Chicago and most suburbs were built before modern stormwater management. Most of our stormwater flows off roofs and pavement into a combined sewer system that is not equipped to handle that much water at once. The overflow causes widespread urban flooding that hits lower-income and minority communities the hardest. Despite our region's investment in tunnels and reservoirs, we still can’t keep up with the changing climate that is generating more intense storms.
Today, the Metropolitan Water Reclamation District of Greater Chicago (MWRD) requires developers of new properties to manage stormwater that falls on their sites. In our densely populated region, most stormwater management infrastructure is underground, in the form of costly “gray” infrastructure such as tunnels and reservoirs that have few environmental benefits. Meanwhile, the most flood-prone neighborhoods also tend to be those with very low development activity, which limits new stormwater investment. We’re putting too much stormwater infrastructure where it’s not as needed, at higher cost.
Stormwater Credit Trading is an innovative, market-based approach to enable more stormwater infrastructure to be built efficiently where it’s needed most. In an area with flooding problems, a supplier can build new stormwater controls not required by a development permit. The stormwater they manage counts as “credits” they can sell. Suppliers typically use natural infrastructure, such as detention ponds, rain gardens, and swales, creating many environmental co-benefits such as new habitats. A qualifying developer can buy the stormwater credits instead of building their own stormwater infrastructure, saving money that they can invest in their project. The credit sale helps the supplier, potentially supporting maintenance. Done well, everyone benefits-–supplier, developer, community, and environment.
Our partnership has documented the benefits of stormwater credits through research and exchanges with other cities, especially the successful Washington, D.C. program. Now, MWRD has authorized stormwater credit pilots in two Cook County watersheds into 2024. Under the name StormStore, we’re working for the pilots’ success, and helping Cook County manage stormwater equitably and sustainably.
By providing flexibility in meeting stormwater requirements while encouraging stormwater solutions to be located the most beneficial locations in the watershed, StormStore has significant potential to provide economic and environmental benefits even at the individual project level.
Equity through the marketplace
- Offsite controls may be 1) used to make transit-oriented developments or affordable housing developments more economically feasible, and 2) located and designed to address an existing flooding problem so neighborhoods experiencing flooding will benefit.
Encouraging beneficial development
- An analysis of stormwater permits in Cook County between 2006-2016 showed that one in five developments would have benefited from stormwater trading, with an average economic benefit per project of $240,645. This can help new economic development occur.
Providing environmental co-benefits
- In many cases, stormwater trading can increase the use of green or natural infrastructure. Green infrastructure is often less expensive than building new underground detention systems and offers many co-benefits beyond reducing localized flooding. Natural infrastructure can lessen water pollution caused by stormwater, improve air quality, reduce the effects of heat islands, and provide communities with new green spaces. These additional benefits help to add to the resiliency, health, and vibrancy of communities.
Key participants of the StormStore market
- The stormwater regulator is the utility that regulates stormwater management. In Cook County stormwater is regulated by MWRD, which is responsible for certifying credits entering the marketplace and tracking the compliance of regulated development for both buyers and sellers through inspections and enforcement.
Credit exchange or market facilitator
- The facilitator or administrator of the stormwater credit trading market can be the water utility, or in some cases these responsibilities can be provided by a third party (e.g. TNC or MPC). The facilitator will need to conduct outreach and community engagement to support the functions of the market and ensure that an adequate supply of credits is available to meet the demand from new development or redevelopment. This includes providing assistance and consultation for potential participants.
- Other critical activities that the market administrator facilitates includes developing the credit exchange platform, maintaining credit registries and tracking databases, and promoting incentive programs for stormwater credit creators.
- The benefit of purchasing credits from the marketplace is the flexibility it provides to developers or credit buyers in meeting their stormwater control requirements. As noted above, offsite stormwater management often results in significant savings, especially for projects that are located in areas that have site constraints or where the development costs are at a premium.
- Typically buyers purchase credits from sellers and enter a contract or maintenance agreement to guarantee the ongoing performance of green infrastructure or other distributed stormwater best management practices constructed offsite to reduce the liability to the developer.
Stormwater project creator/Credit sellers
- Stormwater credits can be generated through installation of new green infrastructure or other distributed stormwater best management practices that are not otherwise needed to meet regulatory requirements. These projects are generally constructed offsite from where the buyers sites are located but within the same watershed. Typically there are two types of projects that can supply credits:
- Development or redevelopment projects that provide more stormwater retention or detention that is required by regulations
- Voluntary projects which provides stormwater retention or detention on sites where no construction is occurring or where construction does not actually trigger the need for stormwater controls.
- Credit creators or sellers earn money based on the amount of stormwater they retain or detain at their site, but also must agree to maintain and ensure that the stormwater infrastructure performs over a set period of time and complies with stormwater management regulations.