Application of Social Impact Bonds in Built Infrastructure Sustainability Projects

This study examines a first look at the implementation of Social Impact Bonds (SIB) for sustainability projects by comparing two cases. The cases are described using System Dynamic (SD) modeling to portray the feedback structures and characteristics of the cases. The comparison consists of two milestones looking at four case descriptors and how the cases align with the criteria outlined by previous research. This provides practitioners with a first look at how a SIB could integrate into built infrastructure sustainability projects.

The study results in six major contributions to practice and research. First, the SIB model is useful for determining the impact different policies have on the system outcomes for a SIB in the Peterborough case. This provides practitioners with a useful means of testing different scenarios for SIB success/ failure. Second, the TAMU case and other sustainability improvement projects for universities make ideal candidates for the use of a SIB structure. Third, the structures required for a SIB (pay for performance, pay from savings, investors, third party assessors, special purpose vehicles, etc.) are already used through ESCOs for sustainability projects. Fourth, the study shows how BIS cases present a preventative intervention, with measurable outcomes that benefit a broad range in society. This shows how BIS cases can extend the definition of ?socio-economic? and alter the requirements for government sponsorship. Fifth, the BIS case is able to return practical savings faster, and the social SIB is able to return a greater savings in the long run. Both projects present a preventative intervention through energy saving improvements or social programs. While both projects are able to align the incentives of program effectiveness, the SIB is also able to align the unit program cost. Finally, a SIB presents a viable opportunity for TAMU project if the funds from the State were not available. This shows researchers how a BIS cases compare with SIB programs and it shows practitioners the similarities of SIB structures to existing BIS cases.