Water

Opening the Door to Alternative Stormwater Compliance

  February 1, 2018      Jeremy Sokulsky   Chad Praul  



Keeping our streams and coastal areas clean and healthy is a critical task for urban stormwater managers. This is complicated by the need to address runoff and pollutants from both public and private lands. Cities and counties often engage private developers in the solution by requiring post-construction management of runoff from new development and redevelopment sites.

While on-site stormwater management has led to improved water quality in recent years, site constraints can limit the potential for properties to meet these requirements. To enable greater development flexibility, Alternative Compliance Programs allow stormwater requirements to be met offsite. These programs can benefit communities by creating watershed projects that provide value to neighborhoods, such as rain gardens or recessed parks, in addition to improved water quality.

Inspiring Private Investment

Not only do Alternative Compliance Programs introduce options for developers, they open the door for new parties to engage in producing water quality outcomes.

Take for example the Stormwater Retention Credit (SRC) Trading Program in Washington, DC, which allows developers to meet up to 50 percent of their post-construction runoff requirement offsite. New development sites are required to retain the 90th percentile storm volume, while sites undergoing substantial redevelopment must retain the 80th percentile storm volume. These translate into gallons of required retention each year.

Not all development sites are created equal – some sites may retain less than their required amount, while other sites can retain more. Thus, a market is born. Developers facing a deficit (buyers) can negotiate with other developers (sellers) to purchase some of their excess SRCs. The diagram below illustrates an example transaction, facilitating alternative compliance between two sites. Credits can also be generated by improving retention capacity on sites with existing development.

The Credit Buyer identifies the deficit in its initial Stormwater Management Plan, which is submitted and reviewed by Department of Energy and Environment engineers. During construction, the buyer reviews a public SRC for Sale report in the District’s Stormwater Database to find a seller and negotiate a transaction.

To date the SRC Program has enabled 26 transactions of 157,000 SRCs for $315,000 (real-time results are available here). The District Government is launching an $11.5 million program to purchase SRCs, creating a price floor for credits and stimulating additional private investment in SRC-generating projects. In addition, several privately-funded organizations are actively searching for project sites to generate SRCs to sell into the market.

See our presentation to learn more about how the SRC program enables post-construction alternative compliance.

Expanding Partnerships and Performance

When used effectively, alternative compliance can lead to new and exciting opportunities for municipal stormwater programs to:

Gain private and public support. Providing the option for off-site flexibility can lessen resistance to the adoption of rigorous post-construction requirements. When development projects improve water quality and community well-being they contribute to sustainability goals and garner public support.

Attract private investment. In a market setting, private firms can directly engage in developing water quality credits – for instance working with private landowners who may not be willing to work with a government entity directly. This creates cost-effective opportunities that would not be available to the stormwater program directly.

Enhance performance of publicly funded projects. The credits used to measure stormwater requirements can be defined for public works projects as well, thus demonstrating the value of multi-benefit projects that deliver water quality, recreational, and community sustainability benefits. Coupled with pay for performance contracts, stormwater managers can cost-effectively purchase credits from private parties with limited or no risk.

Environmental Incentives is supporting communities in the Western and Mid-Atlantic Regions to develop performance-based compliance programs to improve water quality and habitat. We aspire to make it easy for any city, county or region to design and implement programs that engage private parties in creating water quality solutions and enhancing community sustainability.

About the Authors

Evan Branosky developed water quality markets for the World Resources Institute before implementing and managing the Stormwater Retention Credit Trading Program as a DOEE staff person. He is now a Senior Associate with Environmental Incentives where he is helping to expand the use of Alternative Compliance Programs for stormwater programs. Jeremy Sokulsky and Chad Praul have pioneered performance-driven stormwater programs and are enabling clients to achieve water quality goals at a fraction of the initial estimated costs by employing our Stormwater Funding and Strategy Portfolio.

Share this story