2007 Progress Report: Using Market Forces to Implement Sustainable Stormwater Management

EPA Grant Number: X3832207
Title: Using Market Forces to Implement Sustainable Stormwater Management
Investigators: Middaugh, Jim , Shinn, Craig , Vizzini, Dan , Kliewer, Dave , Feighner, Gordon , Wahl, Mary
Institution: City of Portland
EPA Project Officer: Hahn, Intaek
Project Period: May 1, 2005 through December 31, 2008
Project Period Covered by this Report: May 1, 2007 through December 31, 2008
Project Amount: $288,000
RFA: Collaborative Science & Technology Network for Sustainability (2004) RFA Text |  Recipients Lists
Research Category: Sustainability , Nanotechnology , Pollution Prevention/Sustainable Development


Portland recognizes the need to move beyond regulation, utility rates and public infrastructure to achieve long-term sustainability goals. The City’s sustainability agenda must include strategies that animate and direct market and social forces, expand public awareness, establish a green economy, increase private stormwater investments that produce multiple watershed benefits, and foster sustainable private behaviors at home, work and play. Markets are the “place” where the social, economic and ecological principles of sustainability are integrated and leveraged.

This Project was begun in July 2006 to test the feasibility of using market mechanisms to achieve City stormwater, watershed and sustainability goals. The study is organized into three phases:

  1. Phase I was completed in July 2007 and identified the costs and capacity of building public stormwater management infrastructure in the City’s combined sewer basins; the cost and effectiveness of alternative structural and non-structural stormwater management practices (BMPs); and the feasibility of using market mechanisms to increase private investments and reduce public investments.
  2. Phase II will produce in-depth evaluations of the feasibility of market mechanisms, leading to the selection of one or two mechanisms for testing and evaluation.
  3. Phase III will implement pilot projects in the City’s combined sewer basins to assess the performance of the selected market mechanisms.

Progress Summary:

Phase I concluded in July 2007 and produced the following work products:

  • Updated cost estimates to design, install, maintain and operation 20 different stormwater BMPs.
  • Updated effectiveness measures for each BMP focused on volume, flow rate, and water quality including sediment, zinc, pathogens and phosphorous.
  • BMP evaluations of ecosystem services including air quality, carbon, flooding, terrestrial and aquatic habitats, heat island effect and quality of life.
  • Factors that constrain the use of individual BMPs including land uses, soils, slope, and depth to ground water.
  • An evaluation tool to determine the most effective mix of BMP investments to achieve a variety of system, policy, regulatory, financial or sustainability goals within the City’s combined sewer basins.
  • Several runs of the tool to determine the feasibility of market mechanisms to achieve stormwater, watershed and ecosystem goals.

Phase I produced the following findings:

  1. There are enough potential suppliers to support a marketplace.
  2. There is a sufficient differential in the price of stormwater BMPs to realize savings from a marketplace, or achieve higher levels of stormwater management and ecosystem benefit for the same investment.
  3. Portland can stimulate demand and animate a market by targeting public investments, incentives and regulations; however the costs of a credit trading system may far exceed its benefits.
  4. The City is well positioned to stimulate a local green economy, use reverse auctions, and employ creative marketing strategies to increase private investments in stormwater facilities. These strategies should be integrated into the City’s stormwater and sustainability initiatives.
  5. Additional work on the stormwater evaluation tool is needed to support the targeting of market strategies and pricing of public incentives.
  6. Effective sustainability policies require much more work on the valuation of ecosystem services associated with stormwater BMPs and other investment strategies.

Results to Date

The following findings and work products were developed during Phase I of the Project:

  1. Developed detailed characterization data to support an analysis of the feasibility of market mechanisms to increase private stormwater management.
  2. Developed a decision tool to compare the cost-effectiveness of the City’s planned stormwater investments (base case) versus various marketplace scenarios.
  3. Identified potential targets for market mechanisms based on a review of planned projects to control combined sewer overflows and sewer back-ups in a SE Portland combined sewer sub-basin.

Future Activities:

Phase II planning is currently underway to further determine the political, administrative and technical requirements of various market mechanisms and develop prototypes to be implemented on a pilot basis in Phase III. Other Phase II activities will include refining the decision tool software, determining the optimal marketplace structure, and working to integrate the marketplace into other existing Bureau programs. A marked increase in outreach to stakeholder groups, media, and regulatory officials will also be a key part of this phase.

Journal Articles:

No journal articles submitted with this report: View all 2 publications for this project

Supplemental Keywords:

watershed, combined sewer overflow (CSO), urban, TSS, stormwater trading, Pacific Northwest, Oregon, water quality, water quality trading, tradable credits, BMP effectiveness, ecosystem services,, RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Sustainable Industry/Business, Sustainable Environment, Technology for Sustainable Environment, Environmental Engineering, Urban and Regional Planning, Market mechanisms, market-based mechanisms, urbanization, sustainable stormwater management, sustainable development, sustainable water use, decision making, ecological design, conservation, sustainable urban environment, water conservation, best management practices, allowance allocation, market-force, allowance market performance, marketable permits

Relevant Websites:

http://www.portlandonline.com/bes/index.cfm?c=44048& Exit

Progress and Final Reports:

Original Abstract
  • 2005 Progress Report
  • 2006
  • Final