Trading Away the Benefits of Green Infrastructure

by Evan Isaacson

May 10, 2016

In the world of watershed restoration, there are multiple tools and tactics that government agencies, private landowners, and industry can use to reduce pollution and clean up our waterways. In Maryland, two of those approaches seem destined to collide.

On the first track is nutrient trading, a least-cost pollution control concept predicated on the idea that if some distant entity can reduce the same amount of pollution at a lower cost than a facility with a water pollution control permit, then the permit holder should pay the other entity to do so. On the second track is green infrastructure investment, a labor-intensive, capital-intensive direct investment in local urban pollution controls. Neither concept has yet gained widespread adoption, despite pilot programs and local initiatives in a few dozen places around the United States, but what happens when both concepts emerge at the same time and the same place?

Policymakers in Maryland have been kicking around the concept of nutrient trading for about a decade. After the federal Environmental Protection Agency (EPA) released its nutrient trading guidance policy in 2003, the state began experimenting with how granting credits for reducing discharges in one area could be used to offset some of the water pollution associated with population growth. However, it was not until this year that state officials kicked off a series of meetings designed to create a robust nutrient credit market where buyers can not only offset growth but also meet their pollution reduction requirements. The first such trades could be made as early as this summer.

Meanwhile, at roughly the same time, some of the same policymakers dabbled with an equally bold policy experiment designed to address a separate water pollution challenge: reducing the runoff of nutrients, sediments, toxics, and pathogens from impervious urban surfaces (roads, pavements, and rooftops) around Maryland. Although EPA requires larger cities and counties to have a permit that covers such discharges from their storm sewer pipes, those regulations give municipalities wide latitude compared with the strict pollution control requirements that apply to municipal sewage treatment plants and pipes.

Each new generation of stormwater permit (known as an "MS4" permit) is supposed to build on the last, gradually becoming more stringent and effective at actually controlling runoff pollution. Unfortunately, in most places around the country, these MS4 permits have evolved very little in terms of how well they actually reduce or control pollution. Many jurisdictions continue to view their storm drains simply as a means of channeling rainwater as quickly as possible to prevent flooding. They argue that after paying for the upkeep of this "gray infrastructure," there simply is not enough money left over for "green infrastructure" or other methods of reducing runoff pollution. Maryland wanted to try something different.

In the mid-2000s, Maryland officials re-wrote MS4 permits to specifically require the largest municipalities to address a specific percentage of their impervious surfaces through the installation of green infrastructure and other activities designed to reduce the discharge of pollutants into urban waterways within the five-year term of the permit.

The problem with this experiment is that it has proven to be very expensive. (The permits have also proven to be virtually unenforceable, but that is a whole other story.) This is no surprise. Congress knew when it amended the Clean Water Act in 1987 and created the provisions that gave rise to MS4 permits that reducing stormwater pollution is a lot more complicated and expensive than installing technology at a sewage plant or industrial facility.

Policymakers are left with the decision to either hold the line on the impervious surface restoration policy they created a decade ago, or head down a different track with their trading policy, which would allow Baltimore City and the nine largest Maryland counties to pay others to reduce pollution elsewhere. Unfortunately, all signs seem to indicate that Maryland is reversing course and heading toward "regulatory relief" for municipalities through nutrient trading.

What's the problem with choosing a lower-cost pollution control policy? Think of it as the difference between buying a 10-year bond versus taking out a payday loan, or outsourcing to a less expensive country versus investing in the local community. Nutrient trading allows jurisdictions to meet their regulatory obligations quickly and at the lowest possible cost in the short run, but it also means trading away the opportunity to invest in the local economy by creating jobs that cannot be outsourced, enhancing local property values, and reaping local health and environmental benefits.

It also risks leaving green infrastructure investment strategies behind without exploring different tactics and taking into account the many benefits such investments can bring. Cities around the United States have been slowly creating a restoration economy through investment in green infrastructure for over a decade. From New York, Philadelphia, Chicago, Los Angeles, and Washington, D.C., to Lenexa, Kansas; Lancaster, Pennsylvania; and Lexington, Kentucky, these local governments have decided that the benefits of investing in things like green roofs, bioswales, curb cuts, and urban tree plantings far outweigh the costs and are part of the approach to:

  • Mitigating or adapting to climate change;
  • Lowering energy costs and raising property values;
  • Meeting federal obligations to address combined sewer overflows or stormwater runoff; and
  • Preventing illness and death from dangerous air pollutants and the urban heat island effect. 

Each of these municipalities chose to adopt green infrastructure practices for a unique reason to address their own needs. And it turns out they made a wise investment. Just last month, several groups released a study quantifying the economic benefits and large return on investment from every dollar spent by the federal government on clean water infrastructure, including stormwater pollution controls. One dollar in federal grants distributed to states for investment in water quality and drinking water infrastructure was found to return 93 cents to the federal treasury (so that the federal expenditure nearly pays for itself), and the overall economy realized a $2.95 return due to new jobs and economic activity. This does not even account for the economic returns associated with the health and environmental benefits created. 

In short, stormwater and green infrastructure projects are a high-value investment and are particularly valuable in periods when underemployment rates are high and interest rates are low.

If Maryland goes forward with a nutrient trading policy that allows MS4 jurisdictions to meet their permit requirements through trading, it could very well lead to the outsourcing of the enormous economic, health, and environmental benefits that green infrastructure provides. Maryland should stay the course and not trade away a solid approach to restoring polluted waters throughout the state for some short-term cost savings.

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Evan Isaacson, J.D., is a CPR Policy Analyst. He joined the organization in 2015 to work on its Chesapeake Bay program, having previously worked as a policy analyst at the Maryland Department of Legislative Services.

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