Working with the market: Economic instruments to support investment in green stormwater infrastructure

This report summarizes how urban stormwater managers can work with market forces, applying “economic instruments” to address the issues of flooding, water supply and quality, and habitat degradation, and meet their stormwater program goals. Economic instruments recognize and deliberately work within the economic system to create action or drive investment that meets environmental goals. 

Stormwater programs often use rebates, subsidies, or project/logistical support as an incentive for private parties to install green infrastructure. Mitigation or credit-based approaches are those in which stormwater benefits are quantified as a currency or “credit” and traded between parties to mitigate or offset regulatory requirements. This creates an incentive for pollution controls to occur where it is most cost-effective to do so. These programs provide flexibility for regulated parties and create an incentive to develop new, more cost effective methods to reduce pollution and/or control stormwater volume. 

The National Network on Water Quality Trading, Storm and Stream Solutions LLC, Green Infrastructure Leadership Exchange, Oregon Solutions, and the Water Environment Federation engaged over 50 experts in stormwater management and trading to explore these nascent and evolving approaches in the United States of America. It is hoped this research will generate more discussion and new examples to further these approaches, and if proven effective, for economic instruments to become more mainstream and common elements of stormwater programs across the country.