjacent to Port Fourchon Adjacent to Belle Pass Golden Meadow Marsh Creation Coastal Master Plan site Key role in facilitating offshore oil & gas production Numerous potential partner-payors with awareness of their business disruption costs Photo: Greater Lafourche Port Commission

13 Proposed Transaction Summary

14 Conclusion: Feasible, provides broad benefits

15 EIB: Next steps 1. State makes decision to pursue an EIB 2. Enable CPR Financing Corporation bonding authority 3. Transaction structuring 4. Bond Issuance

16 Contact info: Shannon Cunniff, Final Points Carolyn dupont, More info & report at edf.org/environmental-impact-bond This work was funded by a grant from Parties involved in developing this study include

17 Appendix

18 Other possible multi-payor repayment options

19 Possible revenue sources for bond/eib repayment Revenue Source Current Estimates Deepwater Horizon Oil Spill Funds Natural Resource Damage Assessment (NRDA) Timeline $319 million Annual until 2031 RESTORE Act $55.9 million Annual until 2031 Oil & Gas Production Revenues Repayment Potential Principal Principal Notes Project plans must be approved in advance Project plans must be approved in advance Gulf of Mexico Energy Security Act (GOMESA) Oil and Gas Revenues State Mineral Revenues $66 million Annual Principal Dependent on oil prices, maximum of $140 million per year to Louisiana. Projected to be $65 million to $75 million for the next 5 years $15 million Annual Interest and performance payments Tied to state oil and gas production and dependent on oil and gas prices; held in Coastal Protection and Restoration Trust Fund

20 EIBs work with Performance Based Contracting 20

21 Top marsh creation sites evaluated