Procurement auction with public-private co-funding - Oslo

A procurement auction for low impact development (LID) measures was piloted in the Oslo city neighbourhood of Grefsen in 2019, in a collaboration between the Water and Sewage Agency of Oslo Municipality and the Norwegian Institute for Water Research (NIVA) within the action research project New Water Ways. LID measures included rain gardens, rain barrels, green roofs and permeable surfaces. A target group of 462 households received a survey and bidding sheet in which they stated their maximum willingness to pay for implementing the different measures. The auction resulted in rain gardens, permeable driveways, green roofs an rain barrels being implemented on the auction winners’ properties. Auction winners co-funded the LID measures, with the difference between the construction cost of the measure and their bid being co- funded by Oslo Municipality and NIVA. The Water and Sewage Agency managed the construction of the measures, and developed guidance information for maintenance. For these reasons, this is classified as a co-operative instrument, while it the procurement auction mechanism itself is an economic instrument.

Overview

Type of instrument:

Agreement-based or cooperative instrument›Public-private business agreement

Challenges addressed

Water management (e.g. reuse)
Flood risk: pluvial and fluvial / soil permeability

Consideration of nature-based solutions:

The construction of rain gardens, rain barrels, green roofs and permeable surfaces in driveways aims to manage stormwater locally on-property, avoiding on-property flooding, run-off to and flooding of downstream properties, and reducing the likelihood and severity of combined sewage overflow events that contaminate the Akerselva River, with impacts on bathing and aquatic biodiversity.

Targeted (peri-)urban areas:

Green areas for water management

External building greens

Urban green space connected to grey infrastructure

Good practice characteristics:

Support multifunctional NBS

Locally appropriate

Innovative

Policy business case

Governance

Non-governmental actor(s)

Initiating body:

Researchers, university

Details about how the instrument was designed:

The procurement auction was piloted as part of the New WaterWays research project, initiated by the Norwegian Institute for Water Research (NIVA), in collaboration with the Water and Sewage Agency, and several private and public research institutions. NIVA and the Water and Sewage Agency co-designed the auction, and NIVA and research partners carried out participatory assessments of the measures with participants during and after implementation.

Targeted actors:

Private: household, real estate developer, business , financial

Details about the implementation:

The Oslo Water and Sewage Agency took responsibility for coordinating, planning and construction of the low impact development (LID) measures, and supporting with co-funding. The municipality’s competence and coordination role was instrumental for the implementation of the measures on the private properties of auction winners. Management of stormwater run-off is the legal responsibility of property owners in Oslo. In new property developments, the municipality imposes run-off management requirements on new builds and blue-green factor construction norms. For existing buildings, run-off management is not audited by the municipality. On established private property, other instruments are required: awareness raising and economic instruments were assessed. Procurement auctions for nature-based solutions are limited by utility pricing rules that constrain the municipality to charges that directly cover utility supply costs. There is currently no legal basis for municipal governments to earmark funds to economic incentives for LID measures that would indirectly reduce municipal costs related to stormwater runoff (excess sewage treatment, flooding damage to infrastructure). The NewWaterWays project assessed the potential for funding the public subsidy to the procurement using a property stormwater fee ( Wilkerson et al. 2022)

How did the government support the instrument?:

The procurement auction was a pilot project, and has not yet been formalized into municipal strategy documents nor policy.

Financing

Sources of funding:

Public local authority’s budget

Funds provided by non-governmental organization

Norwegian Research Council grant including participatory action research

Budget:

100 000 € 500 000€

Details about instrument financing:

The total cost estimate was co-funded by the Water and Sewage Agency, private property owners who won the procurement, and the research project. Private property owners were willing to co-fund procurement on average between 7-17% of the total cost of the measures.

Monitoring, evaluation and impacts

Is a monitoring framework in place?:

Did an evaluation take place?:

Yes

The Water and Sewage Agency carried out an evaluation of the pilot and its funding of the project (Braskerud et al. 2020). NIVA carried out surveys of households invited to the procurement auction and for a wider neighbourhood, as well as semi-structured interviews of property owners who had implemented measures (Furuseth et al. 2018 and 2021).

Achieved outcomes and impacts:

The invitation to participate in the procurement auction was extended to 462 households in the Grefsen neighbourhood, resulting in awareness raising about stormwater management. 192 households participated in the auction. The pilot had sufficient funds to implement 2 rainbeds, 2 green roofs, 2 permeable driveways and 10 rainbarrels in the Grefsen neighbourhood.

Success factors and lessons learned:

A survey (Furuseth et al. 2018) revealed that the main motivational drivers for the willingness to participate in the procurement auction, by order of importance, were (i) avoiding flooding damage to own property, (ii) economic support, (iii) increasing property values, (iv) technical support for implementation and (v) more aesthetic property. Private property owners were not only willing to set aside part of their property for measures, but also to co fund procurement with their own money. A key to implementation success criteria was the administration of implementation of measures being lead by Oslo Municipality's Water and Sewage Agency. Different types of public information and surveys in several waves were necessary to create awareness about the stormwater management problems for the cities and awareness of measures. A key element of success is a substantial subsidy provided to cover the total cost of procurement. Due to the initial success of the pilot in 2018-2019, the Water and Sewage Agency has made additional funding available for further measures. However, the longer term sustainability of the procurement auction approach is limited by lack of a permanent source of funding. The option of using a stormwater fee to earmark funds for procurement subsidies is discussed by Wilkerson et al. (2021), showing that a relatively low fee-subsidy may support significant and sustained uptake of measures by private households. Barriers to scaling up the approach to other parts of the city concern availability of space in more densely populated neighbourhoods. Also, participants questioned the fairness of a scaled up auction where property owners pay would pay different amounts to procure the same measures.

Sources and further information

References

List of references:

Barton, D.N., Venter, Z.S., Sælthun, N.R., Skumlien Furuseth, I., Seifert-Dähnn, I., 2021. Brukerfinansiert klimaberedskap? En beregningsmodell for overvannsgebyr i Oslo. Vann 4, 18. Furuseth, I.S., Seifart-Dähnn, I., Qandeel Azhar, S., Braskerud, 2018. Overvann i bebygde strøk – tid for å involvere innbyggerne (Stormwater in urban areas - time to involve citizens). Vann 04, 10.

Braskerud, B.C., Q. Azhar, S., Russwurm, I., Skaara, T., 2020. Evaluering av prosjektet «Frakobling av taknedløp og etablering av LOD-tiltak på privat eiendom på Grefsen-Kjelsås», (Evaluation of the project “Disconnecting drainpipes and establishment of LID measures on private property at Grefsen-Kjelsås”) dokumentnr. 18/04133-7, Oslo kommune, Vann- og avløpsetaten.

Furuseth, I.S., Barkved, L.J., Seifert-Dähnn, I., 2021. Lokale overvannstiltak i urbane boligområder: Erfaringer fra samarbeid på Grefsen-Kjelsås, Oslo (Local stormwater management measures in urban residential areas: experiences from collaboration at Grefsen-Kjelsås, Oslo). Vann 04, 10. Accessible at: https://vannforeningen.no/wp-content/uploads/2022/02/Furuseth.pdf

Wilkerson, B., Romanenko, E., Barton, D.N., 2021. Modeling reverse auction-based subsidies and stormwater fee policies for Low Impact Development (LID) adoption: a system dynamics analysis. Sustainable Cities and Society 103602. https://doi.org/10.1016/j.scs.2021.103602

Further documents

Documents:

GK34-regnbed m stakitt.JPG

Weblinks:

https://www.niva.no/en/projectweb/newwaterways

Photos

Bent Braskerud