USING MARKET BASED INSTRUMENTS TO DELIVER COST-EFFECTIVE STORMWATER MANAGEMENT OUTCOMES
Outcomes from an innovative pilot study
J Cheesman, L Harvey, CJ Walsh
Publication Date (Web): 3 November 2016
Melbourne Water, South East Water and Knox City Council (KCC) have been working together to achieve KCC's stormwater quality and flow objectives for Dobsons Creek, which runs through the peri-urban community of The Basin, 31 kilometres east of the Melbourne CBD. To achieve KCC's target of reducing direct connected impervious (DCI) in Dobsons Creek catchment to less than one per cent by 2020, disconnection needs to occur on public land and private land.
This paper reports the results of a market-based instrument (MBI) pilot, an outcome-based auction, for installing rainwater tanks on homes in Dobsons Creek.
The process involved: (1) households in the Dobsons Creek catchment being contacted and asked to participate; (2) having a licenced plumber assess how much impervious area on the property could be disconnected using rainwater tanks, and the cost of disconnection; (3) receiving a bid offer form from Melbourne Water; and (4) making a best and final bid for having rainwater tanks installed on the property by a closing date.
Bids were evaluated and prioritised based on cost-effectiveness to Melbourne Water using a ‘$ per unit of Environmental Benefit (EB) measure’ ($/EB). EB was calculated based on changes in flow frequency, volume reduction and water quality resulting from the tank, standardised to 100m2 (complete disconnection of 100m2 of impervious surface = 1 EB). The $/EB measure was the net cost to Melbourne Water per EB gained by disconnecting roof area from the house. The net $/EB was calculated as the cost of installing the tank minus the household contribution, divided by the number of EB that disconnection would achieve. The information needed to calculate the $/EB was estimated for each household by a licenced tradesperson during the site visit.
Half of all households contacted accepted the site visit. Bids were received from 53 of the 63 households who accepted. Of these, bids were accepted for 39 properties that represented value for money for Melbourne Water, based on cost effectiveness comparison with the cost of delivering stormwater disconnection on public land in the Basin. Households’ average winning bid was a $622 contribution towards having rainwater tanks installed, with a $100–$1,000 bid spread.
The 39 properties will disconnect 6,500 square metres of roof area on private homes from the stormwater system that drains into Dobsons Creek. Disconnection will benefit the Creek by reducing untreated stormwater runoff by around 2.2 ML on average each year.
The pilot highlights that waterway and catchment managers should considering MBIs to manage stormwater impacts on catchments and waterways in combination with public works and other actions when one or more of the following are present:
- Stormwater runoff from household and commercial roofs and other impervious area has to be disconnected to achieve stormwater flow and quality targets;There is limited public land available for stormwater works or public land has a high developable land value;
- There are more than 20 households that can be involved that do not have rainwater tanks, where roof area makes a significant contribution to stormwater drainage, and stormwater systems are connected to waterways that waterway managers want to protect, maintain or enhance;
- A council has limited capacity to operate and maintain public stormwater treatment assets. Locating stormwater treatment works on private land may provide managers with opportunities to operate and maintain these assets in cooperation with the landowner;
- Managers want to maximise the amount of environmental benefit they get from their available budget by obtaining co-contributions from households who benefit from having rainwater tanks installed on their property.
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