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Costs and benefits of capturing urban runoff with competitive bidding for decentralized best management practices
Author(s) -
Cutter W. Bowman,
Baerenklau Kenneth A.,
DeWoody Autumn,
Sharma Ritu,
Lee Joong Gwang
Publication year - 2008
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/2007wr006343
Subject(s) - bidding , business , surface runoff , incentive , subsidy , environmental economics , economics , microeconomics , marketing , ecology , biology , market economy
Urban storm water runoff is both a source of pollution and a potentially valuable resource. Centralized facilities traditionally have been used to manage runoff. Decentralized best management practice (BMP) options may be able to avoid the costs of purchasing expensive urban land needed for centralized facilities. We investigate the cost effectiveness of implementing BMPs in a Los Angeles area watershed with two voluntary incentive mechanisms: competitive bidding and a fixed subsidy. The subsidy mechanism has lower BMP placement costs but generates relatively large excess profits for landowners. The bidding mechanism has higher BMP placement costs but generates smaller excess profits and tends to be more cost effective for the regulator, particularly at higher runoff capture levels. We also compare the costs of bidding and centralized alternatives and find that the bidding alternative is significantly less costly than a centralized alternative for a range of storm water capture goals. Finally, we examine the value of infiltrated storm water and find that it is up to 38% of total BMP costs.