Your chief engineer tells you that 60% of your water treatment costs come from a single source you've never maintained, never invested in, and which is now visibly degrading. That source is your headwater forest. And the treatment plant you're planning won't fix the problem—it will just compensate for it.
This is the reality facing water utilities, power companies, and infrastructure investors across the country. The natural systems that supply, protect, and enhance utility operations have been treated as free externalities for decades. Now they're failing—and the bill is coming due.
the hidden dependency
Every utility depends on nature in ways that rarely appear on balance sheets:
| Utility Type | Nature Dependency | What Failure Looks Like |
|---|---|---|
| Water | Forested watersheds filter sediment, regulate flow | Higher treatment costs, supply volatility, drought |
| Power | Healthy forests reduce wildfire ignition risk | PSPS events, transmission damage, catastrophic liability |
| Stormwater | Wetlands and floodplains absorb peak flows | Infrastructure overwhelm, flood damage, regulatory violations |
| Hydro | Intact meadows and forests regulate water timing | Sedimentation, reduced yield, reservoir capacity loss |
These aren't abstract environmental concerns. They're operational risks with quantifiable costs—costs that are accelerating as climate change stresses natural systems beyond their historical baselines.
The question isn't whether to invest in these natural systems. It's whether to invest proactively—or pay reactively through higher operating costs, stranded assets, and emergency repairs.
why gray infrastructure alone won't work
The traditional utility response to supply and resilience challenges is more gray infrastructure: bigger treatment plants, higher levees, undergrounding lines. But this approach has three fatal flaws:
1. it treats symptoms, not causes
A new water treatment plant handles the sediment—but the degraded watershed keeps sending more. You're on a treadmill of escalating capital costs.
2. it's more expensive over the lifecycle
Study after study shows that natural infrastructure—source watershed protection, forest fuel reduction, wetland restoration—delivers equivalent or better outcomes at 40-60% of the lifecycle cost of gray alternatives.
3. it generates no returns
A treatment plant is a pure cost center. A protected watershed can generate returns through ecosystem service value, carbon sequestration, recreation, and increasingly, through ensurance instruments.
the natural infrastructure opportunity
Natural infrastructure is engineered nature—forests, wetlands, meadows, and other ecosystems managed specifically to deliver utility-grade services. It's not conservation for its own sake. It's infrastructure investment with measurable operational benefits.
Examples already in operation:
- New York City avoided a $10B+ filtration plant by investing $2B in Catskill watershed protection
- Denver Water partners with the US Forest Service on forest health to protect water supply
- San Francisco manages the Hetch Hetchy watershed as core water infrastructure
- PG&E now funds extensive fuel reduction treatments to reduce wildfire liability
These utilities aren't acting out of environmental virtue. They're acting because the economics are better.
how ensurance changes the equation
Ensurance is a financial mechanism that transforms natural infrastructure from a cost center into an investment. Here's the difference:
| Approach | Model | Funding | Returns |
|---|---|---|---|
| Traditional conservation | Expense/grant | One-time, uncertain | None |
| Green bonds | Debt | Ratepayer obligation | Interest cost |
| Ensurance | Investment | Blended capital | Operational + financial |
With ensurance, utilities and infrastructure investors can:
issue ensurance certificates for specific assets
A water utility can issue ensurance certificates for a headwater forest—attracting co-investors who fund protection in exchange for a claim on ecosystem service value. The utility reduces treatment costs. The investors receive returns. The forest stays intact.
deploy agents for ongoing stewardship
Ensurance agents are autonomous or managed accounts that hold natural assets and execute stewardship mandates. A transmission corridor protection agent can manage fuel reduction across thousands of acres—with proceeds from ensurance coins funding the work perpetually.
build portfolios through syndicates
Ensurance syndicates allow multiple utilities or investors to pool capital around shared natural infrastructure objectives—like a regional fire resilience fund or watershed investment vehicle.
Ensurance turns the "should we invest in nature?" question into "why would we NOT invest in nature?" by aligning operational benefits with financial returns.
the regulatory tailwind
Regulators are increasingly recognizing natural infrastructure as prudent investment:
- California's CPUC now considers wildfire risk reduction in rate cases
- EPA's green infrastructure guidance encourages natural solutions for stormwater
- FERC increasingly accepts watershed investment as hydro relicensing mitigation
- State PUCs are beginning to approve natural infrastructure in rate base
Utilities that move early can establish precedent, build portfolios at lower cost, and position for carbon and biodiversity credit upside.
use cases: what this looks like in practice
Important: Ensurance certificates are tradable, yield-bearing instruments. Unlike grants or one-time donations, certificates can be held for yield, traded on secondary markets, or used as collateral—creating liquidity and flexibility for investors.
source watershed investment
A water utility issues ensurance certificates for 10,000 acres of headwater forest protection. Institutional co-investors fund the protection. The utility sees:
- 20% reduction in treatment costs
- Improved supply reliability during drought
- Rate case justification for continued investment
- Returns from ecosystem service value appreciation
transmission corridor protection
An electric utility funds ensurance certificates for fuel reduction across 50,000 acres adjacent to transmission lines:
- 40% reduction in PSPS events
- Measurable reduction in wildfire liability exposure
- Ongoing stewardship funded through ensurance proceeds
- Community goodwill and regulatory credit
green infrastructure portfolio
A stormwater utility builds an ensurance portfolio of wetlands, bioswales, and urban forests:
- 60% lifecycle cost reduction vs. gray alternatives
- Flood capacity that exceeds regulatory requirements
- Co-benefits: heat island reduction, recreation, habitat
- Appreciation of underlying natural asset value
the investor perspective
For infrastructure investors, ensurance opens a new asset class:
| Characteristic | Natural Infrastructure via Ensurance |
|---|---|
| Yield source | Ecosystem service value, utility payments, appreciation |
| Risk profile | Lower correlation with traditional infrastructure |
| Duration | Policy term with permanent protection endpoint |
| Impact | Measurable environmental outcomes |
| Regulatory | Increasingly favored by PUCs, FERC, EPA |
Important: Ensurance is a one-time capital outlay—not a perpetual obligation. Natural assets are protected from day one. At the end of the policy term, assets are permanently conserved through ENTRUST, free from ongoing rent or debt. Investors deploy capital once and receive returns through the policy period, with no trailing liabilities.
This isn't ESG greenwashing. It's real assets delivering real operational value with real returns.
what to do next
If you're a utility or infrastructure investor evaluating natural infrastructure:
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Assess your nature dependencies — Map the natural systems your operations depend on and quantify degradation risk
-
Model natural vs. gray alternatives — Compare lifecycle costs including operational benefits and return potential
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Explore ensurance structuring — Understand how certificates, agents, and syndicates can attract co-investment and generate returns
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Build the rate case — Document the prudence of natural infrastructure investment for regulatory approval
Talk to our team about natural infrastructure planning →
frequently asked questions
how is natural infrastructure different from conservation?
Conservation protects nature for its own sake. Natural infrastructure manages ecosystems specifically to deliver utility-grade services—water filtration, flood control, fire risk reduction—with measurable performance metrics.
can natural infrastructure really replace treatment plants?
In some cases, yes—as New York City demonstrated. More often, it works alongside gray infrastructure to reduce capacity requirements, extend asset life, and lower operating costs.
what's the return profile for ensurance investments?
Returns operate on two levels. The natural cap rate—holistic yield from ecosystem services relative to asset cost—typically ranges from 100% to 750% annually, representing the full value nature provides. The financial IRR for investors typically targets 5-12%, structured through utility payments, ecosystem service value, and natural asset appreciation. Many utility-linked structures also deliver operational cost savings that compound the investment case.
how do regulators view natural infrastructure in rate cases?
Increasingly favorably. The key is demonstrating measurable operational benefits and prudent investment criteria. Ensurance structures with MRV (monitoring, reporting, verification) provide the documentation regulators need.
the bottom line
The utilities that invest in natural infrastructure today will have lower operating costs, reduced regulatory risk, and appreciating asset portfolios. Those that don't will face escalating treatment costs, stranded gray assets, and emergency expenditures when natural systems fail.
Ensurance is the mechanism that makes this investment rational—aligning operational benefits with financial returns, attracting co-investment capital, and building portfolios that appreciate over time.
The watersheds, forests, and wetlands your operations depend on are either assets or liabilities. The choice is yours.
Explore ensurance instruments → | View natural assets → | See how agents work →