Success Story: Green Bonds Fund Asheville Infrastructure

Asheville uses green bonds to improve drinking water infrastructure

Project Purpose

Asheville’s mountainous topography makes water pressure higher than in other areas. This pressure stresses water lines, making them more prone to leaks (McDaniel, 2015).

In 2007, when interest rates were high, the City of Asheville Water Resources Department issued a routine water revenue bond to make system upgrades. The upgrades reduced water leaks by replacing failing water lines, enhancing water tanks and replacing valves. The City also added emergency generators to keep the pump stations online when the power goes out.

When interest rates were lower in 2015, Asheville investigated refinancing options. The City found they could cancel their existing debt and obtain a lower interest rate using a green bond, even though the project had already been constructed.

Quick Facts

  • The City of Asheville used a green bond to refinance water service projects at a lower interest rate.
  • Satisfied with its first green bond issuance, the City of Asheville sought another green bond to fund improvements to the North Fork Dam.
  • In 2021, a second green bond was issued for improvements to the North Fork Dam.
  • Following this second issuance, Moody’s and Standard & Poor awarded Asheville with strong debt ratings of Aa1 and AA+, respectively.

Green Bonds

Green bonds are like traditional municipal bonds, except they fund projects that meet certain standards for environmental or climate benefits. In 2007, a market began emerging for bonds self-labeled as “green.” Within a few years, market- and government-led efforts standardized a set of principles and guidelines to define what projects can and cannot identify as “green.” Interest rates for green bonds are lower because the market for green bonds is stronger than for traditional bonds (OECD, 2015). Green bonds can lower the cost of project financing, making projects more affordable.

Debt Ratings

A debt rating is the result of an assessment of the City’s ability to meet one or more financial commitments. Credit rating agencies use ratings to issue an opinion on an individual obligation (e.g., a bond) or of an entity’s general creditworthiness (Moody's, n.d.). There are three leading agencies that issue debt ratings: Moody’s, Standard & Poor’s (S&P) and Fitch. Only Moody’s and S&P issue ratings to local governments. Moody’s highest rating is an Aaa, followed by Aa1, Aa2, Aa3 and lower. Standard and Poor’s top rating is an AAA, and continue down with AA+, AA, AA- and down (Finney, Mansa, & Rohrs Schmitt, 2023). Having a high rating from both Moody’s and S&P gives a city access to strong financial markets, ultimately lowering borrowing costs and saving the city money (City of Asheville, 2021).

Spotlight on Equity

Local governments can use green bonds to finance projects that help residents who experience the worst effects of climate change.

The North Fork Water Dam in 2021 after improvements financed with a green bond. (Source: City of Asheville)
The North Fork Water Dam in 2021 after improvements financed with a green bond. (Source: City of Asheville)
Key Info
Location Asheville, N.C.
Estimated Costs $0
Published March 1, 2024
Related Resources
Green Bond Principles: Voluntary Process Guidelines for Issuing Green Bonds (PDF) – includes list of eligible project categories, including flood mitigation and climate adaptation
Tab/Accordion Items

  • In 2015, the City of Asheville prepared the refinancing of the 2007 bond under the Green Bond standards. To obtain the green bond, the City had to demonstrate the environmental benefits of the 2007 project. In North Carolina, the state Utilities Commission must certify municipal green bond instruments by reviewing documentation on the project’s environmental benefit. Asheville’s first green bond was issued in June 2015.
  • The City of Asheville was happy with the interest rate savings associated with the first green bond issuance. In 2020, the City decided to pursue another green bond opportunity. The new project would fund $40 million in improvements to the North Fork Dam (Bechel, 2021). The interest rate for this green water revenue bond was just under 2.1%. In September 2021, Asheville was issued its second green bond.

The only costs for issuing a green bond are staff salaries and financial advisor fees. Local governments in North Carolina use financial advisors to handle all bond applications. Asheville did not experience a difference in cost between a green bond application and a regular bond application.

City of Asheville Water Resources Department, financial advisors, North Carolina Utilities Commission

  • The green bonds issued to the City of Asheville lowered the cost to deliver environmentally friendly projects by lowering the interest rate.
  • As of 2015, the City of Asheville had issued $55 million in green bonds to finance both water infrastructure projects (McDaniel, 2015).
  • Following the 2021 green bond issuance, Moody’s awarded an Aa1 debt rating and Standard & Poor affirmed a debt rating of AA+ for the City of Asheville’s water revenue bonds. These high ratings lowered borrowing costs for the City, saving taxpayer dollars (City of Asheville, 2021).

Any time you are issuing a bond or borrowing money, talk to your financial advisors to see if the projects for which you are issuing the debt would allow for a green bond.

Bechel, B. (2021, October 21). City of Asheville completes North Fork Dam Improvement Project. Retrieved from The City of Asheville:

City of Asheville. (2021, October 5). City of Asheville issues Water Revenue Bonds. Retrieved from Mountain Xpress:

Finney, D., Mansa, J., & Rohrs Schmitt, K. (2023, August 26). Credit Rating Agencies: Overview and History. Retrieved from Investopedia:,Standard%20%26%20Poor's%2C%20and%20Fitch

McDaniel, P. (2015, May 26). Asheville the first NC city to issue 'green bonds'. Retrieved from The City of Asheville:

Moody's. (n.d.). Moody's Rating System in Brief. Retrieved from

OECD. (2015, December). Green Bonds: Mobilizing the Debt Capital Markets for a Low-Carbon Transition. Retrieved from