Controlling Storm-Water Runoff with Tradable Allowances for Impervious Surfaces

Storm-water flow from an impervious surface can lead to stream degradation, habitat alteration, low base flows, and increased toxic loadings from nonpoint sources, a problem that has resisted traditional command and control regulatory approaches. We explore the thesis that a well-designed, tradable runoff allowance system can create economic incentives for landowners to employ low-cost runoff management practices to reduce excess stormwater flow to more ecologically sound levels. Attributes such as percent impervious surface, soil type, and so on, determine a given land parcel’s runoff potential and management alternatives and, by extension, its allowance requirements. Using a small watershed in Cincinnati, Ohio, as a case study, we show that a tradable runoff allowance system carries promise as a low-cost method for attaining reductions in storm-water runoff.