Hampton, Virginia Leads the State With Innovative Flood Financing Scheme

(image from Daily Press)

Snapshot: Hampton, Virginia, an historic city in southeastern Virginia is trying something new to raise money for its flood fixes: environmental impact bonds (EIB). Sea Level Rise/Flooding adaptation planning and design are underway in Hampton, as in most of the cities in Southeastern Virginia. Now we just need to figure out how to pay for the implementation work. Wetlands Watch estimates that adaptation plans on the books in coastal Virginia have a price tag of many tens of billions of dollars. Hampton decided to try some new “green finance” scheme to chip away at that cost.

Backstory: Hampton, Virginia, like all the older cities in southeastern Virginia, is being challenged by increased flooding as the mid-Atlantic faces the highest rates of relative sea level rise on the East Coast, combined with increased rainfall intensity. In response, Hampton developed a city-wide plan for dealing with these impacts: Resilient Hampton. This multi-year effort involved many talented people and lots of public input.

Now comes time to make those plans real and Hampton faces the same challenge all of America’s coastal communities face - where is the money to pay for this? Federal funding for adaptation work, found mostly at the US Army Corps of Engineers and the Federal Emergency Management Agency (FEMA) is oversubscribed with billions of dollars backlogged representing decades of delay until funding is available.

Plans in hand, Hampton was approached by the environmental group, Chesapeake Bay Foundation, which had partnered with an investment advisor, Quantified Venture. They proposed that Hampton fund some of its resilience work using an “Environmental Impact Bond’ (EIB) in which investors make money available for projects that produce specific, quantified environmental benefits. This was the first time this EIB approach was used in Virginia.

The city announced the deal last week and all eyes are on Hampton to see if this is a way to bring new dollars into coastal Virginia.