An outlook on stormwater policies, investment needs, water quality trading and market-based instruments

1. Stormwater and WQT from
10,000 Feet
Outlook on Stormwater Policies, Investment Needs, Water Quality Trading,
and Market-Based Instruments
NEFSMA Spring Stormwater Symposium
March 8, 2017
Seth Brown, PE
Founder/Principal | Storm and Stream Solutions, LLC

2. Overview
•National View
•Policy / Legal Rulings
•Funding/Investment Needs in Stormwater
•Innovations in Funding/Financing
•Background on Water Quality Trading
(WQT)
•Examples of WQT
•Considerations regarding WQT
•WQT and Stormwater/MS4s

3. National View

4. National Policy Issues
•“Alternative” Stormwater Facts
•Policy and Legal Rulings of Note
•Funding/Investments Needs in
Stormwater
•Innovations in Funding/Financing

5. Stormwater is important…

6. The Rise of Nonpoint Pollution
Source: William Ruckelshaus, A New Shade of Green, The Wall Street Journal, April 17, 2010
Point Source vs. Nonpoint Source
Water Quality Impairments
1970 2010

7. Stormwater is a punk…

8. Challenge of Stormwater
Source
(Annual
Volume)
BOD5
(mg/l)
TSS
(mg/l)
Fecal Coliform
(colonies/100ml)
Treated
Wastewater
(11,425 BG)
30a 30a <200a
Stormwater
(10,068 BG)
0.4-370 0.5-4,800 1-5,230,000
CSO
(850 BG)
3.9-696 1-4,420 3-40,000,000
SSOb
(10 BG)
6-413 10-348 500,000c
Pollutant Concentrations in Municipal Discharges
aTypical limit for wastewater receiving secondary treatment/limit for disinfected wastewater
bConcentration in wet weather SSOs
cMedian concentration (WDNR 2001)
Source: Report to Congress on the Impacts and Control of CSOs and SSO (EPA 2004)

9. Stormwater cannot be fired…
It’s too good of a deal for economy
It’s too big of a problem for the environment
It’s too promising of a value
“YOU’RE FIRED,
STORMWATER!”

10. What the Boss Has Said…
•He means what he says…literally
•$1 trillion in infrastructure investment
• Public and private partnerships
• Private financing through tax incentives – offset by repatriation
revenues
• Considering dubious by many…
• “use…money to fix America’s water and environmental
infrastructure”
• Triple the State Revolving Fund programs
• Focus on “urban renewal”
• Signaled an immediate 10% cut to EPA’s $8.2B budget
(half of which is passed on to the states)

11. What the Boss Has Done…
• Proposed budget cuts EPA by 25%
• Reduces EPA funding down to lowest level since 1991
• Reduces EPA staff from 15,000 to 12,000
• Reduce Chesapeake Bay funding by 95%
• Administrator Pruitt has stressed the importance of SRF and state
grants – and that “this is the beginning of the process”
• Republican senators have said this budget is “DOA” and that cuts
in EPA are “too severe”
• Likely outcome – will move back to 10% (more about
direction that outcome…)
• BOTTOM LINE – will likely place a financial burden on
states, who already are strained financially (ECOS)
• States may need to address funding/investment gap
• States likely to be expected to play a stronger role in regulatory
enforcement

12. Compelling Driver for Change!
photo credit James Thomas, from Cleveland Press Collection, Cleveland State University Library

13. From http://crlazlo2.blogspot.com/
Compelling Driver for Change?

14. “Only Major Growing Source of
Water Pollution” – U.S. EPA
NRDC, 2013
Boston Globe, 2013
Forestsforwatersheds.org,2014
Wri.org,2014
Water Quality
Impairments
Flooding
Combined
Sewer
Overflows
Ecological /
Public Health
Impacts
?????
Urban Stormwater
Runoff

15. Clean Water Act
•1972 Amendments to Federal Water Pollution
Control Act (Clean Water Act)
• To restore and maintain the chemical, physical, and biological
integrity of the nation’s waters
• Two goals established:
• Zero discharge of pollutants by 1985
• Water quality that is both “fishable” and “swimmable” by mid-1983
• 1987 CWA Amendments created the MS4 program
• Promulgated in 1990 as Phase I program, updated/expanded in
2000 to Phase II program
• Attempted establishment of national standard from 2010-2014 –
deferred
• Still a very young sector, relative to others

16. Investment Pays Off
Investment in Wastewater Sector – Why Not Stormwater?
1972 = 16% raw and 3% tertiary
1978 = 0.6% raw sewage (gone by ‘96) and 19% tertiary
ShiftU.S.EPA,2000

17. Clean Water SRF
• Started in 1989 – grew out of Construction Grants program
• Revolving funds meant to generate revenues as well as sub-
market loans
• Each $1M of SRF funding generates:
• $930,000 in tax revenues ($100B = $93B in tax revenues)
• 16.5 jobs ($100B = 1.65 million jobs)
• $2.95M in economic input ($100B = $295B)
• Stormwater/green infrastructure IS ELLIGIBLE
• 2014 WRRDA bill clarified this
• $48M green infrastructure SRF loan in Maryland – to
a private entity in a P3 arrangement

18. Evolution in Stormwater
Management
Traditional Stormwater Management
ConveyCollect Detain
Infiltrate Retain
Green Infrastructure
StormwaterasaResource
andanOpportunity

19. pedshed.net, 2013
Stormwater Infrastructure
Has Value!
City of Chicago, 2013
City of Philadelphia, 2013
City of Philadelphia, 2013

20. Then Why Hasn’t It Just “Happened”?
NAHB Top 5 List
1. Regulators lack of necessary
experience or knowledge
2. Regulatory approval process
limits flexibility
3. Green Infrastructure/LID
project cost more (real or
perceived)
4. Lack of home buyer demand
for GI
5. Lack of standardized
protocols and specs across
jurisdictions

21. Sustainable Practices: Green Infrastructure
Source: Mulvaney, Lanyon,
Source: ASLA
Infiltration Planter
Source: City of Portland, OR
Green City Metric (U.N., 2010) –
9 m2 (96.8 ft2) per inhabitant for
“proper urban sustainability”
City – Actual (Green City Metric Rate)
Chicago – 39,000 ac (GCM ~ 6,000 ac)
NYC – 22,000 ac (GCM ~ 18,680 ac)
DC – 22,000 ac (GCM ~ 1,500 ac)
Atlanta – 13,500 ac (GCM ~ 995 ac)
L.A. – 16,700 ac (GCM ~ 8,600 ac)

22. The Rise of the Millennials!
VETERANS (1920-43, 67+ YEARS
OLD)
50 million – Greatest /Silent Generation
Family-Oriented, Loyal, Hard
Working, Stable, Reliable
BOOMERS (1944-62, 55-71 YEARS OLD)
76 million-Me Generation
Personal Growth, Optimistic, Driven,
Determined
GEN X (1962-79, 36-53 YEARS OLD)
65 million-Slacker Generation
Entrepreneurial, Creative,
Technology-adept
MILLENNIALS (1980-2000, 15-35
YEARS OLD)
83 million-Generation Next
Networked, Sociable +Sophisticated,
Achievers
0
10
20
30
40
50
60
2005 2010 2015 2020
Generations in the
Workplace
Veterans Boomers Gen X Millennials iGen
iGen (Generation Z) (2000+
<15 YEARS OLD)
79 million
Yet to be known….
Boomers
Millennials
Gen Xers

23. Millennials
Characteristics
• Politically independent
• Favor “sustainability” over “environmentalist”
• More likely to favor alternative/clean energy
• More likely to believe that humans are responsible for
climate change
• More likely to be “car-less” or “car-free”
• Prefer urban core areas
• Prefer walkable areas near mass transit

24. Value of Green Infrastructure
Economics/Financing/Funding Issues
• More experience on cost-effectiveness
• More interest in large-scale green investments
• We’re finding better ways to pay for it…
• Lots of social and other investments interest/capital
• Vehicle for urban blight and addressing vacant
properties and brownfield sites

25. Policy Updates and
Legal Rulings

26. Policy and Legal Rulings
• MS4 Phase II Remand
• 2003 ruling (affirmed in 2014) stated that public comment/review
process for permits is too limiting in general permit process
• Three options:
1. Write all permit conditions at state level (“traditional”) and receive
public input then
2. Write some conditions at state, and some at local level (“procedural”)
with a requirement for some public input at local level
3. Hybrid of Options 1 and 2 (“states choice”) – chosen option
• Some concerned chosen option looks too much like “status
quo”, so appeal by enviro groups is anticipated
• Des Moines Drinking Water Case
• Nutrients from tile drains causing more expensive drinking water
treatment downstream
• Des Moines Water Works lost the case – drainage districts have specific
service to drain lands for farming

27. Policy and Legal Rulings
• Flow-Based Permits/TMDLs
• Accotink Creek, VA flow-based TMDL – EPA lost lawsuit, no appeal
• Others have jumped on this ruling
• Buckely Airforce Base
• West TN Home Builders
• Tennessee permit with retention standard repealed by state legislation
• Massachusetts Phase II permit has retention standard - lawsuits
• Recent EPA document on the impact of flow on downstream waters
• Construction General Permit
• No major changes from 2011 permit
• Homebuilders concerned with transference of permit for multiple
property owners (with temporal implications).

28. Policy and Legal Rulings
• Residual Designated Authority
• Filed in EPA Regions 1, 3, 9 for categorical application
in 2014 by enviro groups – dismissed by all regions
• Enviro groups have just re-filed – pending action from
EPA now
• Railroad Industry Push-Back on SWUs
• Norfolk Southern pushed to get railroad infrastructure
waived from stormwater utility payments in VA
• Others jumping on board in other states

29. Funding/Investments
Needs
Innovations in
Financing and Project
Delivery

30. We’re Paying A Premium
for a Legacy of
Outdated, Failing
Infrastructure!!
Water
Infrastructure
Grade = D
$700 Billion +
Loss
For
Businesses
COSTS
OVER
$ 150
Billion
“The heavily engineered,
capital intensive, facility-
construction solutions
that dominated 20th
century approaches to
water management are no
longer sufficient.”
America 2050: An Infrastructure Vision for 21st 12
Century America

31. The Regulatory Context:
Stormwater/Wet Weather
• Regulated Entities
• 7,500 communities regulated municipal
separate storm sewer systems (MS4s) in
the U.S.
• 772 combined sewer systems in the U.S.
• Growing interest and public demand
for green stormwater infrastructure
• Due to expanded urbanized acres &
increased localized flooding
Clean Watershed Needs Survey
• ~$150B* in wet weather/stormwater needs
*Extrapolated from information provided

32. Infastructure Investment
Needs
• Clean Watershed Needs Survey (CWNS) EPA (2008)
• $100B for CSOs / stormwater (60% / 40%)
• 67% growth in stormwater from ’04 to ’08
• $25.4B in ‘04 to $42.3B in ’08 – largest growth sector
• 7 states reported 85% of needs
• NJ ($15.6B), PA ($6B), CA ($3.8B), MD ($3.8B), TX ($3.1B), FL ($2.5B), NY
($1.1B) – what about others?
• Other states cited lack of time/budget to document needs or
documentation difficulties
• CWNS 2012
• $48B for CSOs (with projections for GI increasing)
• $19.2B for stormwater (only represents 20% MS4s) ~ $100B?
• Perhaps total need of ~$150B in wet weather/stormwater

33. Value of Green on the
Rise
• GI being seen as a investment potential
• GI showing economic bottom-line
value (and bi-partisan – what?!)

34. Funding/Financing
Options/Innovations
Source: Bloomberg BNA Daily
Environment Report
Title: Financing Integrated
Stormwater Infrastructure to
Improve Community Health,
Resiliency
Authors:
• Dominique Lueckenhoff, U.S. EPA
• Seth Brown, Storm & Stream
Solutions

35. Public Funding
Options
•General Funds
•Special Service Tax
•Grants
•In-Lieu Fees, Permit and
Inspection Fees
•Stormwater Utilities

36. Public Funding Options
Stormwater Utilities
• Becoming increasingly
prevalent/common
• 1,500 today out of 7,500 total
• But still only covers 20-25% of
regulated universe
• Stormwater programs often
still under-funded…
• Provides a critical dedicated
revenue source that can be
leveraged for expanded
investment and low-cost
financing 18
From Minneapolis-St. Paul Area
National average ~ $4/month

37. Public Financing
Options
• State Revolving Funds
• Lowest public financing
available in most instances
• Municipal Bonds
• Most common form of
infrastructure investment in
U.S.
• Bond ratings can be enhanced
through fee securitization
• Over 70% of communities
have a bond rating lower than
“Aaa”

38. Public Financing
Options
State Revolving Funds
• Many still consider GSI not eligible
• Over 95% in EPA Region 3 has gone to
wastewater – similar across the country
• SRF assistance can:
• Reduce costs through enhanced bond
rating
• Expand investment potential over 10x
through leveraging
• Generate an additional $6 to $28 billion
for GSI investments nationally
• Go to private parties

39. Innovative Financing
Options
• Water Infrastructure Investment Act (WIFIA)
• Based off of TIFIA
• Just launched – can greatly leverage investments
• Administered by EPA
• Property Assessed Clean Energy (PACE)
• Form of tax-increment financing
• Water infrastructure can be integrated into Clean Energy
projects as well
• DC PACE includes stormwater, specifically

40. Private Financing
Options
•Private Bank Loans
• Good for short-term financing
•Equity
• Not common source of funding
for municipal infrastructure
projects
• Can be helpful in investments
in new and emerging
technologies

41. Private Financing
Options
Socially Responsible
Financing
• Green Bonds
• There is no discernable pricing advantage
for green bond designation
• “Green” certification can needlessly add
costs
• Social Impact Bonds
• Not a traditional bond (most of the time)
• Normally associated with “Pay-For-Success”
or “Pay-For-Performance” approach

42. Project Delivery
Frameworks
Options
• Pay-For-Success (PFS)
• Community-Based Public Private
Partnerships (CBPs)

43. Pay-For-Success Model
Characteristics
• Utilizes “Social Impact Bonds”
(SIBs)
• Usually focus on “social
infrastructure”
• Examples: reducing homelessness,
reducing asthma-related illnesses,
etc.
Millennial Action Project, 2014

44. Pay-For-Success Model
Structure / Applications
• Premise = level of payment
based upon level of “success”
• Driven by “Impact Investors”
• First project in 2012 to reduce
recidivism in NYC
• Discontinued in 2015 due to lack of performance
• Only water application is DC Water to use GI to
retrofit 20 acres of impervious cover for $25M
• Issued “Environmental Impact Bonds” (EIBs),
Yves Blein, 2017

45. Pay-For-Success Model
Criticisms
• “Success” may be:
• Difficult to define
• The tail wagging the dog
• Example: NYC recidivism project
• High project risks may drive high ROIs
• Some have suggested ROIs above 20% (DC Water project near
market rate)
• Dubious for high ROIs for social/environmental good
• More about financing than project delivery
• No/little concern with reducing overall costs – just meet
“success” and ROI
Penn State, 2017

46. Municipality
CBP3 Entity
Private Entity
Design/Build Operate/Maintain
Traditional P3 Advantages
• Reduced project costs
• Project delivery time
• Transfer of risk
• Long term O&M
• Shared economic and social goals
• Alternative financing
Additional CBP3 Advantages
• Community is priority
• Mixed public/private financing can reduce
financing costs
• Municipality has high degree of
control/input
• Reinvestment into project
• Aligned interests
• Fixed-fee; Performance goals
• Integrates program services
• Lowers delivery costs
• Incentivizes private sector
• Lowers procurement barriers
• Supports local DBEs
• Drives local entry-level jobs
Ownership and Control
retained by the public partner
Provides surety of execution and Adopts shared
goals managed through performance metrics
Community Based P3

47. CBP3 Program Platform
Characteristics
• NOT a traditional P3!!
• CBP3 Starts with Community
NOT Financing
• Adaptable, scalable, flexible
• Holistic
• Not just a project – it’s a program
• Long-term commitment
EPA, 2016

48. CBP3 Program Platform
Elements
• Enhanced Procurement
• Public Control and Target Setting
• Co-Permittee/Co-Operator
• Design-Build-Operate-Maintain Project Delivery
Framework
• Fixed-Fee and Performance-Based Contracting
• Focus on Operations and Maintenance
• Funding/Financing/Guarantees

49. CBP3 – Current Programs
Prince George’s County, Maryland
• CBP3 entity (Clean Water Partnership) established in early 2015
• Focus on integrated green stormwater infrastructure
• $100M/2,000 impervious acres for initial phase
• Total of 15,000 impervious acres to address
• Significant cost reductions realized already
• Received $48M in SRF financing
• Over 2,000 acres in design/development
• Pilots in other communities ongoing

50. CBP3 Planning and
Implementation Tools
Guide, Publications at:
www.epa.gov/G3/
CBP3 Resources

51. Overview of Water
Quality Trading

52. Background on WQT
• Premise of Pollutant/Emissions Trading
• Classic view of pollutant trading = “Cap-and-Trade”
• Requires:
• The establishment of a “cap” or a “baseline” of pollutant emission/level
• That transaction cost + purchase cost < upgrade cost
• That regulators approve of transaction
Firm A Firm B
Unused Allowance
Exceeded Allowance
Firm A sells “credits” of
unused capacity to Firm B
if cost of purchasing credits
< cost of upgrading facility
Pollutant “Cap”

53. Background on WQT
• First emissions trading program was 1974 air quality
related (VOCs, MO, SO2, NOx, particulates)
• Early WQT programs include:
• Fox River (Wisconsin) point-point program
• Dillon Reservoir (Colorado) point-nonpoint
• Limited activity, but led to lower cost outcomes
• Interest in WQT stems from success of Air Quality Trading
associated with 1990 Clean Air Act Amendments
• Generated $2 trillion in benefits and $65 billion in costs – 30:1 B/C ratio
• Estimated to prevent 230,000 early deaths annually by 2020
• Official start by EPA in 1996 with publication of WQT
policy document
• Several states developed rules following this (MI, etc.)

54. Background on WQT
• EPA updated official WQT policy in 2003
• Outlines provisions for credible WQT programs
• Identifies purpose, objects and limitations of programs
• Allows for states to develop their own programs
• Identifies restrictions on watershed-based trading:
• Which pollutants are “tradable”
• Must be able to meet local water quality standards
• How baselines are determined
• How to remain in compliance w CWA
• Other elements
• Trading ratios, etc.
• Early estimates by EPA cited potential cost-savings of $900 million
due to WQT across the U.S. (more recent estimates cite this at $140-
$235M annually (Newburn and Woodward, 2012))

55. Background on WQT
•Considerations in a WQT Program:
•Credit life
•Baseline
•Banking
•Limits of Transaction
•Verification
•Transaction Costs

56. WQT Programs
of Note
• Long Island Sound Nitrogen Trading Program
• CT DEP provided authorization to use/sell credits
• Point-to-point in nature
• Has become a model for point-to-point program
• Saved an estimated $200M over command-and-control
• Great Miami Watershed Nutrient Trading Program (Ohio)
• Ag BMPs estimated to be 30 times cheaper than point sources
• No baseline for ag practices (anything above status quo)
• Trading ratios associated with points sources joining program prior to
finalization of program regulations
• Excess credits from late-comes used as insurance
• Considered successful program (100 trades, <800K lbs of nutrients
• Used a reverse-auction process
• Encouraged innovation (allowed multiple types of ag BMPs)

57. WQT Programs
of Note
• Ohio River Watershed Nutrient Trading Program
• Multi-state partnership – largest WQT program in the world
• Complex watershed modeling allows for customized trading ratios
between buyers/sellers
• Only “stewardship” credits available (for corporate sustainability,
not regulatory compliance) – may change in future
• Focus on “stacking” for ecosystem services as well
• Tualatin Creek Thermal Trading Program
• Located in Medford, OR
• POTWs effluent is thermally loaded – require reduction
• Permit allows for riparian restoration and optimized reservoir
releases to offset thermal impacts
• 2:1 trading ratios – 35 miles of shade enhancement
• Costs have saved an estimated $50M

58. WQT Programs
of Note
• Tar-Pimlico Basin
• Point-nonpoint nutrient credit program
• Point sources pay the state based upon collective amount pollutant load
exceeded
• State uses collected funds to implement ag practices – no trading actually
required
• Chesapeake Bay Region
• Driven by Chesapeake Bay Nutrient/Sediment TMDL
• Since 2001, four Ches Bay states developed nutrient trading programs (WV,
VA, MD, PA)
• 89 of 92 river segments in Bay are impaired – trading cannot result in a
violation of TMDL for any segments – constraining
• Most have been limited to point-to-point trading
• Some states have entered into point-to-nonpoint trading
• Nutrient management plans for ag sector driving interest
• Purchasing nutrient credits allowed for some land development projects
• Critics point out the limited potential for trading due to heavy ag loads

59. Concerns on WQT
•Three Major Challenges of WQT Program
• Cited by Tracy Mehan, Former EPA Office of Water
Director
1. Ensure trades create environmentally equivalent
pollutant load reductions
2. Trading avoids the development of “hot spots”
3. Programs used reliable modeling techniques for
calculation of nonpoint source load reductions
•Additional concerns include:
• Minimize transaction costs
• Program enforcement to ensure environmental
benefits

60. Has WQT Delivered?
•Mixed opinions on success of WQT:
• Programs have “resulted in only limited success” (Newburn and
Woodward, 2012)
• Point-to-point has been successful, but not point-to-nonpoint
source
• WQT is not a “market-based” approach at all (Shabman et al, 2013)
• WQT has fulfilled it’s promise, with over 70 WQT programs that
have existed in the U.S. (Kaiser and Feng, 2005)
• Of the WQT programs existing in 2008, 1/3 did not have
any trades at all, with others having limited transaction
(EPA, 2008)

61. What Has Limited WQT
(Compared to AQT)?
• Water is more local than air
• Limits the pool of potential buyers/sellers
• Is more prone to creating “hot spots”
• Includes nonpoint sources, which is more challenging
• Transaction Costs – complex arrangements are costly
• Trading Ratios – very high ratios due to uncertainty may limit cost
efficiency
• Regulations - uneven regulatory pressures compared to point source
• Verification - more costly to verify and model (this is changing…)
• Lack of Cost Heterogeneity - practices can be 65 times less costly than point
sources (Bacon, 2005) – without ag, missing major factor for cost
heterogeneity
• TMDL Process – highly litigious, requires credibility of performance, so
may limit demand

62. Legal Challenges to WQT
• Food and Water Watch lawsuit on WQT in Ches Bay in 2013
• Claimed that WQT violated the Clean Water Act
• Dismissed due to lack of standing
• EPA hadn’t approved of any trades in Ches Bay states
• Mississippi River Basin TMDL/WQT
• MRB TMDL seen as a gateway to WQT in MRB
• EPA petitioned by enviro groups to develop MRB TMDL for nutrients in
2008
• EPA dismissed the petition in 2011 on the grounds that states are working
on the issue
• Lawsuit filed in 2012 by enviro groups against EPA
• Ruling in December, 2016 that sided with EPA
• Judge left the door open
• “The time may come when EPA no longer reasonably can let states
remain in the lead.”

63. Stormwater WQT and
Market-Based
Approaches

64. Stormwater WQT &
Market-Based Approaches
• The Promise of Stormwater in WQT
• Stormwater Trading
• Cost-Based Grants
• Incentive Programs

65. Why Stormwater Is Ripe for WQT
WRI,2010
Storm-
water
Retrofits
Greenfield
Stormwater
Management
Practices
WWTP
Upgrades
(high-end)
Enhanced
Nutrient
Management
Plans
WWTP
Upgrades
(average)
Native Oyster
Aquaculture
Algal Turf
Scrubbing
Cover
Crops
Conservation
Tillage
Grassed
Buffers
Restored or
Constructed
Wetlands
Stormwater
WWTP
Agricultural
New Practices
$200+
$92.40
$47.40
$21.90
$15.80
$7.00 $6.60 $4.70 $3.20
$1.50$3.20
Dollars per pound of annual nitrogen reduction

66. Potential Cost Savings in
Chesapeake Bay
RTI, 2012
No Trading
In-Basin-In-State Trading
In-State Trading
In-Basin Trading
Watershed-Wide Trading
,2012
Total Point
Source
Nutrient
Control Costs
Total
Agricultural
BMP Costs
Total Urban
BMP Costs
Potential Cost
Savings from
Trading
Millions of Dollars per Year
Cost of Achieving Significant Point source and Regulated Urban Stormwater
Load Reduction Targets and Potential Cost Savings from Nutrient (In-Basin-
State Trading)
0 200 400 600 800 1,000 1,200 1,400 1,600
79%
79%
81%
82%

67. MS4s in WQT
• Virginia has adopted legislation to allow MS4s to
purchase credits for MS4 compliance
• Virginia DOT purchased $1M of credits for MS4 compliance
through forest preservation/protection
• Estimated that VDOT could reduce MS4 compliance costs
by 50% through WQT
• Maryland developing policies in the same context
• MS4s would be limited to purchasing nutrients credits for
only 50% of obligations

68. Market-Based Stormwater
Frameworks
Willamette Partnership White Paper
• WQT and MS4s
• Can drive onsite adoption of GI private properties
• Stormwater fee reduction
• Stormwater trading
• Stormwater banking
• Offsets
• In-lieu fees

69. Stormwater Trading:
Washington, D.C.
Stormwater Retention Credit (SRC)
Program
• Not subject to EPA 2003 WQT Policy
• 1.2” retention standard (90th percentile storm)
• Half on-site required, rest can be purchased through
credits or in-lieu fee
• Credit buyers in urban core, credit generators in
outlying urban districts
• Exported retention could lead to social and
environmental benefits and economic efficiencies
• Other communities interested in this approach
• Chattanooga, San Diego, etc.

70. Stormwater Trading:
Washington, D.C.
Creation & Certification of SRCs
• Generation of SRCs through retention in excess
of regulatory requirements or existing retention
SRC Ceiling
Stormwater
Retention
Credit
SWRv on Site
Site without SMPs
1.7” storm
1.2” storm
(0.8” for substantial
improvement projects)
Unregulated Retrofit Sites
SRC Ceiling
Stormwater
Retention
Credit
Existing Site
Retention
1.7” storm
Regulated Sites Exceeding SWRv

71. Stormwater Trading:
Washington, D.C.
Comparing Stormwater Retention
• A:
Single 1.2” Storm Retention = 7,739 gal.
Annual Retention (’09 rain data) = 280,280 gal.
• B:
Single 1.2” Storm Retention = 7,739 gal.
Annual Retention (’09 rain data) = 440,605 gal.
1.2” retention on site 1
(0.25 ac impervious)
0.60” retention
on site 1
0.60” retention
on site 2
+57%

72. Stormwater Trading:
Washington, D.C.
Flexibility for Regulated Sites
*Annual volume retained, based on 2009 rainfall data.
**Retention on Site 1 is $3.25/gallon and on Site 2 is $0.65 per gallon. (Based on analysis of the incremental
cost to achieve retention, compared to existing District regulations, by Industrial Economics, Inc.)
Hypothetical Comparison of Cost Savings from
Scenario A vs. Scenario B
Scenario
A: On Site
Only
Scenario B:
Trading
% Change
via
Trading
Estimated
Retention
Cost**
$25,152 $15,087 -40%
Annual Vol.
Retained*
280,280
gal.
440,605 gal. +57%

73. • Anacostia watershed market size $3B
• District of Columbia, Prince George’s
County, Montgomery County
• Region is focus for innovation in
financing/funding for stormwater/wet
weather
• D.C. SRC Market
• Prince George’s County, MD Community Based
Public-Private Partnership (CBP3)
• Montgomery County considering CBP3
• DC Water Green Bonds and Pay-For-Success
Inter-Entity Trading:
Scale Up to Anacostia Watershed?

74. Cost-Based Grants
Big Stick / Big Carrot
• 10,000 impervious acres to “green” – CSO consent decree
• PWD raised stormwater fees on many non-residential property
owners
• Credit/rebate of up to 80% provided for onsite retention
provided
• Findings show ROI is challenging
• Project aggregation may help
• Stormwater Management Incentive Program (SMIP) and
Greened Acres Retrofit Program (GARP) programs launched
• Fund retrofits <$100K (SMIP), <$90K and >10 ac (GARP) –
Millions in dollars for grants already awarded!!

75. Stormwater Banking
• Similar to other mitigation banking
• Public or private parties can engage
• Can help attract economic/development
activity
• Reducing costs associated with stormwater
management
• Eliminates the risks associated with meeting
regulatory obligations
• Examples:
• Grand Rapids, MI considering this
• Wilmington, DE stormwater wetland park

76. Incentives and Other
Options
• Incentive = change behavior
• Need more stormwater infrastructure on private properties
• Often cheaper option, more area available, etc
• Cost avoidance
• Reduction of stormwater fees
• Financial gain
• Credits through trading
• In-lieu fees
• Puts risk on the public sector – less efficient approach
• Offset
• Determination of equivalent projects can be challenges

77. Why Stormwater Might Be
Challenging for WQT
• Requires numeric limits
• Differing pollutants of interest
(as trading currency)
• Is a break from status quo
• Exports co-benefits outside of
area
• Is abstract/difficult to
understand and quantify
• Regulatory uncertainty
logestonelogic, 2015

78. In the Future…
•Awareness of stormwater/wet weather issues will
continue
•Regulatory pressures will continue as well
•Needs will grow in stormwater/green
infrastructure
•Funding gap will continue
•Innovation in addressing stormwater/wet
weather needs will grow…likely to include WQT

79. Info on NMSA
•National Municipal Stormwater Alliance (NMSA)
•New 501.c.3 focusing on MS4 issues at the national
level
•Coalition of state/regional MS4 groups
•NEFSMA is a member currently
•Total of 12 members covering 7 of 10 EPA regions
•MOU with Water Environment Federation (WEF)
•www.nationalstormwateralliance.org for more
information

80. Stormwater and WQT
from 10,000 Feet
Outlook on Stormwater Policies, Investment Needs, Water Quality Trading,
and Market-Based Instruments
NEFSMA Spring Stormwater Symposium
March 8, 2017
Seth Brown, PE
Founder/Principal | Storm and Stream Solutions, LLC