First Worldwide Summary of Water-Quality Trading Programs Shows Growing Popularity

The first list of the 57 water-quality trading programs worldwide is being released today by the World Resources Institute (WRI).

Water-quality trading is a market-based approach that can complement water-quality regulation. In many industrialized countries, facilities are required to reduce the level of pollutants before discharging wastewater into waterways. A water-quality trading market allows the facilities to buy pollutant-reduction credits from other facilities in the same watershed, or from non-point sources such as agriculture. Since non-point source pollutant reductions are frequently less expensive than treatment-plant upgrades, trading programs can cost-effectively improve water quality.

“Water quality is one of the most pressing environmental concerns facing many parts of the world today,” said Mindy Selman, lead author of the list, which appears in a new report entitled Water Quality Trading Programs: An International Overview. “It is encouraging that trading is a concept that is growing in popularity, especially in the United States, but also in Australia, New Zealand, and Canada.”

The report provides a listing of the 57 programs, all but six of which are in the United States. Twenty-six are active programs, 21 are under consideration or development, and 10 are inactive. Also identified are the 13 statewide programs in existence or in development (Connecticut, Delaware, Florida, Georgia, Idaho, Maryland, Michigan, Minnesota, Ohio, Oregon, Pennsylvania, Virginia, and West Virginia).

One of the programs detailed in the report is the Great Miami program in Ohio, administered by the Miami Conservancy District. Funded by nearly $1 million in grants and voluntary donations from the U.S. Department of Agriculture and local wastewater-treatment plants, the program provides a trading platform between those entities and the 50 farmers selected to participate based on the strength of their plans to reduce phosphorus runoff. Under the trading program, the district has funded projects that have resulted in the reduction of 324 tons of phosphorus pollution and is expected to save local residents more than $300 million over the next 20 years on their utility bills.

Even still, Selman added, “The number of trading programs is not an indication that water-quality trading is an overall success. Many of these programs are not experiencing much trading due to several factors, including low demand for credits. The good news is that new programs can learn from past experiences.”

In a 2008 study, WRI identified 415 ”eutrophic” coastal zones throughout the world de-oxygenated by excessive nitrogen and phosphorus pollution. Only 13 of the coastal areas identified are showing signs of recovery. Some of the coastal areas studied include the Chesapeake Bay, Baltic Sea, Gulf of Mexico, and Tampa Bay. Seventy-eight percent of the assessed continental U.S. coastal area and 65 percent of Europe’s Atlantic coast are eutrophic.