As an environmental friendly measure for surface runoff reduction, low impact development (LID) has been applied successfully in urban areas. However, due to high price of land and additional expense for LID construction in highly urbanized areas, the developers of real estate would not like to proceed LID exploitation. Floor area ratio (FAR) refers to “the ratio of a building’s total floor area to the size of the piece of land upon which it is built.” Increasing FAR indicates that the developers can construct higher buildings and earn more money. By means of awarding FAR, the developers may be willing to practice LID construction. In this study, a new residential district is selected as a case study to analyze the trade-off between the runoff reduction goal achieving by LID practices and the incentive of awarding FAR to promote LID construction. The System for Urban Stormwater Treatment and Analysis IntegratioN (SUSTAIN) model is applied to simulate the runoff reduction under various LID designs and then derive the Pareto-optimal solutions to achieve urban runoff reduction goals based on cost efficiency. The results indicates that the maximum surface runoff reduction is 20.5%. Under the extremity scenarios, the government has options to award FAR of 0.028, 0.038 and 0.047 and the net benefits developers gain are 0 CNY, one million CNY and two million CNY, respectively. The results provide a LID construction guideline related to awarding FAR, which supports incentive policy making for promoting LID practices in the highly urbanized areas.