Water Quality Trading

The Water Quality Information Center at the National Agricultural Library
Agricultural Research Service, U. S. Department of Agriculture

Water Quality Trading

What is Water Quality Trading?

Final Water Quality Trading Policy and an associated fact sheet are provided by the U.S. Environmental Protection Agency (EPA). These documents, available in other formats, and a press release are available from the 2003 Water Quality Trading Policy page. [Find more EPA documents below.]
A New Tool For Water Quality: Making Watershed-Based Trading Work For You is a report by the National Wildlife Federation (June 1999).

[What is Water Quality Trading? | Background/Perspectives |
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Background/Perspectives
The Association of State Drinking Water Administrators (ASWDA) prepared comments on the proposed rule released in July 2002.
The paper, Conservation Marketplace: Market-driven Approaches to Conservation -- A New Way of Doing Business, written by Gerald F. Talbert through a National Association of Conservation Districts (NACD) grant, describes the basic concepts of trading environmental credits in a market-driven economy.
A staff paper, The Design and Comparative Economic Performance of Alternative Second-Best Point/Nonpoint Trading Markets, (May 2001) from Michigan State University Department of Agricultural Economics discusses the design of two trading systems for use with both point and nonpoint sources.
Marc O. Ribaudo, Richard D. Horan, and Mark E. Smith produced the economic report, Economics of Water Quality Protection from Nonpoint Sources: Theory and Practice (December 1999), for USDA's Economic Research Service (ERS). In the report, trading is discussed as a market mechanism with relation to other economic incentives. An abstract of this report is available.
An article, Effluent Trading to Improve Water Quality: What Do We Know Today? (December 2001), by Sandra Rousseau of Katholieke Universiteit Leuven [Belgium] provides background on the economic and policy bases of trading pollution credits.
Richard T. Woodward's paper, The Environmentally Optimal Trading Ratio, was presented at the Annual Meeting of the American Agricultural Economics Association, August 5-8, 2001 in Chicago.
In 2000, the Water Resources Institute published the report, Fertile Ground: Nutrient Trading's Potential to Cost-Effectively Improve Water Quality, written by Paul Fayeth.
In a response to the EPA's 2003 Water Quality Trading Policy, the Natural Resources Defense Council released the statement, New Administration Water Pollution Trading Policy is Illegal, Says NRDC.
The paper, Nitrogen Sources and Gulf Hypoxia: Potential for Point-Nonpoint Trading, was presented at the Annual Meeting of the American Agricultural Economics Association, August 2-5, 1998 in Salt Lake City.
Public Interest Comment on the Environmental Protection Agency's Proposed Water Quality Trading Policy describes the value of market incentive in water quality trading from George Mason University's Mercator Center.

[What is Water Quality Trading? | Background/Perspectives |
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U.S. Environmental Protection Agency (EPA)
A Summary of U.S. Effluent Trading and Offset Projects (November 1999) provides overviews of projects operating from the early 1980s to date of publication (1999) with narrative descriptions including nature of activity, pollutant(s) addressed and contact information. Find related information on the Watershed Trading: Case Studies page.
EPA Region 10's Effluent Trading Initiative: A Stakeholder-Based Program for Efficient and Economic Environmental Protection describes the Region's efforts to promote marketplace trading. In 2003, Region 10 published a useful reference document, Water Quality Trading Assessment Handbook: Region 10's Guide to Analyzing Your Watershed (EPA 910-B-03-003).
EPA's main Watershed Trading Web site provides access to a variety of historical documents, topical reports and related links. Resources included are: Draft Framework for Watershed-Based Trading (1996) and links to the Agency's related programs.

[What is Water Quality Trading? | Background/Perspectives |
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State Water Quality Trading Information (selected)
Connecticut: An annual report on the Nitrogen Credit Exchange Program gives an overview of the state's efforts to implement this pollution control strategy.
Delaware: The Watershed-Based Nutrient Trading fact sheet outlines trading principles and related issues for Delaware.
Michigan: Rule Development Process and Status (for a statewide water quality trading program) describes the Michigan approach to water quality trading.
North Carolina: Tar-Pamlico Nutrient Strategy outlines "the evolution of the Tar-Pamlico nutrient strategy... The strategy's first phase, which ran from 1990 through 1994, produced an innovative point source/nonpoint source trading program that allows point sources, such as wastewater treatment plants and industry, to achieve reductions in nutrient loading in more cost-effective ways. The second phase, which runs through 2004, calls on nonpoint sources as well to contribute to a goal of 30 percent reduction in nitrogen loading from 1991 levels and holding phosphorus loading at 1991 levels."
Wisconsin: Fourth Progress Report on the Trading of Water Pollution Credits provides lessons learned from the state's water quality trading pilot projects.

[What is Water Quality Trading? | Background/Perspectives |
EPA | State Information | Tools | U.S. Congress]

Tools
Environmental Trading Network (ETN), formerly the Great Lakes Trading Network, "is a national clearinghouse for water quality trading projects."
The World Resources Institute developed NutrientNet as "an on-line market and information tool for improving water quality through nutrient trading."
Water Quality Trading (2003), a bibliography from the National Agricultural Library's Water Quality Information Center, lists 77 articles on water and related economic incentive programs. Articles are from AGRICOLA and other sources.

Congressional Hearings and other Activities

Hearing on Water Quality Trading – An Innovative Approach to Achieving Water Quality Goals on a Watershed Basis (June 13, 2002); Subcommittee on Water Resources and the Environment of the Committee on Transporation and Infrastructure, U.S. House of Representatives.

Return to the Water Quality Information Center at the National Agricultural Library.
Last update: December 27, 2004
The URL of this page is http://www.nal.usda.gov/wqic/trading.html

Stuart Gagnon /USDA-ARS-NAL-WQIC / sgagnon@nal.usda.gov

J. R. Makuch /USDA-ARS-NAL-WQIC / wqic@nal.usda.gov