Blog Post

How Much Can You Pay? A New Criterion for Stormwater Management

What if the utility company asked you how much you made when you called to start service in a new home?  What if they wanted this information to tie your bill to your salary and not to how much gas, electricity or water you used?  Would that seem fair?  That's how some communities are treating developers when determining how much stormwater they should be required to manage.  But regulations that link stormwater standards to the developer's ability to pay are neither fair nor efficient.  Environmental regulations and their costs should be directly linked to the impact on the environment, not to profit margins.

 A comprehensive natural resource management approach seeks to first avoid damage, then minimize damage, and finally clean up or manage what's left.  Stormwater management is no different.  To best protect water resources, communities must first determine where to develop and where to preserve.  These decisions can help communities avoid generating stormwater runoff.   

Where development occurs, research shows that certain development types, such as redevelopment, high and vertical density, and mixed use, demonstrate a reduced environmental impact.  For example, development on an abandoned parking lot produces significantly less net runoff than that same development on what used to be a forest.  And runoff per house is significantly less for seven houses on one acre than for one house on that same acre.  These are strategies that can minimize runoff generated.   Finally, there are numerous site-level stormwater strategies-from big basins to more natural systems that infiltrate, reuse, and evaportranspirate stormwater-that can manage runoff generated from development.  

Some communities are now recognizing in their stormwater regulations that some development approaches can minimize the amount of stormwater generated.  Building off of EPA's recent publication, Protecting Water Resources with Higher-Density Development, Grand Rapids, Michigan recently found that higher densities produce less stormwater when measured per housing unit and not per acre.  They used this research to develop a 80-percent stormwater credit.  Two high-density residential projects have received this credit.  This stormwater regulation not only recognizes the reduction in stormwater from more compact land use, but still also requires a developer to manage 20 percent of the remaining runoff.  This regulation is based on the development's impact to the environment.

But some stormwater managers think this strategy is misguided.  Not because of flawed science, but because developers who build higher density or more urban projects have greater profit margins and therefore have the ability to manage a larger share of stormwater.  For example, one watershed district administrator put it this way, "We are not relaxing our requirements for high density projects.  We feel they have more options available due to increased financial resources."  Under this scenario, higher density projects are subsidizing lower-density development patterns.   

This is not an isolated opinion.  In the last two weeks, I've heard this sentiment expressed by state and regional stormwater mangers in four states.  The rationale seems to be that developers of low density projects can't afford to take responsibility for the stormwater impacts from that development.  But if lower-density development causes more stormwater impacts than higher-density development, why should the developers of the low-density projects pay less? 

I don't understand it.  If your job is to manage stormwater and to protect water resources, then you should want more infill and more redevelopment, as those development types produce significantly less runoff.  If I wanted to improve my community's water resources, I would develop policies and standards that encouraged, not punished, more redevelopment and higher densities. 

 We should be glad when redevelopment and infill developers are making a good profit because maybe they'll do more projects.  Redeveloping dead malls, vacant properties, and abandoned parking lots is how communities will enjoy the opportunities associated with growth without further degrading our precious water resources.  



From an economic point of view

From an economist's point of view, this is an excellent case of a project's social benefits misaligned with its social costs. In this example, the social benefits are comprised of profits to developers and new housing for residents. The social costs comprise not only the dollar cost of building the development, but also of the environmental costs - stormwater management being just one of them.

These stormwater managers fail to realize that equilibrium is reached only when the social benefits of a project intersect its social costs. Thus, if the returns on low-density projects do not justify the total costs, then these developers should not be pursuing such projects. The argument of these stormwater managers amounts to little more than a subsidy to developers who cannot afford to pay the entire cost of their projects.

This spells market failure.

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