Water Quality Trading Program
Final water quality trading rules were adopted on December 22, 2006 and became effective on January 1, 2007.
Water quality trading is receiving increasing attention as a tool for achieving water quality improvements. Under the right circumstances, trading has the potential to yield both environmental and economic benefits, while promoting increased interaction among watershed stakeholders.
In June 2006, the Agency released draft rules for trading for interested party review and comment. After considering the comments received, preparing a responsiveness summary and making revisions to the rules, the Agency filed proposed rules for trading for review and comment with the Joint Committee on Agency Rule Review (JCARR) on October 10, 2006. Final rules for trading were adopted on December 22, 2006 with an effective date of January 1, 2007.
A fact sheet [PDF 179K] is available that provides a summary of the final rules.
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Bank erosion is a common cause of water quality impairment.
Bank stabilization can generate water quality credits and improve water quality.
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Ohio Projects Finalists for Water Quality Trading Funding
In December 2008, U.S. EPA selected ten finalists to apply for Targeted Watershed Grants that focus on water quality trading or other market-based water quality projects to reduce nitrogen, phosphorus, sediment, or other pollutant loadings to three Mississippi River sub-basins. EPA will award up to $3.7 million to support the selected organizations.
Two of the finalists are here in Ohio.
The Miami Conservancy District plans to continue its water quality trading program in the Great Miami River Watershed for two more years by continuing to fund agricultural best management practices that will reduce nitrogen and phosphorus runoff. The Great Miami River Watershed is located in the Ohio River Basin. This trading program utilizes economic incentives to encourage wastewater treatment plants to participate prior to having a regulatory obligation to reduce nutrients.
The Ohio State University will undertake a market feasibility assessment for a water quality trading program in the Upper Scioto Watershed. The feasibility assessment will focus on determining the potential costs and benefits for the City of Columbus and other wastewater treatment plants in the watershed for trading phosphorus, nitrogen, and sediment to help reduce the hypoxic zone in the Northern Gulf of Mexico.
Ohio would be involved in a trading program being studied by a third finalist. The Electric Power Research Institutes' project will design a water quality trading program for the entire Ohio River Basin, which includes portions of over fourteen states. It will develop a legal framework for interstate trading, targeting nitrogen and phosphorus to help reduce the hypoxic zone in the Northern Gulf of Mexico.
Additional information on these grants can be found on the U.S. EPA Web page.
U.S. EPA Trading Evaluation
In October 2008, U.S. EPA released EPA Water Quality Trading Evaluation, Final Report [PDF 527K]. The report assesses the effectiveness of U.S. EPA’s activities to support water quality trading and provides insight on why more trading activity has not occurred. It is based on interviews with individuals associated with 11 different water quality trading programs and initiatives.
Trading Toolkit
U. S. EPA’s Water Quality Trading Toolkit for Permit Writers provides NPDES permit writers with guidance on incorporating trading provisions into permits. While the Toolkit is geared toward state and regional permitting authorities, all stakeholders including permitted entities, agriculture and other nonpoint sources, watershed groups, and other parties interested in trading, will utilize the Toolkit.
Related Documents
Great Miami River Watershed Water Quality Credit Trading Program Operations Manual [PDF 1,403K] - The Miami Conservancy District’s Operations Manual addresses the trading program’s development, implementation, evaluation and adaptation.
Testing the Waters: The Great Miami River Watershed Water Quality Credit Trading Program [PDF 168K] - A September 2006 article by Katherine Hamilton for the Ecosystem Marketplace.
Alpine Cheese Phosphorus Nutrient Trading Plan [PDF 3,101K] - The plan includes a description of the pollution abatement strategies to be employed, a schedule for their implementation, and a monitoring plan to identify potential remediation sites and to gauge success over time. It also identifies the parties responsible for each part of the implementation process and includes a cooperative agreement between the Holmes Soil and Water Conservation District and Ohio EPA.
Water Quality Trading Policy (January 13, 2003) [PDF 112K] U.S. EPA’s policy on water quality trading.
WRI Policy Note: Conservation Best Management Practices, Cost-Share, and Water Quality Trading Programs, July 2006 [PDF 323K] - This article from the World Resources Institute addresses the question, "Should ALL reductions in nutrients and sediment resulting from the implementation of conservation best management practices (BMPs) partially paid for by federal or state cost-share funding be eligible for sale in a water quality trading program?"
WRI Policy Note: Paying for Environmental Performance: Using Reverse Auctions to Allocate Funding for Conservation Programs, January 2007 [PDF 367K] - This article from the World Resources Institute addresses the question, "Can reverse auctions be used to achieve cost-effective improvements in environmental quality?" The Miami Conservancy District’s trading program in the Great Miami River Watershed uses a reverse auction to determine which BMP proposals to fund.
Water Quality Trading Assessment Handbook (EPA 841-B-04-001; November 2004) [PDF 1,372K] This U.S. EPA handbook was prepared to help answer the questions:
- How do you know when and where trading is the right tool?
- Will water quality trading work in my watershed?
A free copy of the handbook is available from The National Service Center for Environmental Publications (NSCEP), (800) 490-9198 or ncepimal@one.net (refer to the EPA report number).
Getting Paid for Stewardship: An Agricultural Community Water Quality Trading Guide [PDF 3,117K] - This guide outlines the concept and basic elements of water quality trading for the individuals and organizations that serve as agricultural advisors to producers, such as soil and water conservation districts, Certified Crop Advisers (CCAs), Extension agents, farm bureaus, United States Department of Agriculture (USDA) agencies, such as the Natural Resources Conservation Service (NRCS) and Farm Service Agency (FSA), universities, producer associations and other agricultural interests.
Related Links
Great Miami River Watershed Water Quality Credit Trading Program
http://www.miamiconservancy.org/water/quality_credit.asp
U.S. EPA Water Quality Trading Page
http://www.epa.gov/owow/watershed/trading.htm
Wisconsin DNR Watershed Based Pollutant Trading Page
http://dnr.wi.gov/runoff/pt/
Minnesota River Basin General Phosphorus Permit: Phase 1 - The Minnesota Pollution Control Agency issued this permit in December 2005. It covers 40 wastewater treatment facilities and is being used to implement a TMDL for dissolved oxygen. It includes provisions for trading.
http://www.pca.state.mn.us/water/basins/mnriver/mnriver-phosphoruspermit.html
Idaho DEQ Pollutant Trading Page
http://www.deq.idaho.gov/water/prog_issues/surface_water/pollutant_trading/overview.cfm
Pennsylvania DEP Nutrient Trading Page
http://www.dep.state.pa.us/river/Nutrient Trading.htm
Oregon DEQ Water Quality Trading Page
http://www.deq.state.or.us/wq/trading/trading.htm
Clean Water Services Watershed-based Permit - This permit was issued by Oregon DEQ to Clean Water Services, a water quality management agency. Clean Water Services operates several municipal wastewater plants, and this permit includes provisions for temperature trading for implementing a temperature TMDL.
http://www.deq.state.or.us/wq/wqpermit/cwspermit.htm
Environmental Trading Network - A national clearinghouse for water quality trading projects
http://www.envtn.org/
Additional Information
For additional information on the Ohio EPA Water Quality Trading Program contact:
Gary Stuhlfauth, (614) 644-2026, gary.stuhlfauth@epa.state.oh.us