National View, Trends, and Market Based Approaches

Transcription

1 National View, Trends, and Market Based Approaches HWEA Stormwater Conference May 26, 2017 Seth Brown, PE Founder/Principal Storm and Stream Solutions, LLC

2 Overview National View Market-Based Approaches Big-Picture Trends National Representation of Stormwater

3 National View

4 Life at the Kids Table Everyone else Stormwater 4

5 Stormwater is a punk

6 Challenge of Stormwater Pollutant Concentrations in Municipal Discharges Source (Annual Volume) Treated Wastewater (11,425 BG) Stormwater (10,068 BG) CSO (850 BG) SSO b (10 BG) BOD 5 (mg/l) TSS (mg/l) Fecal Coliform (colonies/100ml) 30 a 30 a <200 a , ,230, , ,000, ,000 c a Typical limit for wastewater receiving secondary treatment/limit for disinfected wastewater b Concentration in wet weather SSOs c Median concentration (WDNR 2001) Source: Report to Congress on the Impacts and Control of CSOs and SSO (EPA 2004)

7 Rise of Nonpoint Pollution Point Source vs. Nonpoint Source Water Quality Impairments Source: William Ruckelshaus, A New Shade of Green, The Wall Street Journal, April 17, 2010

8 Stormwater is important

9 YOU RE FIRED, STORMWATER! Stormwater cannot be fired It s too good of a deal for economy It s too big of a problem for the environment It s too promising of a value

10 What the Boss Has Said He means what he says (maybe?) $1 trillion in infrastructure investment Public and private partnerships Private financing through tax incentives offset by repatriation revenues Considering dubious by many use money to fix America s water and environmental infrastructure Triple the State Revolving Fund programs Focus on urban renewal Signaled an immediate 10% cut to EPA s $8.2B budget (half of which is passed on to the states)

11 What the Boss Has Done Proposed budget cuts EPA by over 30% Reduces EPA funding down to lowest level since 1991 Reduces EPA staff from 15,000 to 12,000 Eliminates programs such as Ches Bay and Great Lakes, etc. Talk of impacts to regional offices Administrator Pruitt has stressed the importance of SRF and state grants and that this is the beginning of the process Senators on both sides have said this budget is DOA and that cuts in EPA are too severe

12 Reaction to the Boss Recent budget agreement Funding through rest of FY17 (September, 2017) EPA budget reduction of 1% overall Full restoration of Chesapeake Bay program funding INCREASED funding of Great Lakes program Likely outcome will move back to 10-15% (more about direction that outcome ) BOTTOM LINE state programs will have to step up in a bigger way (ECOS) States may need to address funding/investment gap States likely to be expected to play a stronger role in regulatory enforcement ( cooperative federalism ) 12

13 Compelling Driver for Change! photo credit James Thomas, from Cleveland Press Collection, Cleveland State University Library

14 Compelling Driver for Change? From

15 Only Major Growing Source of Water Pollution U.S. EPA Forestsforwatersheds.org, 2014 Water Quality Impairments Flooding Boston Globe, 2013????? Urban Stormwater Runoff Combined Sewer Overflows Ecological / Public Health Impacts Wri.org, 2014 NRDC, 2013

16 Investment Pays Off Shift U.S. EPA, 2000 Investment in Wastewater Sector Why Not Stormwater? 1972 = 16% raw and 3% tertiary 1978 = 0.6% raw sewage (gone by 96) and 19% tertiary

17 Clean Water SRF Started in 1989 grew out of Construction Grants program Revolving funds meant to generate revenues as well as submarket loans Each $1M of SRF funding generates: $930,000 in tax revenues ($100B = $93B in tax revenues) 16.5 jobs ($100B = 1.65 million jobs) $2.95M in economic input ($100B = $295B) WEF, 2016 Stormwater/green infrastructure IS ELLIGIBLE 2014 WRRDA bill clarified this $48M green infrastructure SRF loan in Maryland to a private entity in a P3 arrangement

18 Market-Based Approaches Economic Instruments Water Quality Trading Public-Private Partnerships

19 Why Consider the Market Drive down costs (find cost efficiencies) Provides flexibility for compliance Political support Enables vehicles to drive investments on to private parcels Can relieve pressure on municipality Because it has worked in other sectors Opens up financing options Enables innovation

20 Incentives and Other Options Incentive = change behavior Cost avoidance Reduction of stormwater fees Financial gain Credits through trading In-lieu fees Puts risk on the public sector less efficient approach Offset Determination of equivalent projects can be challenges

21 Economic Instruments in Stormwater Willamette Partnership White Paper on Market- Based Frameworks in Stormwater WQT and MS4s Incentive-Based / Credit-based Stormwater Trading / Banking Cost-Based Grants/Subsidies Offsets / Mitigation In-Lieu Fees Policy Challengrs Future Effort = Roadmap Document Download PDF at: WEF Webcast Working with the Market for Green Stormwater Infrastructure June 8, :00 PM - 2:30 PM Eastern Standard Time Willamette Partnership,

22 Stormwater Trading Washington, DC: Stormwater Retention Credit (SRC) Program Not subject to EPA 2003 WQT Policy 1.2 retention standard (90 th percentile storm) Half on-site required, rest can be purchased through credits or in-lieu fee Credit buyers in urban core, credit generators in outlying urban districts Exported retention could lead to social and environmental benefits and economic efficiencies Other communities employing this approach Chattanooga, etc. DOEE, 2015

23 Cost-Based Grants Philadelphia Water Department: Green Acres Retrofit Program (GARP) 10,000 impervious acres to green CSO consent decree PWD raised stormwater fees on many non-residential property owners Credit/rebate of up to 80% provided for onsite retention provided Findings show ROI is challenging Project aggregation may help Fund retrofits <$100K (SMIP), <$90K and >10 ac (GARP) Millions in dollars for grants already awarded!!

24 Alternative Compliance City of San Diego Focus is on offsite and alternative stormwater compliance for meeting new development requirements Not finalized still evolving Considerations include: Limits of offsite investments Nature of offsite projects Water quality treatment backstop Hydromod treatment and location Inclusions of credit options (trading ratios, etc.)

25 Stormwater Banking Similar to other mitigation banking Public or private parties can engage Can help attract economic/development activity Reducing costs associated with stormwater management Eliminates the risks associated with meeting regulatory obligations Examples: Grand Rapids, MI considering this Wilmington, DE stormwater wetland park

26 Why Stormwater Is Ripe for WQT Dollars per pound of annual nitrogen reduction $200+ Stormwater WWTP $92.40 Agricultural New Practices $47.40 $21.90 $15.80 $7.00 $6.60 $4.70 $3.20 $3.20 $1.50 Stormwater Retrofits Greenfield Stormwater Management Practices WWTP Upgrades (high-end) Enhanced Nutrient Management Plans WWTP Upgrades (average) Native Oyster Aquaculture Algal Turf Scrubbing Cover Crops Conservation Tillage Grassed Buffers Restored or Constructed Wetlands WRI, 2010

27 Why Stormwater Might Be Challenging for WQT Suggests need for numeric limits Must meet EPA WQT policy Differing pollutants of interest (as trading currency) Is a break from status quo Exports co-benefits outside of area Is abstract/difficult to understand and quantify Regulatory uncertainty logestonelogic, 2015

28 Community-Based P3 Municipality Ownership and Control retained by the public partner Private Entity Provides surety of execution and Adopts shared goals managed through performance metrics Integrates program services Lowers delivery costs Incentivizes private sector CBP3 Entity Lowers procurement barriers Supports local DBEs Drives local entry-level jobs Design/Build Traditional P3 Advantages Reduced project costs Project delivery time Transfer of risk Long term O&M Shared economic and social goals Alternative financing Operate/Maintain Additional CBP3 Advantages Community is priority Mixed public/private financing can reduce financing costs Municipality has high degree of control/input Reinvestment into project Aligned interests Fixed-fee; Performance goals U.S. EPA, 2017

29 Community-Based Public- Private Partnerships (CBP3) Prince George s County, Maryland CBP3 entity (Clean Water Partnership) established in early 2015 Focus on integrated green stormwater infrastructure $100M/2,000 impervious acres for initial phase Total of 15,000 impervious acres to address Significant cost reductions realized already Received $48M in SRF financing Over 2,000 acres in design/development Pilots in other communities ongoing

30 Pay-For-Success Model Structure / Applications Premise = level of payment based upon level of success Driven by Impact Investors First project in 2012 to reduce recidivism in NYC Discontinued in 2015 due to lack of performance Only water application is DC Water to use GI to retrofit 20 acres of impervious cover for $25M Issued Environmental Impact Bonds (EIBs) Yves Blein, 2017

31 Big-Picture Trends

32 Trends NGOs will be active More green Market-based Funding/Financing approaches Maintenance Long-term planning for costs/activities stormwater Nutrient impacts (HABs, etc.) Cooperative Federalism Demographic support

33 Evolution in Stormwater Management Traditional Stormwater Management Collect Convey Detain Green Infrastructure Infiltrate Retain Stormwater as a Resource and an Opportunity

34 Funding Needs in Sector EPA Clean Watershed Needs Survey 2012 ~$150B* in wet weather/stormwater needs *Extrapolated from information provided Regulated Entities 7,500 communities regulated municipal separate storm sewer systems (MS4s) in the U.S. 772 combined sewer systems in the U.S. Growing interest and public demand for green stormwater infrastructure Due to expanded urbanized acres & increased localized flooding U.S. EPA, 2012

35 Maintenance Issues Maintenance costs often seen as a new cost What is performance? Who is responsible for maintenance? How much effort, money needed to maintain performance? How do we ensure maintenance staff is credible?

36 Nutrient Impacts Harmful Algal Blooms/ Hypoxia Mid-Atlantic Chesapeake, Delaware Bays (Hypoxia) South/Southeast Gulf of Mexico (Hypoxia) Lake Okeechobee (Toxic Algae) Red Tide Midwest/Great Lakes Lake Erie (Toxic Algae) Des Moines, IA (Nitrates)

37 Cooperative Federalism Marble-cake Federalism Local, state and federal governments work together to solve problems Kicked in at the New Deal Example: Construction of the Interstate Highway System Dual Federalism Also known as Layer-cake Federalism Federal and state/local governments are divided into separate spheres Started by Andrew Jackson, ended at New Deal

38 The Rise of the Millennials! VETERANS ( , 67+ YEARS OLD) 50 million Greatest /Silent Generation Family-Oriented, Loyal, Hard Working, Stable, Reliable BOOMERS ( , YEARS OLD) 76 million-me Generation Personal Growth, Optimistic, Driven, Determined Generations in the Workplace Boomers Millennials GEN X ( , YEARS OLD) 65 million-slacker Generation Entrepreneurial, Creative, Technology-adept Gen Xers MILLENNIALS ( , YEARS OLD) 83 million-generation Next Networked, Sociable +Sophisticated, Achievers igen (Generation Z) (2000+ <15 YEARS OLD) 79 million Yet to be known Veterans Boomers Gen X Millennials igen Senseandsustainability.net, 2014

39 Millennials Characteristics Politically independent Favor sustainability over environmentalist More likely to favor alternative/clean energy More likely to believe that humans are responsible for climate change More likely to be car-less or car-free Prefer urban core areas Prefer walkable areas near mass transit Senseandsustainability.net, 2014

40 National Representation for Stormwater

41 A new center of excellence and innovation housed within WEF Responds to MS4 professionals for a central hub on stormwater issues, and provides a platform to develop best practices and share better approaches to stormwater management Will leverage and be complementary to ongoing and proposed WEF stormwater programs Provides new options for collaboration and funding for key initiatives 41

42 Objectives for stormwater success Work at the watershed scale Transform stormwater governance Engage the community Manage assets and resources Close the funding gap Support innovation and best practices 42

43 National Municipal Stormwater Alliance An alliance of state and regional groups comprised of MS4 permittees that is solely focused on MS4 issues

44 Motivation for Formation To represent MS4 permittees at the national level by providing a unified voice To lead changes in regulation both proactively and reactively To connect and unite MS4 programs To promote stormwater as a resource To improve the public image of stormwater To create opportunities for multi-benefit and multi-use stormwater projects

45 Get Involved!! WEF Stormwater Institute National Municipal Stormwater Association (NMSA) Chris French WEF Stormwater Institute Stormwater Program Director Scott Taylor California Stormwater Quality Association, Past Chair National Municipal Stormwater Alliance, Chair

46 Conclusion

47 In the Future Stormwater is significant and becoming more significant Sector is evolving quickly Needs are rising Market-based approaches on the rise Non-regulatory pressure will drive GI as well as regulatory National representation growing get involved!

48 National View, Trends, and Market Based Approaches Seth Brown, PE Founder/Principal Storm and Stream Solutions, LLC Linkedin.com/in/sethbrownpe