Stormwater Markets: Concepts and applications

The report examines the transition from traditional gray infrastructure to green infrastructure (GI) for stormwater management. It argues that because the benefits of GI are collective while costs are private, public intervention via economic instruments—specifically stormwater markets—is necessary to bridge the investment gap. The document details various price-based and quantity-based instruments, such as stormwater retention credits and environmental impact bonds, and analyzes their application in cities like Washington D.C., Philadelphia, and Halifax.

• Urban areas experience significantly higher surface runoff volumes and peak flows compared to natural settings due to a higher share of impermeable surfaces such as roads, sidewalks, and parking spaces.
• Green infrastructure (GI) manages wet weather impacts by using vegetation and soils to increase permeable surfaces, which reduces the volume of stormwater and mitigates flood risk by decelerating peak discharges.
• The 'first flush'—the initial phase of a stormwater event—is particularly damaging because it carries the highest concentrations of pollutants, including heavy metals and toxic substances, which are often not addressed by centralized gray infrastructure.
• A social dilemma exists where private property owners are reluctant to invest in stormwater management because the benefits are primarily collective, leading to an investment gap that requires public intervention.
• Quantity-based instruments, such as stormwater allowance markets, create a trading environment where a cap on runoff is divided into allowances, incentivizing those who can reduce runoff easily to sell credits to those with higher implementation costs.
• Washington D.C. has implemented a Stormwater Retention Credit (SRC) trading program that allows developers to meet runoff retention standards by purchasing credits from a private market, making retention benefits location-independent.
• Washington D.C. issued the first Environmental Impact Bond (EIB), a performance-based financing tool where payments to investors are contingent on the actual runoff reduction achieved by green infrastructure projects.
• Philadelphia's 'Green City, Clean Waters' program has fostered a green stormwater infrastructure industry with an annual turnover of at least USD 146.8 million and the creation of over 430 jobs.
• In Lancaster, Pennsylvania, the implementation of green infrastructure is estimated to save over USD 120 million in avoided gray infrastructure capital investment costs over a 25-year period.
• Mississauga, Ontario, uses a GIS-based approach to determine impermeable area for a six-tier stormwater billing system, offering discounts of up to 50 per cent for properties implementing best management practices.
• Halifax, Nova Scotia, established Canada's first regulated, integrated water, wastewater, and stormwater utility, utilizing a parcel-based system to calculate fees based on precipitation and impermeable area.
• The effectiveness of stormwater markets is hindered by technical challenges, including the need for specialized skills, the difficulty of identifying clear units of trade due to precipitation variability, and the debate over whether credits should be permanent or time-bound.

APA

Bassi, A., Cuéllar, A., Pallaske, G., & Wuennenberg, L. (2017). Stormwater Markets: Concepts and applications. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/stormwater-markets-concepts-applications.pdf

Chicago

Bassi, Andrea, Andrés Cuéllar, Georg Pallaske, and Laurin Wuennenberg. Stormwater Markets: Concepts and applications. International Institute for Sustainable Development, 2017. https://www.iisd.org/system/files/publications/stormwater-markets-concepts-applications.pdf.

Wikipedia

{{cite report |last1=Bassi |first1=Andrea |last2=Cuéllar |first2=Andrés |last3=Pallaske |first3=Georg |last4=Wuennenberg |first4=Laurin |title=Stormwater Markets: Concepts and applications |publisher=International Institute for Sustainable Development |date=December 2017 |url=https://www.iisd.org/system/files/publications/stormwater-markets-concepts-applications.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bassi2017stormwater, author = {Bassi, Andrea and Cuéllar, Andrés and Pallaske, Georg and Wuennenberg, Laurin}, title = {{Stormwater Markets: Concepts and applications}}, institution = {International Institute for Sustainable Development}, year = {2017}, month = dec, url = {https://www.iisd.org/system/files/publications/stormwater-markets-concepts-applications.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }