Environmental Innovations in Israel: Revolving River Restoration Fund


Jordanian, American, Palestinian and Israeli participants of the Financial Innovations Lab, November 6, 2008. Mishkenot Shananim.
Booky Oren, former CEO of Israel′s water company Mekorot and the President of Miya Water and Eng. Sa'ad Abu Hammour, Deputy CEO of Jordan′s water company Miyahuna.
U.S. financial and policy innovation pioneers Susan Weil of Lamont Financial, Steve Townley of the Missouri Environmental Improvement and Energy Resources Authority and Peter Taylor of Barclays Capital explained how a state revolving fund works as a finance mechanism during the lab.
The Milken Institute Israel Center held a series of events in November 2008 to address water shortages, wastewater and environmental degradation issues facing Israel and its neighbors. Participants began with a tour of the Kidron River Valley, an important revitalization project in need of funding. The group of U.S. and Israeli water experts also met with Ministry of Finance officials to discuss possible finance models that could replace the current antiquated funding structure.

The center then conducted two Financial Innovations Labs to discuss financing water restoration in Israel, Jordan and areas under control of the Palestinian Authority. Water engineers from the United States and the Middle East joined representatives from local municipalities, the capital markets and academia to design an implementation plan.

The first session, held at Mishkenot Sha'ananim in Jerusalem on November 5, 2008 featured U.S. financial and policy innovation pioneers Peter Taylor of Barclays Capital, Susan Weil of Lamont Financial and Steve Townley of the Missouri Environmental Improvement and Energy Resources Authority, who explained how a state revolving fund works as a finance mechanism. This model allows government grants to be matched by local resources to ensure a steady flow of capital into river projects. The revolving structure allows the fund to make loans to local river/stream projects, which in turn generate income to repay the original investment and recapitalize the fund. Local river authorities can leverage their resources, which are secured by the revolving capital in the fund, to issue bonds for more than one project at a time.

The second session, held the following day, focused on the ability of such a fund to work regionally, with the creation of a multinational committee to oversee restoration projects. According to Aaron Wolf, a professor of geography in the Department of Geosciences at Oregon State University and an expert in water conflict management and transformation, cross-boundary water solutions are only successful when all parties can move past political mistrust. Gidon Bromberg, director of the Friends of the Earth Middle East, also noted that a legal framework must be established for the creation of a multinational committee, with active participation from local communities.

Two subsequent meetings were held to form steering committees, one focused on Israeli rivers, the other addressing regional issues. The work of the committees was complemented by research undertaken by the Koret-Milken Institute fellows assigned to the Ministry of Finance and the Knesset.

The Lab resulted in two separate reports: one on the revolving river restoration fund and one on transboundary water issues that is available in English, Hebrew or Arabic.