Investigating the Cost-Effectiveness of Nutrient Credit Use as an Option for Stormwater Permitting Requirements

About the report:

The purpose of this study was to determine the feasibility of the Virginia Department of Transportation (VDOT) participating in water quality trading (WQT) in lieu of constructing onsite structural best management practices (BMPs) to achieve compliance with Virginia water quality standards for stormwater runoff for linear development projects. The objectives of the study were (1) to assess the potential credit demand for VDOT projects, focusing on the James River watershed as a case study; and (2) to compare the costs to VDOT of constructing BMPs and participating in WQT.

Data, including a database of existing BMPs, construction plans, and detailed cost estimates, were provided by VDOT. To assess the potential credit demand, details of existing BMPs were reviewed for eligibility to participate in WQT. For the cost comparison, a cost estimate for select linear development projects with BMPs was calculated and then compared to credit costs.

Based on 19 years of historical data, VDOT could have used between 1 and 63 pounds of phosphorous credits per year and a median of 11 pounds of phosphorous credits per year for the James River watershed if current WQT guidelines had been in place over this period of time. In the hypothetical scenario where VDOT’s participation in the WQT program was allowed in lieu of VDOT’s construction of nine BMPs, VDOT would have realized a cost savings of 5% to 75%, with an average cost savings of 51%. These results suggest that participating in WQT at current market rates in lieu of constructing onsite structural BMPs is an economically feasible solution for VDOT to manage stormwater quality. It should be noted that market rates for phosphorus credits may change in the future.

VDOT’s Location and Design Division should continue purchasing stormwater credits for those projects that are eligible for WQT.

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