# Presentation: 106758

## Environmental Impacts for Innovative Finance Projects

**Environmental Impacts for Innovative Finance Projects**
**Part II**

## So Far ...

- The underlying issue is the efficiency of the local and regional transportation network
- Private Investment is a standard finance tool
- Congestion (a network inefficiency) is often positively correlated with cash flow
- Questions about environmental impacts are linked to the changes in network efficiency
- Specific finance tools generally influence timing and entry costs associated with ∆ efficiency

## The Problem

- The finance tools most suitable to a given transportation improvement vary depending on circumstances
- The political acceptability of innovative finance tools is also varies over time and space
- Failure to address the environmental implications of all suitable finance tools in decision support analysis, such as NEPA, can delay projects

- Congestion on I-95 in Northern Virginia

**Notes:**
Total cost of $63 billion/ year
In the 10 most congested cities each rush hour traveler congestion expense is between $800 and 1,600/year.

## The Approach

- Consult with finance experts before scoping transportation improvement proposals
- Optimal: include the full suite of suitable finance tools in range of alternatives
- Alternate: include full range of potential environmental effects of all suitable finance tools within politically acceptable alternatives.
- Failure to incorporate impacts associated with the full suite of finance tools has set back project delivery by years!

- Congestion on I-95 in Northern Virginia

**Notes:**
Total cost of $63 billion/ year
In the 10 most congested cities each rush hour traveler congestion expense is between $800 and 1,600/year.

## The Approach

- The analytic and compliance issues associated with innovative finance are routine
- Key is to stick with Environmental Impacts Analysis basics (Business as Usual)
- Two-part analysis
- Categories of Impacts
- Regional Economics of 1930s – 1970s
- Location Decisions

- Congestion on I-95 in Northern Virginia

**Notes:**
Total cost of $63 billion/ year
In the 10 most congested cities each rush hour traveler congestion expense is between $800 and 1,600/year.

## Environmental Impacts

- Categories of Effects
- Encroachment – Alteration
- Induced Growth and Related
- Interaction of Project and Resource Attribute; Risk to Sustainability
- Assessment and Two-Part Analysis

**Notes:**
Narrative:
It improves the consistency of action-focused effects evaluations if you have a standard way of thinking about transportation projects.  A suggested starting point is to break the project into major components.  This slide suggests five broad areas where any given transportation project could have a series of step-down actions, sometimes hundreds of step-down actions, that would trigger an exposure-response profile in the resources of concern. 

Think about it.  Can you think of any reasons that property owners may alter their behavior during the planning phase?  Might people with property in the right-of-way defer maintenance, especially if they are not sure whether or not the DOT will move their structure?  What does that mean if the deferred maintenance adversely affects the integrity of a historic building? This is a particularly interesting question since planning stage impacts may not be part of the analysis under the NHPA, but would be under NEPA. As a matter of ethics, think about what you would do if you knew that you would get two different answers depending on which law you did the analysis under.  Would doing the analysis under both laws improve the quality of information available to decision-makers and reviewers?

Likewise, it is not unknown for landowners with property near planned interchanges to change their management of the property, either.  

Construction often has multiple phases, and a whole set of action-focused effects unique to those phases.  Where and what happens in equipment and material staging areas, borrow sites, and disposal or fill sites may be as important to the decision-maker as what happens in the right-of-way.

Operations can be, depending on the project, a major source of analytic headaches.  This refers not just to traffic, but the way the traffic influences everything else.  Over the life of the project.  On the other hand, you are hopefully drawn to analytic nightmares and complex puzzles like a moth to light.  This can be the bread and butter of environmental impact analysts.   This is frequently the most challenging part of the project that practitioners have to deal with.  It is definitely the part of the project that drives concerns with land use changes, exurban growth, and landscape and community impact issues.

Maintenance has been a dark horse over the years, and sound analysts now make every effort to ensure that maintenance practices are fully incorporated into the analysis, and that any relevant environmental commitments are transmitted to the maintenance organization in a manner that ideally leads to perpetual implementation. 

The need to consider decommissioning during pre-project implementation analysis is rare.  Typically, it would only be evaluated if it is built into the design, in extremely sensitive situations.  For example, some road projects in national parks transect such nationally significant resources that the design dictates construction and decommissioning processes.

## Encroachment-Alteration

- Ecological
- Habitat fragmentation
- Habitat degradation (physical, chemical, biological)
- Ecosystem disruption
- Socio-Economic
- Opportunity-Threats
- Development/Event
- Adaptation/Post-development

**Notes:**
Narrative:  
n/a

Action-focused, especially indirect, effects can fall within the encroachment – alteration category.

## Example 

**Notes:**
In this example, an EJ community must take mass transit (buses) from the residential area (orange) to the city center (blue) for connections to work and shopping/medical care (yellow).

The bus routes to and from the city center follow access roads that parrellel an congested freeway.  Improvements to the freeway will be accomplished by leasing the freeway to a private investment group, which will make the freeway a tollroad.  This change in cost will, at least in the short term, move traffic from the freeway-turned-tollroad to the still no toll access road.  

This increase in traffic on access roads will add delays to the buses, increasing the travel time for the EJ community to move between their residential area, work, healthcare, and shopping opportunities.

## Example 

- B

- A

- 1

- 2

**Notes:**
In this example, there are three routes between residential area A and work area B.  Two routes go through small business districts (gray ovals, numbered 1 and 2).

The thick bold line represents a route that will be improved.  The construction and operation will be more or less advanced depending on the finance tool.  If a special bond is used, and the project is let as design-build, would the implications for business districts #1 and #2 be any different than if the project was funded through all government sources and let under the traditional sequence of design, let, and build?

**Induced Growth**** **

*Land Use*

**Land Markets**

**Geography/Topography**

_**Economic Conditions**_

**Environmental  regulations**

**Individual Preferences**

**Infrastructure**

**Ownership**

**Technology**

**Planning and Zoning**

**Transportation**

**Individuals**

**Private Sector**

**Local Government**

**State Government**

**Federal Government**

**Notes:**
Narrative:  
It is generally agreed that roads help move goods and services, and are therefore often contributory factors in economic change.  A common indicator of economic change is land use patterns.  This does not mean that the project under consideration is the primary driver in land use change, merely that road networks support the general societal goal of economic development.  Land use change may be a factor in regional and local economic growth.  On the other hand, some transportation improvements can shift regional and local development patters in time and space.  It is our job to know the difference.

Think about the different contributory factors shown here.  Some factors are not explicitly shown here; for example, how many individuals are home owners, and see their total tax burden reduced because society subsidizes mortgage interest, and some motor vehicle purchases?

[The material in this slide is consistent with NCHRP 466.  Additional information is desirable for workshops taking place in States where land use, induced growth, or sprawl is a concern.  For example, participants appear to appreciate questions and ideas generated by well rounded and relatively short book - Nivola, Pietro S.  (1999) Laws of the Landscape: how policies shape cities in Europe and America.  Washington, DC.  Brookings Institution Press.  126 pp.]  

## Induced Growth and Related

- Projects planned to serve specific land developments
- Projects planned to stimulate complimentary development
- Projects that influence intra-regional location decisions

**Notes:**
Narrative:  
The Induced Growth and Related category covers action-focused effects that influence land use in time and/or space.

This includes accelerating the pace of land use change, as well as influencing the pattern of change.  Again, review the related NCHRP reports prior to the beginning of the course.

## Thinking About – Induced Growth

- _Transportation May Affect Growth:_
**Amount** – a change in overall amount (stock)
**Pace** – a change in the rate
**Location** – a change in the direction or location
**Pattern** – a change in the type (density; use)

**Notes:**
Narrative:  
n/a

We will use ”sprawl” as shorthand for induced growth and other impacts.  The next few slides are meant to get everyone on the same analytic page.

## Example

**Notes:**
In this example, the existing road network includes all the black lines.  The long horizontal line with red lines on top and bottom is currently a poorly maintained secondary road, but the TIP includes upgrading it to a four lane divided limited access roadway in up to three sections with independent utility (following the suburbanization trend from left to right on the diagram).

The green splotches on the right represent some environmentally or culturally sensitive area (blotch intensity represent more or less importance to integrity).  

Because the area to the right is supports some pioneer very high end residences, and the current road could not support more traffic, it is possible that a PPP finance tool might be suitable, if all three sections could be constructed at the same time.

The effects of a PPP tool would be to accelerate the development trends in the environmentally sensitive area over what would be expected under a traditional financing scheme.

## Thinking About – Induced Growth

- _Transportation Network Efficiency Affects:_
- Location Decisions
- Within Commute-shed
- Between Commute-sheds
- Trip Decisions
- Mode
- Route
- Time

**Notes:**
Narrative:  
n/a

changes in populations may occur at more than one scale; in general, ask where the new folks are coming from or going to.

## EIA Basics

- Environmental Impact Analysis
- Identify, predict, evaluate [and mitigate] _relevant and potential effects caused by the project_ on affected resources
- Has two parts (Action and Resource Focused):
- Cause-and-effect (project’s interaction with resource attribute)
- Risk effect poses to resource’s sustainability

**Notes:**
Tab A Useful Information 

Tab B Interacts of Action with Each Resource
Narrative:
We have seen that our ability to predict and communicate models of the resource of concern and the action are the building blocks to any analysis.  This means that, when conducting Environmental Impact Analyses for the Federal Highway Administration under any of the environmental laws, you should be describing how the resource works.  You should be leaving a written record of the model you are using to conduct your analysis.  It could be conceptual, pictorial, a box and arrow diagram, a mathematical model, or just about anything.  The key is to identify the dependent and most important independent variables.  Likewise, you must clearly articulate what actions, in what sequence and in which space, are expected to interact with the resource.   A sound analysis depends on your ability to describe the relevant independent variables and how the project intersects with their functions or forms. 
We will not spend much time talking about models and building exposure-response, or cause-and-effect profiles in this session.  What we want you to take away from this session is the unequivocal understanding that just guessing, or making unsubstantiated statements of expected impacts, is poor science and poor public service.  The record should clearly identify your understanding of what makes the resource work, of how and why the project is going to interfere with those patterns and processes, and only then should you be saying what that means.
How the Resource of Concern Works in Space and Time
	Patterns, Processes
	Life History Requirements

What Actions Will Result from the Decision in Space and Time
 Planning (in special cases), Construction, Operations, Maintenance, Decommissioning (rare)
Sources of Uncertainty

Tab C Describe Trends and Conditions 
Trends and Conditions
Adjustments, Feedbacks, Discount Rates
Sustainability
Resilience and Thresholds
Response to Known Perturbations
Stressors and Drivers

Tab D Two-Part Analysis
Action-Focused
Resource-Focused
Total Effects
Mitigation
Uncertainty

Tab E Presentation of Results
What Do We Know
What Don’t We Know
How Important is What We Don’t Know
Monitoring – Adaptive Management

## EIA Basics

- Resources: Which Attributes or Elements?
- Resource Trends and Condition (Resilience)
- Action x Resource Interactions
- Feedbacks, Adjustments, and Risks to Sustainability (So What?)
- Mitigating Total Effects and Managing Uncertainty

**Notes:**
Tab A Useful Information 

Tab B Interacts of Action with Each Resource
Narrative:
We have seen that our ability to predict and communicate models of the resource of concern and the action are the building blocks to any analysis.  This means that, when conducting Environmental Impact Analyses for the Federal Highway Administration under any of the environmental laws, you should be describing how the resource works.  You should be leaving a written record of the model you are using to conduct your analysis.  It could be conceptual, pictorial, a box and arrow diagram, a mathematical model, or just about anything.  The key is to identify the dependent and most important independent variables.  Likewise, you must clearly articulate what actions, in what sequence and in which space, are expected to interact with the resource.   A sound analysis depends on your ability to describe the relevant independent variables and how the project intersects with their functions or forms. 
We will not spend much time talking about models and building exposure-response, or cause-and-effect profiles in this session.  What we want you to take away from this session is the unequivocal understanding that just guessing, or making unsubstantiated statements of expected impacts, is poor science and poor public service.  The record should clearly identify your understanding of what makes the resource work, of how and why the project is going to interfere with those patterns and processes, and only then should you be saying what that means.
How the Resource of Concern Works in Space and Time
	Patterns, Processes
	Life History Requirements

What Actions Will Result from the Decision in Space and Time
 Planning (in special cases), Construction, Operations, Maintenance, Decommissioning (rare)
Sources of Uncertainty

Tab C Describe Trends and Conditions 
Trends and Conditions
Adjustments, Feedbacks, Discount Rates
Sustainability
Resilience and Thresholds
Response to Known Perturbations
Stressors and Drivers

Tab D Two-Part Analysis
Action-Focused
Resource-Focused
Total Effects
Mitigation
Uncertainty

Tab E Presentation of Results
What Do We Know
What Don’t We Know
How Important is What We Don’t Know
Monitoring – Adaptive Management

## Thresholds and Sustainability

**Notes:**
Narrative:

You are all familiar with the Level of Service metric used to describe the condition and trend of traffic.  The “L-O-S” graph shown here is, in fact, just another way of depicting the condition gradient concept shown on the previous slide.

The point is exactly the same, too.  Say we have an event, ,maybe a manufacturing plant with hundreds of employees per shift that commute on this stretch of roadway is going online.  That same change in the number of vehicles using the roadway per hour could have different, potentially very different, implications for Level of Service, depending on where we are on the graph when the event occurs. 

## Thresholds and Sustainability

**Notes:**
Narrative:

The Level of Service example highlights more than just the need for two parts in any analysis.  It also points out that there are thresholds between most probable states, dynamic equilibria, or ranges.  And, this is a really important point.  

The two-part Environmental Impact Analyses should generate information about the sustainability of the resource in its’ current condition or state given everything else that is affecting it over space and time, as well as our potential action.

## The Two-Part Question

- _What are Action-Focused Effects?_
- Direct (NEPA):* ****Caused by the action**** and occur at the same time and place.*
- Indirect (NEPA):* ****Caused by the action**** and are later in time or farther removed in distance, but still reasonably foreseeable...*

**Notes:**
Narrative:  
Direct and indirect effects are action-focused.

Focusing on Action-focused and Resource-focused effects enhances the distinction between direct and indirect; and cumulative effects. 

From the analytic perspective, distinguishing between direct and indirect effects is not relevant.  They are simply variations on a theme, and we routinely consider mitigation options for both. 

Here, we see that Action-focused effects are those impacts caused by the action, regardless of spatial and temporal scales.

## The Two-Part Question

- _What are Resource-Focused Effects?_
- Cumulative (NEPA): *Impact ****on the environment**** which results from incremental impacts of the action when added to other past, present, and reasonably foreseeable future actions, regardless of agency or person* ...

**Notes:**
Narrative:  
Resource-focused effects consider the action-focused effects from the perspective of the resource or environmental parameter itself.  This second part of the two-part analysis is necessary because resources do not experience our projects’ direct or indirect effects in isolation.  This is the part of the analysis that tells us what our project’s effects mean to the sustainability of the resource itself.

Look at the key phrases of the definition, paying attention to how this definition is so very different than those for direct and indirect effects.  First, we have emphasized the text that says that resource-focused effects take the resource’s perspective.  This means that Resource-focused analyses consider “our” action’s influences as just one among many from the perspective of the resource of interest.   Second, the words “incremental impacts of the action when added to other ...” imply that the action-focused effects of our action are just more input to the resource-focused part of the analysis, and ties this part of the analysis into the sustainability, resilience, and thresholds goals we have discussed.  Third, the references to past, present, and reasonably foreseeable future” bound with “other ... actions” tells us that the resource-focused analysis should address the trends and conditions of the resource, using information about what it looked like and how it bahaved in the past to inform us about the future.

The resource-focused effects terminology also helps us keep our eyes on the ball, as it were.  Since our goal is to optimize decision support (for informed decisions) and transparency, the terminology serves to remind us and the public that we are interested in understanding how the action-focused effects may alter the resource’s trends and conditions, particularly sustainability.  

## Two Parts?

- You Bet!
- NEPA
- ESA
- NHPA
- CWA 404
- The so-called 4(f)

**Notes:**
Narrative:

Why does the Federal Highway Administration emphasize that environmental impacts analyses have two parts?

There are two reasons.  First, think about the big 5 environmental laws and regulations, and what the criteria are for making a finding under each:

Second, the goal of environmental effects analyses is to tell us what the action means to the resource.  For now, let’s call it the “so what?” aspect of an analysis.  

We want to understand how the action affects the resource’s sustainability, and to get a sense of the total effects.  A pre-requisite to understanding sustainability is to first generate information on how the action interacts with the resource.  So, any analysis that considers sustainability must have at least two parts: a description of the interactions between the resource and the action, and then an evaluation of what those interactions mean to the resource itself.  Total effects, which we do not typically address in the FHWA, combine information about the action-focused and resource-focused analyses to more or less measure the area between the with project and without project trends and conditions for each resource, and add a relevant discount rate.  We will not cover Total Effects in this session, except for a short reminder in the mitigation discussion.  We will remind you of the Total Effects concept because it provides a useful overview of what we are trying to do when we address mitigation.    

## Analysis and Assessment

- Predicting
- Effects

- Scoping

- Disclosing
- the
- Implications

- Identify
- useful
- information

- 	2. Resource-Focused
- Analysis

- Conduct:
- 1. Action-Focused Analysis

- Discuss uses and limits of the information

**Notes:**
Narrative:  
To be useful, information must be understood.  Communicating, or telling the analytic story effectively, requires us to put the aspects of our evaluation into a logical sequence.

This slide shows one approach.  We use the scoping process to decide which resources we want to evaluate, select “R-E’C’s, methodologies, and how we want the results presented.  Then, we conduct the two-part environmental Impacts Analysis by generating an action-focused effects analysis, which is input for the resource-focused analysis.  We consider mitigation, or ways to reduce the Total Effect, through out the analysis.   Finally, we discuss the results, with an emphasis on what we know, what we don’t know, and the relative importance of what we don’t know.

## Summary

- The environmental side of innovative finance: business as usual
- Stick to analytic basics!
- It’s all about transportation network efficiency
- Address suitable finance tools upfront

**Notes:**
The public is the consumer they must understand, a strong education/public awareness program will generate the necessary support. 

## Useful Information

***If  it is not in the record, ***
***it does not exist***
***If it is in the record and ***
***essential to the analyses,***
***but not referenced ***
***in the public document, ***
***it does not exist***** **

**Notes:**
Key Message:  Administrative recordkeeping is EVERYONE’s job

To be useful, information must be effectively communicated, and supported with factual and substantive background material.

Background:  Documentation will be covered throughout the course.

Interactivity:  Ask – whose responsibility is recordkeeping?

## Questions