From adaptation planning to action Finance and project perspectives dr. ir. Jeroen Rijke CAMINO End Conference, Antwerp, 25 March 2015

From adaptation planning to action

Many challenges to turn strategies into action:

– Political sense of urgency – Cultural – Institutional – Skills & competencies – Technical – …

– FINANCIAL

© CRC for Water Sensitive Cities 2012

Melbourne, Australia

© CRC for Water Sensitive Cities 2012

Hamburg, Germany

© CRC for Water Sensitive Cities 2012

Rotterdam, Netherlands

‘Mainstreaming’ the new dominant approach?

© CRC for Water Sensitive Cities 2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010

2011.7

2013.4

2015.1

2016.8

2018.5

2020.2

2021.9

2023.6

2025.3

2027

2028.7

2.0

3E+

03

2032.1

2033.8

2035.5

2037.2

2038.9

2040.6

2.0

4E+

03

2044

2045.7

2047.4

2049.1

2050.8

2052.5

2054.2

2055.9

2057.6

2059.3

2061

2062.7

2064.4

2066.1

2067.8

2069.5

2071.2

2072.9

2074.6

2076.3

2078

cumulative ratio of building stock at EELS yearly addition

Deltares & UNESCO-IHE, 2010

© CRC for Water Sensitive Cities 2012

Example: Fish migration river Afsluitdijk

© CRC for Water Sensitive Cities 2012

Who’s running the marathon?

© CRC for Water Sensitive Cities 2012

• Recognition of opportunity

• Identification of scope, requirements & constraints

• Assessment of added value / business case

• Agreeing on financing & organisation

• Identification of contracting & realisation requirements

• Identification of maintenance & operation requirements

Mainstreaming from the perspective of projects

Different perspectives on adaptation projects

Adaptation from the perspective of planning/engineering:

Maximise societal values, such as safety, liveability, prosperity

Minimise risk of damage and fatalities

Adaptation from the perspective of financing

Maximise return on investment

Minimise risk of negative/insufficient return on investment

Renewable energy: increasing investment, declining dependence on subsidies

Frankfurt School - UNEP Centre & BNEF (2014)

Can financial instruments for renewable energy be applied to urban water?

?

Typical financial risks of geothermal energy projects

Besselink et al, 2014

Phase of project

Fin

anci

al r

isk

Low

High

Initiation & design

Realisation Operation and maintenance

Possible to finance

Difficult to finance

Financiers for geothermal energy projects

Besselink et al, 2014 Phase of project

Fin

anci

al r

isk

Low

High

Initiation & design

Realisation Operation and Maintenance

Bank

Supplyers guarantee

Development Fund

Pension Fund / Reinsurer Guarantee

Subsidy

ROI required

No ROI required

Exploitation subsidy

Water projects are fundamentally different

Besselink et al, 2014

Phase of project

Fin

anci

al r

isk

Low

High

Initiation & design

Realisation Operation and maintenance

Possible to finance

Difficult to finance

• Non-monetizable benefits

• Avoided damage • Split incentves

REVOLVING FUNDS

Financial instruments – some examples

Stimulating private investment through co-funding Proven technology Proven business case Willingness to invest Availability of public funds

GRANT SCHEMES SERVICE CONTRACTING

FEED-IN SCHEMES

Compensation for unused capacity (upfront/continuous) Quantifiable benefits Co-funding capacity (upfront compensation) Long-term commitment (continuous compensation)

Private investor taking over service provision Idem as feed-in schemes + Ability of service provider to attract finance and manage risks during exploitation

Venture capital for private investments Non-bankable projects Innovative technologies Entrepreneurship Approx 8% annual return on investment

Why?

Requires e.g.

Zomerhofkwartier (ZoHo), Rotterdam

Water plaza

Polder roof

Streetscape greening

Source: de URBANISTEN, 2014

Combi of public funds

Public funds + Service

contracting

Grant + feed-in

+ service contracting + revolving funds

Other findings from ZoHo, Rotterdam

• Thus far, limited funds from outside area attracted.

• ‘End users’ are driving force behind transformation.

• Thinking in local value chains stands central.

Conclusion

1. Overcoming financing hurdles may be difficult, but feasible. Despite the differences, the renewable energy sector can provide

useful lessons.

2. Private sector investments can only be expected for projects that generate (indirect) return on investment. For example: Increase attractiveness of entrance to office buildings Compensation for green roof’s water storage capacity Using demonstration projects as a showcase for businesses

3. Successful projects emerge from opportunities. Adaptation requires opportunistic thinking through a perspective

of projects.

THANK YOU! dr. ir. Jeroen Rijke j.rijke@triple-bridge.nl +31 6 150 86 275