Solutions to environmental finance challenges: the environmental finance center network approach: the environmental finance center network is a national network of university-based public service centers that focus on helping communities determine how to pay for diverse environmental programs.

• Author: Hughes, Jeffrey
• Position: Solutions

What do the following have in common: A low-income family living in an energy-inefficient home, the pollution-impaired Chesapeake Bay, a wastewater treatment plant in a small town, a rural community with rising solid waste disposal costs, and a large urban water system with enormous debt and plummeting water sales due to drought restrictions? Each of these scenarios lies at the challenging intersection of environmental protection and finance.

To solve the country's diverse environmental challenges, such as reducing energy use and cleaning up polluted water bodies, communities must figure out how to mobilize financial resources in fair, efficient, and effective ways. While financing mechanisms may be vastly different, depending on the nature of the environmental problem, many of the underlying issues are similar. The financing sources needed to support a state agency charged with protecting wetlands may be very different than the sources needed to fund an urban water utility, but both entities require sustainable revenue streams to carry out their mission. The Environmental Finance Center Network (EFCN), a national network of university-based, public-service environmental finance centers (EFCs), focuses on helping communities determine how to pay for these types of diverse environmental programs.

WHAT IS AN EFC?

The Environmental Protection Agency began funding environmental finance centers in the 1990s to help communities protect and improve their environmental conditions at a time when federal and state funding for such efforts was beginning to decline. In response, the EFCs developed strategies and approaches that go beyond simply looking for grants. Even in cases where grant funding is available, it isn't the solution. It may even be part of the problem, as communities sometimes use grants to sustain projects or programs that won't be able to support themselves once the grant dollars run out. EFCs, on the other hand, help jurisdictions develop and implement sustainable financing mechanisms that can lead to extended partnerships, community participation, new fee and tax systems, and creative capital finance. More than 20 years later, the EFCN is helping thousands of communities across the country to plan, finance, and manage a wide variety of environmental programs and services.

Developing the financial solutions to environmental problems often requires understanding a host of other complex issues and disciplines. A typical EFC project is as likely to involve a legal analysis or community assessment as a cash flow analysis. And because environmental challenges rarely respect strict geographic or jurisdictional boundaries, environmental finance solutions typically involve developing and supporting intricate partnerships. For example, a partnership may involve two small governments sharing resources or a collaborative consortium of dozens of individual governmental, nonprofit, and private-sector entities.

The EFCN is currently supported by cooperative agreements with the EPA's...