New NRDC Issue Brief guides cities toward effective, fair, and lawful stormwater credit trading programs

When rain runs off impervious surfaces such as sidewalks, streets and roofs, it collects a wide range of toxic pollutants, which are then dumped, usually untreated, into local waterways.

Many people don't know that.

pipes-493086__180.jpgIf the rain gathers up all the street salt, oil, lawn chemicals, exhaust particles and other nasty things on the ground and sweeps them away, that's a good thing, right? Not if that polluted runoff is left untreated, as it is in most every city, and then goes into the source of your drinking water or where your kids like to play.

And, it gets worse.

In cities with older "combined" sewer systems, the problem is exacerbated because stormwater pipes join with wastewater pipes, sending both the polluted runoff and waste from sinks and toilets into those same waterways.

These systems are products of antiquated approaches to stormwater runoff, but the good news is that many cities are aware of the problem and are taking steps to reduce it through large-scale "green" stormwater infrastructure (GI) solutions, including street trees, rain gardens, vegetated swales, porous pavement and green roofs. This type of infrastructure welcomes rain where it falls, keeping polluted stormwater out of waterways -- until it can be treated, evaporate back to the atmosphere, be used onsite, or filter into the ground to benefit vegetation and replenish groundwater supplies.

Most cities' GI plans include modifications to existing paved space on public properties and in the public right-of-way such as streets and sidewalks, but there are also creative ways to turbocharge municipalities' approaches to the issue by including private land owners as stakeholders as well, and that's where our new "How To" Issue Brief comes in.

An increasingly common and straightforward way for cities to realize some of the GI potential of private land is by requiring on-site stormwater retention as a condition of construction permit approval for new property development or re-development projects above a certain size. The concept of "stormwater credit trading" typically arises within this context.That cities are realizing they need private property owners to help manage stormwater is no suprise. In many cities, the majority of the paved or impervious surface area (which generates stormwater) is privately owned property. Credit trading programs enable property developers or owners who are subject to an on-site retention requirement (for example, a requirement to manage the first inch of stormwater that falls on their site) to meet a portion of their requirements by buying stormwater "credits" from other property owners rather than building all needed GI on their own property.

In our Issue Brief, we describe in detail how cities considering setting up stormwater credit trading markets can ensure that the markets they create are fair, economical for the city, and lead to good water quality outcomes. Some cities, such as Washington, D.C., have already established stormwater credit trading programs, with initial stormwater credit trades taking place in late 2014. As more cities consider local ordinances requiring on-site stormwater management, and as those cities seek to introduce some flexibility into the rules of compliance for private property owners, we anticipate that "stormwater credit trading" or "alternative compliance" systems, as they are sometimes called, will continue to proliferate.

The fact is, each city is a unique instance with its own stormwater reduction goals that it needs to meet using locally tailored strategies. While there is no one-size-fits-all approach to how stormwater credit trading should look in every city, our aim in this Issue Brief is to stress important criteria that a trading system must meet in order to be fair, effective, and lawful.

Let's get started.

About the Authors

Alisa Valderrama

Senior Project Finance Attorney, Center for Market Innovation

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