5 Lessons from 5 Years of Focusing on Resilience
This year marks our 5th year at re:focus. In looking back on the past five years, we have been reflecting on how far the field of resilience practice has come. Here are some of the surprising lessons we’ve learned along the way.
1. Finance starts on the drawing board.
Usually investments to make infrastructure, like water and energy systems, more resilient are seen as extra costs. Over the past five years, we’ve worked with dozens of cities to show how the reverse could be true. Planning for resilience up front can create cost savings and open up new financing opportunities for local governments.
The mantra “if you build it, they will come” unfortunately doesn’t translate to infrastructure. More often, if you built it right, no one will notice. (We have lots to say on this topic. For more, check out our Meeting of the Minds piece on Innovative Financing and the Myth of the Shovel-Ready Project.)
When a city decides to approach its infrastructure with an eye towards system resilience, it needs new methods for aligning public and private interests to find financially viable projects. We’ve learned that the biggest opportunities to unlock new money start in the “predevelopment” stage of infrastructure planning — all the activities that go into designing and developing a major project before construction (and often even before a Request for Proposals or RFP is written). Starting early creates space to integrate design and financing in new ways so that parking fees can help pay for flood management or insurance savings can be captured to rebuild seawalls. Funding resilience is not only about finding more money, it’s about helping cities design new solutions rather than building more of the same.
2. Set a high bar and your partners may exceed your expectations.
In 2012, the City of Hoboken was devastated by Hurricane Sandy. Parts of the city were flooded with nearly 12-feet of water. Starting in early 2013, the re:focus team worked with Hoboken through the RE.invest Initiative to develop new options to improve the city’s resilience to flooding and support the local utility’s efforts to manage combined sewer overflows (CSOs). The re:focus team designed a layer cake solution that integrated an underground parking garage with a storm water storage “bathtub,” recreational space, and green infrastructure.
After helping the City secure the first phase of funding for the project (~$12.5 million from the New Jersey Environmental Infrastructure Trust) in 2015, our team concluded its predevelopment support. Since then, the City and North Hudson Sewer Authority have moved forward with plans for full sewer separation that far exceeded our initial expectations. The lesson learned? Create the conditions for ambitious outcomes and the end result might even surprise you.
For more about Hoboken’s flood resilience efforts, click here.
3. Resilience is revenue.
One of the most remarkable recent signs of progress on resilience finance was a November 2017 report from Moody’s (yes, that Moody’s). As Bloomberg News put it: “Coastal communities from Maine to California have been put on notice from one of the top credit rating agencies: Start preparing for climate change or risk losing access to cheap credit.”
Less noticed, but equally important was a 2016 FEMA proposal to create a new “disaster deductible” to motivate cities and states to invest in resilience and reduce pressure on already strained federal disaster recovery resources. These are still early days, but the signal is clear: resilience is going to have a place on government and investor balance sheets one way or another.
We’ve been hard at work creating new insurance-linked finance opportunities, like Resilience Bonds, to help governments around the world reduce risk and stretch resources farther by capturing value from resilient infrastructure investments. As Risk & Insurance wrote in a May 2017 piece on Rewarding Resilience: “Healthy cities, like healthy people, are less risky to insure. So if insurers offer people tools and incentives to meet their health goals, why not do the same for cities and regions?”
4. Look for innovation in unlikely places.
Over the past five years, we’ve also learned that innovation is risky, and some the most successful innovators are also the most understated. The more you can make something look familiar and non-threatening, the more likely you are to succeed. Take Mobile, Alabama’s approach to reframing its infrastructure maintenance backlog as a problem of “infrastructure blight” and integrating social media into its engineering strategy.
Innovation in government is rarely about being first; most cities would rather be the second or even third to do something. Everyone is looking for a good precedent to follow. After several years of collecting examples of resilient infrastructure innovations for our government partners and clients — everything from green infrastructure to smart cities technology — in 2016 we launched The Atlas Marketplace as an independent company. The aim of The Atlas is to transform how cities learn about and procure solutions to accelerate infrastructure innovation. Put simply: cities must be able to buy things differently in order to buy different things. Listen to co-founder Ellory Monks on the GovLove podcast talk about how The Atlas is designed to help cities learn from one another and improve how companies engage with governments.
5. Small is beautiful.
It is easy to think that resilience is a luxury for large or wealthy communities. Nothing could be farther from the truth. Small and medium sized cities around the world are where some of the biggest opportunities lie. Many smaller cities are faced with the tough and expensive choice between designing entirely new systems or making incremental patchwork fixes to existing systems. In legacy industrial cities, the result is taxpayer dollars spent on temporary fixes and partial system upgrades designed for yesterday’s (or more accurately, last century’s) challenges. In dynamic, rapidly developing cities, the result is major gaps in basic services.
A common solution to both of these types of challenges is to pursue integrated projects that address multiple needs in one cohesive design. For example, including wastewater improvements alongside energy system investments or focusing on water infrastructure as a solution to reducing landslide risks in urban slums can drive a variety of short-term and long-term benefits. Although integrated planning might at first appear more complex than conventional project design and finance, pursuing cross-sector infrastructure projects can help unlock new resources and build broader support for projects that would never move forward otherwise.
The need for major global infrastructure investment is not controversial. Institutions from the World Bank to the American Society of Civil Engineers have estimated the total funding required to range in the hundreds of billions to trillions of dollars over the coming decades. What is controversial is how that funding should be made available. With all the focus on the total price tag, what we shouldn’t miss is that the biggest bang for the buck out of a trillion-dollar infrastructure investment opportunity might just mean that funders and investors need to start thinking small.
Since our launch in 2012, we’ve seen the word resilience go from specialized jargon to mainstream use. Cities around the world now have Chief Resilience Officers. Late-night comedians are covering issues like deferred infrastructure maintenance. Investors are eager for sustainable investments, and infrastructure is in the news almost weekly.
We’re optimistic that communities will continue to push the frontiers of resilient infrastructure innovation in the coming years. We expect to see even more resilience innovators* emerge from unconventional fields like materials science, health policy, and government procurement. The one thing we know for sure is that the challenges communities are facing are only growing, and the next five years of resilience practice are certain to be even more important than the last.
* Are you one of those unconventional frontier pushers? Please come say hello @refocuspartners. We are always looking to expand our network of partners, and we would love to hear your thoughts on what the next five years could bring.