What happens to all the water when snow melts? To keep our water clean, DC wants to limit the amount of stormwater runoff a property can have, and create a market for buildings that go over to buy credits from those who don’t. If it works, the program will serve as an example for other cities facing similar challenges.
DC hopes to mitigate the environmental harm of stormwater runoff, like melting snow. Photo by Pamla J. Eisenberg on Flickr.
Here’s why runoff is bad
When it rains or snows, paved and urban environments send a tremendous amount of water into the nearest gutter. From there, it either goes to treatment or, as in two-thirds of DC, directly into the nearest body of water.
As stormwater flows to the closest river or lake, it picks up all of the pollution that has built up on city streets since the last rainfall (picture once white snow on the sidewalk after a couple days). This contaminates the surrounding environment and can lead such areas to be declared potentially toxic for humans, as is the case along much of the Anacostia.
Pollution is far from the only concern. The banks of Rock Creek or the Potomac demonstrate a separate, but no less harmful, problem stemming from urban runoff around every drain pipe: erosion of natural waterways.
Here’s what DC wants to do about it
DC’s Department of Energy and Environment has created a new approach to fixing the urban stormwater runoff problem.
The first part of the new law is that all new or renovated buildings above a certain size must capture and reuse or evaporate a specified amount of stormwater runoff.
If a building goes over its limit of allowed runoff, its owner (or the owner of the business occupying the building) has to buy credits that increase that allowance. On the flip side, if a building’s runoff is under its limit, the owner can sell its credits to those going over. This is called a stormwater retention credit marketplace.
Requiring developers to contribute some part of their profit to remediate a property’s negative impact on the public commons makes a lot of sense. This approach also treats all developers or redevelopers equally.
This won’t be easy
The framework does, however, have a serious weakness from an impact point of view: Not all stormwater runoff has an equal impact on the environment, or on social welfare. A lot depends on factors like the state of the sewer system in the area and how close it is to a body of water, among others.
In fact, given the District’s geography and different types of sewer systems, on many regulated sites, even full compliance with the capture requirements will have little or no water quality impact. Such differences do not, however, make stormwater retention any less viable; on the contrary, it means the relative impact of each individual project will vary greatly depending on its location. This is especially true for areas adjacent to or east of the Anacostia River.
Stormwater runoff to the Anacostia. Photo by Krista Schlyer.
Another potential difficulty stems from the inclusion of projects completed before the legislation was enacted, making them eligible for credits and potentially flooding the market with excess credits.
One possible solution that would be to establish a buyer of last resort, public or private, which would allow developers to unload unwanted inventory at a guaranteed price.
The right market could make this work
Washington’s new program is attracting the interest of organizations and investors, but so far, it has been hampered by confusion surrounding the long term shape of the marketplace and the price for credits. Furthermore, the regulatory framework defines all stormwater runoff as equal, with volume being the only unit of measurement.
However, critically, the law sets up the possibility for an independent organization to serve as a market maker by creating or buying large numbers of credits. This should facilitate development of the marketplace by guaranteeing developers of credits a price at which to sell and allowing buyers to enter stable, long-term purchasing agreements in order to meet new regulatory requirements.
RainPay, an initiative of the Anacostia Waterfront Trust, is one such attempt. The organization will broker credit sales agreements with developers that would meet their regulatory requirements for a defined period of time, and then work with landowners in the places likely to achieve high pollution reduction to create new credits. If the marketplace develops as planned, it will result in a self-supporting system of substantial water quality gains without any government or philanthropic money.
Other non-profits, including the Nature Conservancy, are looking for ways to exploit this new regulation. Real estate developers, engineering companies and investors are also exploring the budding marketplace.
"The District’s basic regulatory framework, coupled with a sophisticated intermediary like RainPay, will create a new market in ecological protection that, with adaptations to the overarching state (or national) legal and regulatory framework, can be replicated elsewhere,” says Anacostia Waterfront Trust Executive Director Doug Siglin. “It is possible that someday London, Beijing and Nairobi could enhance their impact on water quality through local versions of the RainPay program. In this sense, RainPay could be a global market-maker.”
Before stormwater retention credit marketplaces start popping up around the world, the regulation must be proven to work in Washington. It is apparent that knowledge about the credit market is still low. The program is relatively new and anything that can be done to increase awareness will help speed the development of the market. Obstacles remain, but if it works as planned, cities may have a powerful new policy tool for reducing stormwater pollution.