Brandywine Christina Healthy Water Fund. Draft Business Plan Presented to Stakeholders May 4, 2017

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1 Brandywine Christina Healthy Water Fund Draft Business Plan Presented to Stakeholders May 4, Brandywine- Christina l Healthy Water l Fund

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4 Goal To create self-sustaining conservation finance vehicle that will restore the Brandywine-Christina watershed to fishable, swimmable, potable status in an accelerated timeframe.

5 Water Fund Model

6 Basic business strategy Align and Expand Capital Water Companies Municipalities Foundation/Corporate Strategic Capital Deployment GIS-Based Targeting Leveraging Relationships Quantifying Impact Long-Term Freshwater Security Sustainable Funding Enduring Practices Profitable Farming

7 How will the Water Fund work? Provides a mechanism to value a pound of pollution reduction Demand beneficiary need projections Supply - services and accounting Brief overview of sections in plan: Proposed governance structure Financial projections

8 Current project path Importantly, the funds are expended and investment is not fully realized. How do we monetize the conservation outcomes to generate more investment in restoration?

9 As you go through life, take time to monetize the roses.

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11 Sustainable systems Current outcomes Water Fund will tie in the economic and social outcomes to beneficiaries of conservation practices

12 How will the Water Fund work? POUNDS POSITION PRICE

13 What is the value of a pound? The value of a pound of sediment removal from the watershed can be determined through what beneficiaries needs are for that pound of reduction and how much it costs to provide that reduction.

14 Value and services

15 Needs of primary beneficiaries Beneficiaries: MS4s and Water providers Needs: Sediment and nutrient removal Pollution removal prices based on potential demand and cost to provide services to these two beneficiaries.

16 Water Fund services - $/lb 1) Demand estimation 2) Supply strategy: project coordination, accounting, and reporting 3) Reinvestment of funds

17 Projected demand (5yr) Beneficiaries MS4* (PA & DE) TSS Target Pollutant Quantity Demanded Approximately 30 +/- tons/yr. Water** Providers (Private & Public) TSS Approximately 25+/- tons/yr. *Demand will be further understood within the first year of the funds function as the MS4 communities determine their projects for reductions. **Proxy for water provider is based on current willingness to invest

18 Pricing TSS service on MS4 sample urban abatement curve Price of TSS Removal ($/lb) $45 $40 $35 $30 $25 $20 $15 $10 $5 BMP #1 *This is stylized. Fortunately, the Fund will know this abatement curve for each MS4 based on permits submitted. BMP #2 Ave. cost of TSS removal: ~$13lb BMP #3 BMP #5 BMP #4 BMP #6 Water Fund supplies the last 20-25% at cost below MS4 s average cost. $0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of TSS reduction delivered

19 Water service providers Based on what currently paying Value will be determined by what the public service commission and or city council is willing to approve The Fund provides a vehicle to value the pollution removal in a manner that can be adopted by the oversight bodies

20 Projected demand and price (5yr) Beneficiaries Target Pollutant Quantity Demanded Price MS4 (PA & DE) TSS Approximately 30 +/- tons/yr. $4-$6/lb Water Providers TSS Approximately 25+/- tons/yr. (Private & Public)

21 Supply strategy: Agricultural BMPs

22 Project coordination

23 Accounting: MapSheds and DRWI

24 Reporting Coordination Beneficiaries Regulators Contracts

25 Leveraging existing watershed funding 100% Barrier to farm restoration, ~30% funding shortfall Over time philanthropic is replaced with market based funds. Each $1 leverages $2.33 of current funds % total project funding 80% 60% 40% 20% 0% Without Water Fund Federal State Other Fund - Philantropic With Water Fund Federal State Other Fund - Investor Supported

26 Leveraging existing watershed projects % of TSS reduced per Plan 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Without Water Fund Pounds of sediment to meet beneficiary needs Baseline With Water Fund Securing, monetizing, accounting, and maintaining pounds removed for beneficiaries

27 Projected services Service YEAR # of Farms Cum. # of Farms TSS inventory (TN/YR) TSS demanded (TN/YR) Net TSS

28 Long term projections Long Term Projected Market Impact Without Water Fund New Farms Cumulative Fund Farms Projected TSS removed 180 Farms implementing plans Start up and proof-ofconcept phases Mature Phase TSS removed (tons/yr) Year -

29 Financial projections $1,200,000 $1,000,000 $800,000 Dollars ($) $600,000 $400,000 $200,000 $ Year Total investments Total Reveue

30 Operations An independent business organization. Facilitate projects and accelerate scale of implementation that would not have occurred without the activities of the Water Fund. Dedicated staff to facilitate partner projects and cultivate sustainable funding streams. Governing body to provide guidance and expertise in aligning restoration with beneficiaries.

31 Potential governance representation William Penn Foundation Impact investors The Nature Conservancy in Delaware UD Water Resources Center Brandywine Conservancy Brandywine Red Clay Alliance Stroud Water Research Center Natural Lands Trust Christina Municipal Watersheds Partnership City of Wilmington City of Newark SUEZ Water DE AQUA PA PA American Water Downingtown MUA MS4 municipalities

32 Challenges The Water Fund faces three challenges to effective and successful implementation: 1. Sufficient capitalization to adequately resource activities and staff. 2. Providing recognized, streamlined, and efficient process to partners. 3. Navigating regulatory uncertainties to generate sustained revenue.

33 Next steps Governing board composition and formation Organizational setup (policies/procedures) Build project pipeline with partners Implement proof-of-concept Report out (to stakeholders, regulators) for adaptive and iterative process Multiple grants (awaiting awards) to fill the proof-of-concept phase capital needs

34 Thank you Questions? White Clay Creek from Wedgewood Road Bridge