Introduction to Green Infrastructure Financing in the UK

What is Green Infrastructure? The concept of ‘green infrastructure’ is an admittingly vague one. There are numerous definitions of what it means ranging from greenspace planning to water management and entire academic papers have been written to derive a conclusive meaning. However, this article will consider the European Commission’s definition as ‘a strategically planned network of natural and semi-natural areas’. The broad definition of the concept also results in multiple reasons for its existence. The primary purpose of green infrastructure can range from improving the mental and physical health of the local population to attracting investment. There is a wealth of information on green infrastructure from a social perspective, so this article will mainly focus on the topic from a financial perspective.

The financing of green infrastructure has typically been considered the domain of local governments. Local government spending has traditionally been limited by the wealth of its residents. This has typically primarily resulted in only affluent neighbourhoods benefitting from green infrastructure as until recently, since green infrastructure had an exceptionally low priority when it came to fund allocation. However, in recent years the growing interest in environmental issues has allowed for alternative financing systems to emerge. An important development in this regard are Community Municipal Investments (CMIs). CMI’s are effectively bonds issued by local councils and have been used to fund otherwise unaffordable green projects. A notable example was West Berkshire’s CMI in 2020 (the first in the UK) which raised £1 million towards green projects including green infrastructure developments including tree planting and habitat creation.

However CMI’s are not the only form of financing popularised in recent years. Mayors of urban centres from across the UK have recently launched funds to increase the green spaces in inner cities. A prominent example is the Mayor of London’s £6 Million fund for green spaces in 2021. With all this increased interest in green issues, it is apt to ask what the future of funding could look like for green infrastructure. One could argue that there will only be increased methods of financing for green infrastructure as people are becoming more environmentally conscious. However this is not guaranteed as most investment in the space is going towards green technology such as Electric Vehicle charging facilities as opposed to green spaces. Indeed even with current projects the technology aspect is one that is most being advertised to potential investors. So it is likely that CMI’s coupled with occasional grants will be the way forward for green infrastructure.

Karthik Govindarajan


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