Estimating the Economic Impact of Stormwater Runoff in the Allen Creek Watershed

Stormwater runoff generated by increased landscape imperviousness results in flooding and degradation of aquatic systems. This paper proposes an economic model of stormwater runoff damage estimation. Using a hedonic property model that allows us to account for the heterogeneity in each parcel's generation of stormwater runoff, we estimate the marginal implicit cost of an additional 10,000 ft3 of annual runoff (which represents about a 2% increase in the average annual runoff volume coming from each lot) to a downstream community in the Allen Creek watershed located in Rochester, NY. We estimate that an additional 10,000 ft3 of runoff translates to nearly $12,000 (or $1.20 per cubic foot) of damages to downstream residences under current development conditions. Results can be compared with abatement cost estimates from other studies to help quantify one important part of the tradeoffs between the desirability of development versus the increase in environmental challenges and economic costs that may result.