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Te water investments presented in

the Liquid Assets report include a range of approaches that include improve- ments to watershed health, investment in agricultural and ranch lands, the financing of “environmentally-benefi- cial” municipal infrastructure, and new market institutions that could reduce “systemic risks” to people and the envi- ronment. “In many cases, the ability of a

particular investment to achieve the desired impact will depend upon specific contractual or other investment condi- tions; in other cases, the outcomes will be driven more heavily by the relative location within the system at which the investment is pursued,” the report said. “For example, investments in efficiency that result in the transfer of water downstream will have different potential benefits and tradeoffs than a similar in- vestment undertaken along an off-stream canal.” In one example, Encourage Capital has been looking at ways to finance forest health treatments to reduce fire suppression costs, Culp said. “It’s an interesting strategy,” he said.

“While the investment is obviously focused on wildfire prevention, there’s been some very interesting research done by the Nature Conservancy suggesting that this could be a really important way to augment or restore watershed yield throughout the Basin.” Other investment options include agricultural efficiency improvements – changes in crops and changes in grazing practices – and helping a new generation of farmers with the capital they need to launch their endeavors. On the urban side, there is discussion

of how to use “pay for performance” mechanisms in municipal infrastructure and how to finance green infrastructure in small to midsize communities that don’t have access to the bond markets, Culp said. Tere is also discussion of an investment-driven “water trust” that would help to expand the functions of current environmental water trusts that pay for instream flow improvements.

Te Liquid Assets report, which

provides detailed blueprints of nine investment types, explains how each of the approaches might work in concept, provides hypothetical case studies and potential deal structures for each ap- proach, and describes how money flows with a notional financial model built out of each investment blueprint. “It’s been a very interesting project, and I hope that the information it has generated will be useful,” Culp said. “It was intended primarily to help educate the investment community about the opportunity for impact investment in water, and get some people interested and excited to move forward.”

Needed Investment In May 2015, a large team of Colorado River stakeholders representing a cross- section of sectors released their recom- mended actions to ensure the river’s sustainability. Urban, agricultural and recreational/environmental workgroup members identified the need to increase funding for water use efficiency, water reuse and environmental and recreational flow projects. “Each workgroup stressed the impor- tance of developing sources of continu- ous, sustainable funding,” the Moving Forward report said. “Additionally, pur- suing funding and technical assistance opportunities that leverage funds from multiple sources was encouraged. Such sources and opportunities could lead to more rapid, effective, and creative implementation of water use efficiency measures, reuse, and environmental and recreational flow projects.” Te Moving Forward report is the

follow-up to the Basin Study which concluded that, absent any additional action, the gap between the supply demand for water could, under some projections, exceed supply by 3.2 million acre-feet, at the median, by 2060. Munévar noted that “while we’ve been fairly good at identifying solutions and the range of potential actions, we’ve not matched that with the fund- ing need.” He broached the idea of a

Colorado River Basin Sustainability Fund “to help accelerate implementation of some of those needs.” Te idea, he said, has precedent. “Tere’s a whole range of them occur-

ring in Australia, in the Murray-Darling Basin, in Brazil and various aspects in terms of watershed protection,” he said.

SNWA began work on its new intake in 2008.

“In the Murray-Darling, it’s been a lot for market aspects as well as efficiency improvements. In the Nile River Basin, it’s largely been funding, monitoring and management across the multiple coun- tries that make up the Nile River Basin. And in the U.S., we have a number of examples that range from water security management to flood management to investing in infrastructure to measure and monitor and improve infrastructure as well as some that look at investing re- sources for forest management to reduce the catastrophic impacts of wildfires from a water quality standpoint.” Munévar cited “innovative funding initiatives” such as the Portland,

Winter 2015-2016 • River Report • Colorado River Project • 7

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