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Tapping into New Funding Sources & Partners to Improve Water Quality

Stormwater managers have been pulled between competing goals – improving water quality, and the need to limit costs within municipal budgets that support multiple priorities, such as transportation and community health. The requirement to do the “maximum extent practicable” to achieve water quality standards only reinforced this tension.

However, contexts are changing as Municipal Separate Storm Sewer System (MS4) permits shift to require definitive progress toward meeting standards. In many urban areas, the projected cost of compliance is billions of dollars – significantly higher than most existing budgets. More than ever, stormwater managers must innovate and expand their toolbox of strategies and funding approaches.

Using feedback to align incentives

Performance measures, such as load reductions or volume treated, link individual projects or actions to a resulting outcome: water quality improvement. Although simple, this subtle feedback can align the interests of diverse stakeholders and create opportunities for innovation. For instance, stakeholders can work together across departments to implement projects, sharing both the costs and outcomes achieved. Private actors can invest in water quality improvements, reducing the burden on stormwater managers. And regulators can allow flexible approaches to achieve compliance. Overall, performance feedback can lower the cost and increase the pace of achieving water quality standards.


The concepts and strategies in this blog are discussed in greater detail in our white paper: Stormwater Funding and Strategy Portfolio. Contact us to request an advance copy.

Stormwater Funding and Strategy Portfolio

Through our work with municipalities, watershed collaboratives, and regulators over the last dozen years, we have developed a portfolio of performance-driven strategies and funding structures. Even the most familiar strategies have a unique twist: they use performance feedback to align incentives and consciously influence behaviors. Using these strategies results in access to previously untapped funding sources and partnerships. The diagram below shows a selection of strategies grouped by the mechanisms that make each strategy effective.

Increase Stormwater Funding and Effectiveness – Reducing the total cost of achieving water quality and community goals benefits all stakeholders. This can be achieved through performance management systems that increase the amount of benefit per dollar spent, and by securing additional public funds to fuel a higher level of activity. For example, results of the Cost-Benefit Analysis for San Diego identified a strategy that was 20 times more cost-effective than previously planned strategies.

Engage Partners to Implement Improvements – Coordination with partners can decrease the total cost of achieving stormwater goals through efficiency. Cost distribution strategies engage parties other than the stormwater department to take on responsibilities and costs for achieving water quality and community goals. In Lake Tahoe, TMDL cooperation enabled permittees to share credits from regional projects, increasing compliance efficiency.

Leverage the Private Sector – Engaging private actors to implement water quality improvements can rapidly increase the pace of progress while limiting use of municipal staff time. In exchange for potential returns, these private actors are also willing to take on project execution risk, limiting or eliminating the risk of public funds being spent on projects that perform lower than expectations. In the case of alternative compliance programs, private actors can generate water quality credits to sell to developers struggling to meet post-construction requirements. Alone or in combination, these strategies can improve the performance of any stormwater program. By understanding the local regulatory context and public and private partnership opportunities, stormwater programs can select the right strategies to meet their water quality and community goals.

This is a challenging and exciting time. We look forward to working with stormwater managers to unleash the potential that strategic partnerships, process improvements, and new sources of funding hold. The concepts in this blog are discussed in greater detail in our Stormwater Funding and Strategy Portfolio White Paper, contact our water team to request an advance copy. We will also be delving further into each strategy on our blog in the coming months. Stay tuned!

Jeremy Sokulsky and Chad Praul have been exploring concepts to improve the performance of stormwater programs since founding Environmental Incentives. With over a decade of experience and experimentation, they understand which strategies are best suited to each context. Evan Branosky is now adding his experience with alternative compliance programs to expand the portfolio and increase our rigor.


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