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

Water quality trading (WQT) offers a new option to the Virginia Department of Transportation (VDOT) for achieving sustainable transportation infrastructure systems. Rather than treat runoff from infrastructure projects on-site, as is the common practice now, WQT allows for off-site treatment for projects that meet certain regulatory guidelines. When evaluating WQT from a sustainability perspective, it is important to weigh the economic, environmental, and social impacts of the strategy. As a first step toward this longer term goal, the focus of this study is on the economic feasibility of the VDOT participating in WQT in lieu of constructing on-site structural best management practices (BMPs) to achieve water quality compliance for stormwater runoff for linear development projects. The study includes two objectives: (1) assess annual credit demand for VDOT projects, focusing on the James River watershed as a case study, and (2) conduct a cost evaluation of WQT in lieu of constructing on-site BMPs. Data, including a database of existing BMPs, construction plans, and detailed cost estimates, were provided by VDOT. To asses annual credit demand, details of existing BMPs were reviewed for eligibility to participate in WQT. For the cost evaluation, a cost estimate was calculated for select linear development projects with BMPs and compared to credit costs. In regard to the first study objective, results suggest that annual credit demand for VDOT projects in the James River watershed will be on average 24 pounds of phosphorus credits per year but range annually between one and 63 credits. In regard to the second study objective, results show that there is the potential for approximately 50% cost savings on average with a range of 5% to 75% across the nine BMPs analyzed in this study. Based on these results, we conclude that WQT is an economically attractive option for VDOT at current market rates for nutrient credits. The sustainability of WQT from an environmental and social perspective was not part of this study and should be addressed before broad adoption of WQT.