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Historically, strong federal environmental regulations drove government action to manage water resources -- that’s changing as more communities experience flooding and see the benefits of nature-based solutions to mitigate those impacts.
By Erin Delawalla, Contributing Author for The Epicenter and Regional Manager, Resiliency Solutions for Resource Environmental Solutions (RES)
The Clean Water Act was passed in the U.S. in 1972 in the wake of public outcry that rivers were literally on fire from industrial pollution. In addition to restrictions on industrial dumping in public waterways, the Clean Water Act required governments to take actions to treat used wastewater and manage stormwater to protect downstream water quality. These requirements pushed communities to address legacy infrastructure problems, like combined sewers, which allow untreated wastewater to combine with stormwater and pour into public waterways after big rain events (known as a “Combined Sewer Overflow” or “CSO”).
Milwaukee, like many early cities in the U.S., was built partially on a combined sewer system, and when it rained, untreated wastewater flowed directly into Lake Michigan, which also happened to be the drinking water supply for 1.5M people in the Milwaukee Metropolitan area. Regulatory pressure to limit Combined Sewer Overflow events (CSOs) and public pressure to protect drinking water led the regional government agency responsible for water management, Milwaukee Metropolitan Sewerage District (MMSD), to make major investments in managing stormwater, such as the Deep Tunnel project completed in 1994. The Deep Tunnel helped MMSD cut their CSOs from an average of 50 per year to an average of just over two per year, but it could not eliminate the problem completely.
MMSD realized additional long-term solutions needed to focus upstream, managing water where it fell—before it filled and overflowed waterways, pipes, and sewers. One solution to this is green infrastructure, which catches the water where it falls, either infiltrating that water into the ground directly or storing it until it can be released after the peak flow event ends. This practice reduces how much water flows into the sewer in the first place, meaning fewer CSO events and better water quality.
Because the Deep Tunnel alone could not eliminate CSOs, MMSD began exploring more distributed rainwater infrastructure, such as rain gardens, bioswales, and providing rain barrels to homeowners to capture water from downspouts. To address water in the upstream rural areas, MMSD launched the Greenseams program in 2001 to protect streams, rivers, and wetlands in the larger Milwaukee Metro Area. Despite these early initiatives, in the early 2000s, MMSD still had too many CSOs for their permit limit and flooding was an ongoing issue.
Thus, in 2002, when Kevin Shafer became Executive Director of MMSD, he doubled down on a watershed approach that not only targeted flood-prone areas, but also the areas upstream to keep stormwater from getting to the more at-risk areas. His commitment to the strategy was memorialized in 2009, with the publication of a 2035 Vision for MMSD. Shafer envisioned a future with no CSO events, no homes in the 100-year floodplain, and a network of green infrastructure that would effectively capture the first 0.5 inches of water in any storm. He believed a “climate resilient” Milwaukee Metropolitan Area was possible, powered by 100% renewable energy.
To-date, Shafer has overseen investment of $90M in green infrastructure, with a plan to invest $84M more in green infrastructure before 2033. MMSD’s combined sewer overflow problem is vastly reduced at this point, with fewer CSOs occurring than their permit allows. But MMSD is committed to further investment—why?
MMSD realized that regional watershed management protected communities against the growing threat of flooding. Despite a lack of regulations forcing MMSD to spend more money on green infrastructure, MMSD is forging ahead toward Shafer’s 2035 Vision of a resilient future for the Milwaukee region–one where there is greater protection from increasing heat, no flooding in verdant neighborhoods, and adequate storage for rain despite increasing precipitation trends.
MMSD is finding success in this strategy for three main reasons:
MMSD’s unique governance structure enables a comprehensive regional approach to managing flooding.
MMSD is a regional government agency in the greater Milwaukee Metro responsible for flood management and wastewater treatment across a large geographic region.
MMSD invests and manages water that would be impossible for individual municipalities to manage without MMSD’s watershed-wide mandate for flood management.
While individual municipalities experience the acute impact of a flood, they often lack the capacity, authority, and funding to manage water outside of their municipal boundary. Instead, they focus on what they can control, which is typically how water is managed within the municipality’s own city streets and through development ordinances. This is critically important, but it may not solve larger flooding issues caused by poor management of water somewhere else in the watershed. It may also lead to communities paying more to manage water within their boundaries than a lower cost solution upstream.
The advantage of a regional flood management district is the ability to evaluate flooding at the watershed scale. It enables MMSD to look upstream to the headwaters of the Milwaukee and Menomonee Rivers to understand how conditions in those areas affect water flows and quality in the urban Milwaukee area, and then to take action to change those outcomes as needed.
A regional governance structure enables government leaders to look at an entire watershed and ask “How can we best solve this issue? Is the solution one huge retention basin, or distributed green infrastructure throughout the watershed?” This approach supports finding the lowest cost solutions to address the problem rather than being limited by municipal boundaries, which rarely follow watershed boundaries.
Since 2001, MMSD acquired over 5,000 acres of flood-prone properties through the Greenseams program, protecting not just those flood-affected property owners, but many more downstream.
Greenseams became one of the most effective tools for MMSD to manage water at the regional scale—proactively funding acquisition and conservation easements on wetlands, streams, and riparian areas throughout the larger Milwaukee and Menomonee Rivers’ watersheds. The program’s goal is to acquire land in the floodplain adjacent to waterways.
Residents initially expressed concern about this program—a government initiative to acquire privately held land sounded a lot like eminent domain. However, that has never been MMSD’s approach; MMSD only purchases land from willing sellers. After five years of consistent communication about the strategy, residents slowly came to trust that this program would provide benefits in the form of flood resilience and compensation for undevelopable property.
This approach also protects critical water infrastructure–the rivers, streams, and wetlands that protect Lake Michigan, Milwaukee Metro’s source for clean drinking water. Wetlands are also natural sponges, soaking up excess floodwater. The wetlands protected and restored through the Greenseams program hold an estimated 1.3 billion gallons of water (about 1,970 Olympic-size swimming pools). These natural areas also provide habitat for wildlife and recreational opportunities for residents.
Although MMSD’s Planning Area Boundary only reaches as far north as Richfield and Thiensville, MMSD has also funded watershed planning for communities outside of their Planning Boundary but within the larger watershed (such as Fredonia, more than 18 miles beyond the MMSD boundary, but in the headwaters of the Milwaukee River). This strategy makes sense to Shafer, as the water in those communities ultimately drains through MMSD’s boundary. By managing the water where it falls in the upstream rural areas, Shafer is saving money on managing that water once it crosses the MMSD boundary into a more urban landscape where management tends to be more expensive. This innovative use of government funds to holistically solve problems at the “root” rather than putting a Band-Aid on the problem has led to a significant reduction in flooding across the region. By taking a dual approach to managing water upstream in rural areas and downstream in the urban core, MMSD is setting the region up for long-term resilience, regardless of how precipitation patterns may change in the future.
MMSD is leveraging a P3 procurement strategy to accomplish its goals cost-effectively and on schedule, and funding that work through innovative financing strategies.
An innovative “Public-Private Partnership” (also referred to as “P3” or “pay-for-success”) procurement structure enables MMSD to get projects on the ground much faster and more cost effectively than a typical government design-bid-build process. With the various MMSD programs focused on green infrastructure and a total goal of building 740M gallons worth of water storage in the urban core, MMSD quickly maxed out the capacity to accomplish all of the goals with internal staff. MMSD knew models for public-private partnership (P3) existed and viewed this as the best way to continue to accelerate the green infrastructure strategy.
Through a P3, all facets of the projects are implemented by private companies. MMSD contracts with the company upfront to design and install a certain number of gallons (e.g., 20 million gallons) for a defined cost in a defined period of time (e.g., 2 years). The company can then work with landowners to implement these projects, and are only paid after the storage is successfully implemented. Private companies build trust by working directly with individual property owners.
Per Shafer, a private company’s process to take a project from landowner engagement through design, permitting, and construction can be much more streamlined than MMSD managing each of those stages themselves. The contract structure also shifts the risk and cost of project failure to the private company. MMSD only pays for the successful projects. As long as MMSD defines strong guardrails in the contract for the outcomes expected, this approach can achieve the goals of the program faster and often more cost effectively.
MMSD has defined a number of parameters for this program, the Fresh Coast Protection Partnership, which dictate where and how private contractors can develop projects and what will let a project qualify for funding. To date, MMSD and its implementation partners have built storage capacity equivalent to 157M gallons, or 21% of its ultimate goal.
MMSD is committed to a total investment of $174M in green infrastructure and floodplain property acquisition across the region through 2033, and they are funding most of that work through property taxes charged to municipalities within the MMSD service area. This program represents a sizeable part of MMSD’s total budget, which also pays for wastewater treatment. In 2024, green infrastructure spend was 13.3% of the total MMSD annual budget.
MMSD leverages three primary financial tools:
Municipalities in MMSD’s boundary pay a property tax to MMSD in exchange for the flood management services provided, which MMSD uses to pay those bonds and loans back over time. Each municipality can then choose to create a local stormwater utility fee for property owners to generate the funds for the MMSD property tax fee, or they can integrate the cost into property tax bills.
With a Triple A bond rating from both Moody’s & Fitch, MMSD issued municipal bonds for green infrastructure and floodplain management investments. Three strategies enabled greater investment upfront through low-cost long-term debt.
By leveraging municipal bonds and low-interest loans, MMSD has been able to implement more projects today than they otherwise would if they only funded projects using the annual fees year-to-year. A strong sustainable governance strategy also helps attract new corporate investment, such as a commitment from Goldman Sachs to finance the development of green infrastructure.
Although MMSD does not rely primarily on grant dollars to fund projects, the significant financial commitment from MMSD to fund its own water infrastructure has provided leverage to secure grant dollars to further accelerate progress. Just one example: the Reforestation and Wetland Restoration (RWR) Program, one of MMSD’s newer programs, is on a mission to plant 6 million trees and restore 4,000 acres of wetlands across the larger MMSD boundary. This resilience-focused program has helped MMSD and partners to secure a Sustain Our Great Lakes grant for $1.6M. More trees and wetlands will help reduce flooding in the future as the climate changes. Increasing tree canopy by 10% in the Milwaukee urban core will provide human health benefits by mitigating urban heat islands and will also enable economic development.
Building partnerships with community stakeholders and strategically aligning to community priorities is key to MMSD’s success.
When asked what advice he would share with communities considering how to address flooding, Shafer recommends that communities consider the total benefits that come from projects and then engage the stakeholders that care about those benefits. By considering a broader approach to solving local flooding problems, there may be opportunities to design a project that serves multiple needs.
For example, a flood management project may also protect roads and require a bridge upgrade. Shafer’s suggestion: bring the local Department of Transportation (DOT) in to help with this project, maybe even to help with funding it.
Similarly, most utilities must spend a certain amount of money for regulatory compliance. How can utilities leverage that funding to get more partners to the table while adding more amenities and benefits for the community?
In the case of MMSD, the district looks for flooding solutions that provide a dual benefit–a degraded park becomes a location to manage floodwaters, but in a way that also improves recreational space. This boosts the economic vitality of a neighborhood, protects drinking water, boosts housing values, and improves a public amenity that needed investment anyway.
Milwaukee’s investments in resilience will support community growth in the future with new residents looking to escape drought-prone regions and increasing temperatures.
Improved clean water and less flooding is not just nice to have. It is a major driver of economic benefit. MMSD’s green infrastructure program is already estimated to have improved property values by $667M in the MMSD Service Area. Clean water in lakes and rivers allows people to recreate in those areas, which enables real estate development to provide services to those people. Less flooding decreases the risks to property, which also supports greater economic investment. MMSD’s efforts to buy people out of the floodplain properties sometimes involves helping those homeowners to move into affordable housing but at a higher elevation. This creates opportunities for new real estate development in upland areas that are attractive for residents that need to move but want to stay nearby.
Early in Shafer’s tenure, discussions with the MMSD Commission were critical and skeptical. Today, the Commission consistently votes unanimously in support of continuing these programs because the Commission understands the economic incentives driving this strategic investment.
With rising temperatures, shrinking water supplies, and more extreme hurricanes and weather along the coasts, many have pointed to the Great Lakes as a destination for internal U.S. migration in the future. It won’t just be residents looking for less stressful and dangerous places to live. Companies will need water for their supply chains and it will make business sense to go where there is a sustainable supply. Shortages are already occurring in the southeast and western U.S., and with more water-thirsty data centers coming online in the near future, water supplies face greater demand pressure all over the country.
With MMSD’s investments to protect its clean water supply and reduce flooding, the Milwaukee Metro Area will be ready for this inevitable population growth and economic boom. In Shafer's mind, MMSD is doing the work to prepare and clean the house for future residents, and they are ready for more residents to move in.
This article is the second in a series about the role that different levels of government can play in addressing flooding. Read the first piece here. Have thoughts to share about the piece? Email us with your comments.
Erin Delawalla leads nature-based solution development for community resilience needs in the Midwest for RES, the nation’s largest operational ecological restoration company. She works to develop innovative funding strategies for environmental restoration. Delawalla is a licensed attorney with extensive experience in permitting issues related to renewable energy and natural resources. She previously worked at a large renewable energy developer, managing wildlife and wetland issues for over a gigawatt of utility-scale wind and solar projects.
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