Currently, most Israeli river revitalization projects are funded solely by the government and local authorities and structured as one-time grants. But this funding is difficult to obtain and chronically delayed. The one-time-only grant formula does not leverage private investment and is inadequate to the task at hand.
A better solution might be found in a model pioneered in the United States: the Clean Water State Revolving Fund, which pools federal grants with state funding and may include bond sales to capital market investors. The state makes loans to local municipalities and organizations, which repay from project revenues and local taxes. These repayments are recycled back into the state fund, creating a sustainable flow of funding for future projects.
With that success in mind, the Milken Institute convened a Financial Innovations Lab in Jerusalem to discuss how to apply the state revolving fund model in Israel. More than forty scientists, ministry officials, investors and water experts examined the legislative and regulatory changes that will be necessary to develop the country's first revolving fund.
A vast clean-up effort will be needed to restore Israel's rivers and streams - and this effort will carry a significant price tag. Utilizing public resources to attract private investment could break the funding crisis for these rivers and streams. By adapting the U.S. model to its unique circumstances, Israel can demonstrate its leadership in environmental protection. The financial innovations identified in the Lab have great potential to protect public health and preserve Israel's vital natural resources for generations to come.