EPA Studies Stormwater Credit Trading

The Environmental Protection Agency is sponsoring research on a tradable credit system for stormwater similar to the recently released Water Quality Trading policy for dischargers.

By James Laughlin

The Environmental Protection Agency is sponsoring research on a tradable credit system for stormwater similar to the recently released Water Quality Trading policy for dischargers.

Instead of relying exclusively on large scale, centralized, and costly infrastructure to control stormwater runoff, EPA would like to develop a system of tradable runoff credits that would create economic incentives for individual property owners to build small best management practices (BMPs) distributed throughout a watershed.

Researchers believe this method will control stormwater runoff in a cost-effective way that approximates the water retention profile in an unaltered watershed. With the sale of detention credits as the incentive to increase construction of BMPs in the watershed, parcel owners can trade responsibility for runoff detention, much like emissions allowances in the air quality trading market.

Excess stormwater runoff is a serious problem in a large number of urban areas, causing flooding, groundwater recharge deficits and ecological damage to urban streams. Stormwater also carries a significant pollutant load, as it washes away the garbage that litters American streets and soaks up the nutrients and toxic mix of chemicals spilled or applied by a modern society.

The effects of stormwater runoff on stream ecosystems are worsened by urbanization and the spread of impervious surfaces in a watershed. Those hard surfaces allow more stormwater from rain events to reach a stream faster causing higher peak flows that can lead to stream alteration and habitat degradation.

Researchers hope to show that a properly designed tradable runoff credit system would create economic incentives for landowners to employ best management practices to protect waterways.

The pilot analysis focuses on Shepherd Creek, a 500 acre subbasin of Mill Creek in Cincinnati, OH. This area was chosen because of its diverse land use, topography, and soil types, and because the Mill Creek basin is an impaired warm water habitat with well-documented stormwater related problems.

Using individual property level data (such as land use, soil type and BMP cost information) for 453 parcels in the Shepherd Creek subwatershed, researchers demonstrate the credit methodology with an ArcView GIS-based decision support tool.

The tradable runoff credit methodology uses the USDA - NRCS "hydrologic curve number" system (TR-55) to calculate stormwater runoff volume on a property-by-property basis under constraints on stream power and development. Mathematical representation of the property owner's cost minimizing objective is implemented in Excel.

Property owners can minimize the cost of required stormwater runoff abatement responsibility by choosing the least-cost BMP technology suitable to their parcel or by purchasing credits. Under the program, those for whom building detention capacity is relatively expensive will purchase storage capacity (or credits) from those for whom BMPs are relatively cheap.

EPA research suggests that a tradable runoff credit system — in some cases on its own, and in some cases in concert with a large-scale engineering solution for control of excess stormwater flow — could lower the cost per cubic foot of runoff detention given certain credit prices.

My understanding is that the research shows promise, but an actual trading program is still in the distant future. Articles discussing the topic and research can be found on the Internet using the keyword search "tradable runoff credits."

James Laughlin, Editor

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