Published in Economic Development

GR’s green infrastructure investments worth the cost, GVSU study finds

BY Saturday, August 18, 2018 05:13pm

Grand Valley State University researchers have found the benefits outweigh the costs of Grand Rapids’ investment in green infrastructure to limit stormwater runoff.

Advocates say the findings are significant for quantifying the environmental benefits of projects that cost more upfront compared to traditional “gray infrastructure” that simply diverts stormwater to the Grand River, posing flood and pollution risks. Green infrastructure includes porous pavement, rain gardens and the preservation of natural areas.

While city officials have a plan for deploying green infrastructure on public property, the extent to which developers and other private property owners will invest in such projects remains unclear. The question comes down to how to incentivize private property owners to bear the costs of a project that benefits the public, according to researchers.

“That’s the crux of the issue when we get into practice,” said Erik Nordman, Ph.D., an associate professor of natural resource management at GVSU and an author of the study published in the Journal of Cleaner Production. “By and large, (green infrastructure is) going to cost more. Right now, there is no incentive for private landowners to take on those additional costs.”

The research analyzes the costs and benefits of six green infrastructure practices meant to mimic the area’s natural hydrology: conserving natural areas, porous asphalt, rain gardens, street trees, green roofs and bioretention basins.

Researchers weighed the upfront costs, operation and maintenance of green infrastructure with direct and indirect benefits. The benefits include reduced flood risk, improved water quality, “scenic amenity” value and carbon dioxide storage.

The conservation of natural areas has the highest net value among the practices and also has been shown to increase nearby property values. Street trees, rain gardens and porous asphalt follow in order of net value. Bioretention basins and green roofs showed net costs, although some green roofs have a net benefit when associated with other environmental improvements to a building.

“In most cases, the economic benefits of managing stormwater onsite using green infrastructure practices are greater than the economic costs over the life of the resource,” Nordman said.

He added that Grand Rapids, 44 percent of which has an impervious surface, spends about $3 million annually to maintain existing stormwater infrastructure. By reducing the volume of runoff, those costs decrease.

“Green infrastructure keeps water onsite and allows it to seep into the soil. The reduction in flood risk is a big benefit,” Nordman said, citing the 2013 Grand River flooding downtown.

Quantifying environmental benefits

Environmental advocates say stormwater management is a vital government function that limits water pollution and shields residents from costly flood damage.

The West Michigan Environmental Action Council (WMEAC) took the lead 10 years ago in developing a calculator that quantifies the benefits of green infrastructure over the life of a project. Over the years, WMEAC has worked closely with the city on drafting stormwater policy.

“Stormwater is one of the largest contributors of pollution to our waterways,” said Elaine Sterrett Isely, WMEAC’s director of water programs and a co-author of the GVSU report. Isley also serves on the city’s Stormwater Oversight Commission.

As communities increasingly are being told to manage stormwater and limit flows into waterways, their first reaction, according to Isely, is often: “How do we do that?”

Quantifying the environmental benefits of green infrastructure is a key step in helping cities make investment decisions, she said. Isely plans to share the calculator not only with other communities, but also with developers.

“As much as environmentalists don’t want to put a price on nature, we have to acknowledge there are economic interests that need to be balanced,” Isely said. “It’s very important to have a tool to say, ‘Here are the financial benefits of this.’”

Under the guidelines of Grand Rapids’ Vital Streets program that was part of a 2014 citizen-approved income tax extension, the city prioritizes on-street green infrastructure or property improvements. These include curb cuts with drains and filtration basins.

“Then we revert to gray infrastructure if green isn’t engineeringly possible,” said Michael Lunn, director of the city’s Environmental Services Department. “The preference is to do green, especially with filtration. Just putting more water in the river doesn’t help us.”

The city’s Stormwater Master Plan was last updated in January 2014, while a revised 2007 ordinance emphasizes best management practices “to reduce the quantity, and improve the quality, of runoff on a site-by-site basis.”

Communities in the Grand Rapids metro area also have partnered on uniform Municipal Separate Storm Sewer System (MS4) permits to comply with new federal regulations.

“Grand Rapids is ahead of the curve in many ways” on stormwater management, including by separating its streams of wastewater and stormwater, Isely said.

Who pays?

While the GVSU study focused on green infrastructure in Grand Rapids, municipalities across the state continue to wrestle with the contentious issue of paying for stormwater management. Only a few cities collect utility fees for stormwater management.

This year, the city of Detroit redesigned its flat-rate drainage fee to charge landowners based on the amount of impervious service on their property as a way to incentivize practices that absorb stormwater rather than divert it. An advocacy group has filed a legal challenge to the controversial effort, saying the program amounts to a rain tax at a time when thousands of residents face water shutoffs.

In Grand Rapids, which doesn’t have a dedicated stormwater fee, environmental groups’ support for one has faced opposition from neighborhood advocates and business groups who also criticize the concept as a “rain tax.”

In 2012, a city task force considered the idea for a utility fee in the city, although the proposal encountered widespread opposition. Environmental groups are not pushing such a plan, but say they support the concept.

There is also dispute over whether some cities’ dedicated funding approach is a fee or a tax. The Grand Rapids Area Chamber of Commerce is opposed to a bill proposed by state Sen. Marty Knollenberg, R-Troy, that would codify steps cities could take to design a fee to avoid legal challenges.

“If you’re going to ask for money, you should have to go through the tax approval process,” said Josh Lunger, government affairs director with the Grand Rapids Chamber. He added that “a lot of promises were made to the public and business community” about environmental projects with the 2014 income tax extension. The “streets tax” includes dedicated funding for green infrastructure.

However, Grand Rapids is exploring the potential for trading stormwater credits that could involve the private sector by incentivizing green infrastructure, Lunn said.

Lunger said the Grand Rapids Chamber would be open to a credit-trading approach rather than fees.

“From our history, especially when our local members hear about a rain tax, you can imagine what the reception is,” he said. “I love that the city is trying to provide market-based alternatives.”

Isely said a credit-trading program would be a “really good idea. As with any complicated issue like that, it depends on how it’s implemented, but the more green infrastructure we can have is going to be better for the city.”

‘Misalignment of incentives’

Even as advocates identify a path forward for green infrastructure for public land, they say the economics of similar investments on private property remain less clear.

Lunger said developers already are set to face stricter federal regulations on stormwater discharges based on the size of their properties. Costs associated with stormwater management in developments could increase roughly 25 percent, he said.

Despite a lack of incentives for incorporating green infrastructure, developers and other property owners may do so based on demand, he said.

“There is an incentive for developments like this: People want placemaking,” Lunger said.

Officials with Grand Rapids-based Rockford Construction Co. Inc. have pursued a variety of green infrastructure components at Michigan State University’s downtown research center and at the construction management firm’s LEED Platinum-certified office in Grand Rapids’ West Side neighborhood. While acknowledging the “limited financial incentives available to private developers” for green infrastructure, the company includes them based on interest from the community, clients and other partners.

“By thinking creatively and collaboratively, our buildings reflect our commitment to sustainability and lower our tenants’ costs while providing a great return on investment,” said Monica Steimle-App, Rockford’s vice president of property management.

Isely also considers green infrastructure on public versus private land to be the same issue.

“The city is involved in all of these projects because it’s in the city’s best interest as the operator of the water recovery facility,” she said.

Still, the GVSU paper notes a “misalignment of incentives” for private property owners investing in green infrastructure since they pay the costs while the public receives the benefit.

Although developers may include green infrastructure in their projects, local communities will likely need to adopt new policies to achieve the highest amount of benefit, according to GVSU’s Nordman.

“Without public policy behind it, you’ll get some voluntary commitments to take some action, but it won’t be an economically efficient amount,” he said.

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