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INCORPORATING WETLANDS IN WATER QUALITY TRADING PROGRAMS: ECONOMIC AND ECOLOGICAL CONSIDERATIONS
Citation:
THURSTON, H. W. AND MATTHEW T. HEBERLING. INCORPORATING WETLANDS IN WATER QUALITY TRADING PROGRAMS: ECONOMIC AND ECOLOGICAL CONSIDERATIONS. In Proceedings, NCEE NCER Market Mechanisms and Incentives; Applications to Environmental Policy, Washington, DC, October 17 - 28, 2006. U.S. Environmental Protection Agency, Washington, DC, 23 p., 2006.
Impact/Purpose:
to provide information
Description:
Water quality trading has grown in popularity and scope in recent years owing to its potential as a flexible low cost way to achieve water quality goals, especially nutrient removal goals. Wetlands probide a variety of ecosystem services. They can sequester CO2, they can provide habitat and biodiversity and they can remove nitrogen from nonpoint sources of pollution before they enter receiving streams or rivers. Because of this last service regulators are interested in determining the best way to allow traders, primarily agricultural traders, to use restored and protected wetlands ina water quality trading policy. Key to the problem is the existence of the ancillary benefits of wetlands. In this paper we examine the options of 1) including the ancillary benefits of a properly functioning wetland in the market for nutrient removal through subsidies and unique trading ratios, or 2) allowing a producer to trade te various services offered by wetlands in various markets. We also examine which option might be preferred depending on the shape of the marginal benefits curve.