Managing stormwater runoff is a challenge for cities nationwide. When it rains in urban areas such as the District of Columbia, stormwater runs off rooftops, parking lots, and other impervious surfaces into streams and rivers with powerful erosive force and laden with pollutants, severely degrading waterbodies. The District of Columbia’s Stormwater Retention Credit (SRC) Trading Program aims to solve this long-standing urban challenge by encouraging the installation of green infrastructure through strong, innovative stormwater regulations that provide flexibility for regulated development and maximize protection for waterbodies. In addition, credit trading leverages private investment to maximize community benefits.
Green infrastructure, like green roofs, rain gardens, and other industry-accepted best practices, absorbs and reduces stormwater runoff, but the cost can be significant. The estimated cost to retrofit the District’s impervious areas with green infrastructure is more than $7 billion. However, only approximately $10 million in public funding is available each year for green infrastructure. While developing an innovative approach to improve stormwater management in the city, the District recognized that tweaking stormwater regulations to allow credit trading would encourage the private sector to install green infrastructure at a rate much faster than government funding alone could achieve.
The premise of the SRC program is that credits may be generated by voluntary installation of green infrastructure – and those credits may be sold on the open market to project developers as a way for them to achieve their stormwater regulatory requirements. Project developers are permitted to achieve up to half of their runoff-reduction (“retention”) requirement offsite by purchasing SRCs generated by green infrastructure voluntarily installed elsewhere in the city.
Because regulated development is projected to occur on about 1 percent of the District’s land annually and 43 percent of the District is impervious, there are ample opportunities for SRC-generating green infrastructure throughout the city. Also, while the traditional regulatory approach requires large green infrastructure on regulated sites, trading encourages smaller scale and more dispersed green infrastructure across the city, which retains volume from a greater area, resulting in more total runoff captured, including more of the dirtiest “first flush” volume. The SRC program also incentivizes green infrastructure in areas with low land value that happen to drain to the District’s smaller streams that are especially vulnerable to stormwater runoff. This green infrastructure also benefits the District’s rivers, into which the streams flow, and it concentrates air quality, aesthetic, and urban heat island benefits in less affluent communities with lower land values.
Results to Date:
Developers have praised the flexibility afforded by SRC trading, and environmental advocates are optimistic. The stormwater retention performance requirements in the regulations took effect in 2014. To date, 27 sites are going through the permitting process and have opted to achieve some retention off site. Two sites have completed construction, the point when regulatory compliance begins, and have opted to use SRCs. Seven sites currently have SRCs for sale on the market, with two trades completed, generating $45,000.
In addition, the market has leveraged private investment. Most notably, Prudential Financial has invested $1.7M to install green infrastructure in the District. This venture with The Nature Conservancy and Encourage Capita will prevent millions of gallons of stormwater runoff from polluting waterbodies in the nation’s capital. The Nature Conservancy describes SRC trading as a model for addressing stormwater issues nationally, and the program has also been recognized by the United Nations. For more information, please visit doee.dc.gov/src.
