Water Resources Research Act Program

Details for Project ID 2014DC162B

Determining the Feasibility of Simulating the District of Columbia’s Department of the Environment Proposed Stormwater Volume Trading Market Using Agent-Based Modeling

Institute: District of Columbia
Year Established: 2014 Start Date: 2014-03-01 End Date: 2015-02-28
Total Federal Funds: $10,900 Total Non-Federal Funds: $34,093

Principal Investigators: Pradeep Behera, Seth Brown

Project Summary: In recent years, EPA has faced growing criticism about the effectiveness of its stormwater regulatory program to address the corresponding water quality impacts. These impacts are significant and affect all portions of the country. To better assess its existing regulatory program, EPA asked the National Research Council to review the program and provide suggestions for improvement. The Council released its report, Urban Stormwater Management in the United States, in early 2009 and was critical of many aspects of EPA’s regulations, and concluded that “radical changes are necessary to reverse degradation of fresh water resources and ensure progress toward the Clean Water Act’s goal of ‘fishable and swimmable’ waters.” To address the problems cites in the NRC report, the EPA is currently engaged in a rulemaking to update the regulations associated with their stormwater program. A new national performance standard – the first of its kind – is expected to be a central feature in this rulemaking, and it is anticipated that this performance standard will reflect a more progressive on-site retention requirement, such as the capture/infiltration of certain percentile storm on site. This retention-based requirement is consistent with the newly-adopted MS4 permit administered by the District of Columbia Department of the Environment (DDOE), which requires the on-site retention of the 90th-percentile storm, which equates to events of 1.2 inches and less. Concerns have been raised by the land development community that this new requirement may significantly increase the cost of developing or redeveloping land in the District. Some fear this new requirement may not only stifle development within the District, but may drive development to suburban “green field” development. To combat these fears, DDOE is proposing a new regulatory framework that allows owners/developers of regulated sites, after achieving a minimum of 50% of this volume on site, to have the option to use off-site retention in the form of Stormwater Retention Credits (SRCs), purchased from the private market, or in-lieu fee, paid to DDOE. SRCs are expected to be lower-cost and therefore more commonly used than in-lieu fee. DDOE’s program is designed to provide flexibility for regulated sites while maximizing the benefit to District waterbodies. It is anticipated that buyers of credits will consist of developers/owners of sites in the urban core/downtown area while credits are expected to be generated outside the urban core area. These roles are defined by the logic that meeting the new on-site retention requirement in the dense urban core using vegetated roofs and cisterns, for examples, is more costly than capturing equivalent volumes in less dense areas outside of downtown by using practices such as porous pavement and bio retention. This redistribution of volume retention will also benefit the environment by providing greater protection to non-tidal headwater streams of the Anacostia River, which are more susceptible to the impacts of flashy urban flows, at the cost of greater discharge of flows to the tidal Potomac River, which can better absorb urban discharges with nominal impacts to water quality or ecology. Similarly, the increased vegetative cover associated with green infrastructure practices expected to be used by SRC-generators will increase property values, reduce urban heat island effects, enhance public health, and provide a greater aesthetic value to these areas. The framework proposed by DDOE is both novel and significant; however, it is the first of its kind, so it is unknown how successful and active this “market” will be and what the consequences of it may lead to. One way to simulate and predict how this market may function is through the use of agent based modeling (ABM). This is a relatively new approach used in the social sciences and macroeconomic fields to model complex systems to study emergence and behavioral-based patterns. Using this framework, “agents” may be individuals, groups, firms, or companies who are identified and given decision-making properties that affect how various types of agents interact. Helbing and Balietti (2006) state that ABM is a, “method that (is) suited for the computer simulation of socio-economic systems,” and that, “the behaviors and interactions of the agents may be formalized by equations, but more generally they may be specified through (decision) rules, such as if-then kind of rules or logical operations...this makes the modeling approach much more flexible.” The development of an ABM to simulate the proposed stormwater volume trading market will help to predict how the market may behave and aid in the enhancement of conditions that may help to improve the performance and effectiveness of the framework. Similarly, this process may help to spell out a process that can be used to analyze other urban areas in an effort to determine the feasibility of a similar market-based program for ultra-urban stormwater management that may lead to a more cost-effective outcome.