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The First Environmental Impact Bond: DC Water's Quest to Finance Green Infrastructure

Washington, DC, USA

Goverment Champion

Public Works (DC's water utility)


25 Million USD

Project Status

In Progress/Under Construction since 2016



Challenges Addressed

Coastal & Tidal Flooding
Sea Level Rise
Stormwater Management
Energy Efficiency


Resilient city
Sustainable city

Funding / Financing

General Fund/Existing Public Funds
Environmental Impact Bond

Project Type


At a Glance

In partnership with DC Water, Quantified Ventures closed the first Environmental Impact Bond (EIB), a Pay For Success transaction, in 2016. This financing mechanism allowed DC Water to share the performance risk of their green infrastructure project with impact investors, thus enabling them to pay for outcomes.

Problem Addressed

Like 772 communities across the country, the nation’s capital has a combined sewer system. This means both raw sewage and storm water flow through the same pipes into DC Water’s treatment facility, where the wastewater is treated and safely discharged into the Potomac River. During periods of heavy precipitation, the volume of water and sewage exceeds the capacity of the pipes and, by design, bypasses the treatment facility and is discharged directly into local rivers. DC Water’s solution was a $2.6 billion tunnel system designed to capture the combined sewer overflow and prevent it from entering the rivers. Halfway through the 20-year project, however, the practice of green infrastructure (GI) emerged as a viable, innovative, and natural alternative to grey infrastructure tunnels, with the possibility of other benefits like creating sustainable green jobs, promoting economic development, and fostering healthier communities. However, GI had never been deployed at this scale before, leaving DC Water with concerns around risk.

DC Water used/is using Environmental Impact Bonds to address this/these challenge(s).

Solution(s) Used

We worked with DC Water to apply the PFS model to green infrastructure (GI) and created financing that shares core project risk with investors: the first Environmental Impact Bond (EIB), a $25 million tax-exempt bond sold in a private placement to Calvert Impact Capital and Goldman Sachs Urban Investment Group. While standard municipal bond holders invest in issuers' ability to repay on schedule, DC Water’s EIB investors bet on how well GI will produce outcomes. If GI performs as expected during the pilot, then DC Water can build the remaining GI. If outcomes are better than expected, DC Water can modify the GI's design, presumably saving money. In this case, both DC Water and investors share in these savings. If GI underperforms, then investors make a ‘risk share’ payment back. DC Water is then armed with the information to decide whether to continue with GI or go back to its grey infrastructure tunnel solution. By identifying, quantifying, and sharing risk, DC Water’s EIB created the incentives to deploy an innovative solution.


  1. Goal is to have 51% of the new jobs created by the green infrastructure program filled by certified, District residents.
  2. By focusing on outcomes and carefully measuring progress along the way, EIBs can also garner bipartisan support from those who want to see more government effectiveness and accountability.

Something Unique

Innovation in financing for environmental projects

Who Should Consider?

Cities looking to implement critical resilience projects that are held up by budget cycles and aversion to risk

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