Grantee Research Project Results
Final Report: Evaluating Point-Nonpoint Source Water Quality Trading in a Raritan River Basin Sub-Watershed
EPA Grant Number: SU833186Title: Evaluating Point-Nonpoint Source Water Quality Trading in a Raritan River Basin Sub-Watershed
Investigators: Obropta, Christopher , Luxhøj, James T , Caluseriu, Alexandra , Johnson, Clair , Rusciano, Gregory , Thompson, Jillian , Lam, Kenny , Wen, Qi
Institution: Rutgers University - New Brunswick
EPA Project Officer: Page, Angela
Phase: I
Project Period: September 1, 2006 through April 1, 2007
Project Amount: $10,000
RFA: P3 Awards: A National Student Design Competition for Sustainability Focusing on People, Prosperity and the Planet (2006) RFA Text | Recipients Lists
Research Category: P3 Challenge Area - Safe and Sustainable Water Resources , Pollution Prevention/Sustainable Development , P3 Awards , Sustainable and Healthy Communities
Objective:
The objective of our research involved applying existing knowledge about water quality trading to a smaller scale watershed and using our results to prove it’s still beneficial for both parties. A trading program allots a certain number of pollution credits to sources located in the same watershed. Typically point source, such as Wastewater Treatment plants, trade with nonpoint sources in a 2:1 ratio. This is due to possible irregularity ofnonpoint source loadings and inability to regulate and monitor them. The ratio meansthat for every pound of pollutant the point source needs to reduce, it must purchase credits worth at least 2 pounds of offset. Best Management Practices are considered an effective option in the mitigation of nonpoint source pollution. BMPs can be described asnatural systems that use elements of the environment in reducing pollution loadings. Examples if possible BMPs are retro-fitted bioretention basins, rain gardens, and filterstrips. The phosphorus loadings from nonpoint sources would be mitigated with the functioning of these BMPs to meet water quality standard limits, thereby avoiding the costly upgrades of the WWTPs located within the study area.
Summary/Accomplishments (Outputs/Outcomes):
The implementation of BMPs as part of a water quality trading program has the potential to reduce the phosphorus load of nonpoint sources by as much as 90%. Runoff from agricultural land contributes about 85% of the non-point source loadings to the Beden Brook sub-watershed. Therefore, agricultural lands became the main target for BMP implementation. Filter strips are BMPs with areas of herbaceous land situated between agricultural lands that use plants as a means for phosphorous reduction. Filter strips tend to achieve slightly lower phosphorus removal efficiencies, but have significantly lower capital base costs. As a result, filter strip implementation is the most economically beneficial trade and is the focus for the cost analysis. Installing three BMP’s alone would reduce phosphorus loadings to the Beden Brook sub-watershed over 57%.
The implementation of 45 acres of filter strips saves over $15,000 dollars in WWTP upgrades, a burden that would essentially fall on the taxpayers of the Beden Brook sub-watershed.
Conclusions:
The effects of a trading program implementation include reduced land impact and increased sustainability. The WWTPs would provide funding to farmers to improve and maintain the quality of the surrounding natural resources. The backing received for BMP implementation would also substantially contribute to agriculture sustainability in New Jersey. If the viability of farming is preserved, a decrease in the development of urban and residential areas would result. This is important as New Jersey is rapidly urbanizing and there is less land available for agricultural purposes. Likewise, reduceddevelopment of land would lead to a decreased population growth rate in MercerCounty, implying increased resource availability and diminished anthropogenicinfluences on the environment. The impacts of our project are broadly applicable to various situations and locations. Like New Jersey, many states struggle with the problems of rapid urbanization, or will in the future. Our methodology for developing a successful trading program can be replicated for any area. As long as the technical requirements for water quality trading are met, the same positive impacts will result.
The project’s impacts would contribute to improved quality of life for both the residentsof the Beden Brook sub-watershed and within the river ecosystem. The residents would benefit from improved quality of the waterways, which impacts recreational activity,downstream source water used for drinking, and also the overall aesthetic of the streams or rivers. Constructed BMPs provide habitats for local wildlife and reducenutrient loadings to waterways, resulting in higher DO concentrations and improved conditions for fish and other aquatic organisms.
Proposed Phase II Objectives and Strategies
Phase II of the project will build upon the analyses and designs for water quality trading between the wastewater treatment plant (WWTP) and nonpoint sources of pollution within the Beden Brook sub-watershed of the Raritan River Basin in New Jersey. The analyses in Phase I determined the economic feasibility of trading—comparing the costs of WWTP upgrades to the costs of natural system BMPs on agricultural and urban land uses. Additionally, potential nonpoint source trading partners were identified within the watershed and several example concept designs were prepared. Phase II will result in the actual implementation of the BMPs as part of a trading market. This will occur as a result of several project components:
- STEP 1: Satisfying the regulatory requirements/modifying the existing permit The WWTP of concern is the Stony Brook Regional Sewage Authority—Hopewell Facility (SBRSA-HF), which is permitted by the New Jersey Pollutant Discharge Elimination System (NJPDES; N.J.A.C. 7:14A) under the authority of the United States Clean Water Act. According to NJDEP (2005), “The NJPDES Program protects New Jersey's ground and surface water quality by assuring the proper treatment and discharge of wastewater (and its residuals) and stormwater from various types of facilities and activities. To accomplish this, permits are issued limiting the mass and/or concentration of pollutants which may be discharged into ground water, streams, rivers, and the ocean.” While the SBRSA-HF is currently permitted under the NJDEP program, new permit requirements will likely be set in response to a Total Maximum Daily Load study for the Raritan River Basin. Thus, the project investigators will work with the SBRSA in collaboration with the NJDEP to address the anticipated requirements with water quality trading. Based on the analyses performed in Phase I, the project investigators will be able to effectively present on the feasibility of trading with both parties and work with them to establish a legal system of trading through permit modifications. According to Woodward et al. (2002), “the shift from a permit system to a system of transferable credits changes the nature of enforcement.” In a trading market, which is “multi-directional” unlike a “unidirectional” permit system, liability must be assigned to the buyer, the seller or both (Woodward et al. 2002). Thus, discussions about liability will also be addressed at this time.
- STEP 2: Facilitating Negotiations—making trades happen Bilaterally negotiating is a common market structure for water quality trading markets and involves substantial interaction between the buyer and the seller (Woodward et al. 2002). Other types of market structures are clearinghouses and exchanges. While bilateral negotiations are often thought of as having a high transaction costs associated with them, the project investigators of this project hypothesize that they would be significantly minimized due to the fact that the watershed of concern is very small and there is only one WWTP within it. This is something that will be proved or disproved during the course of the project. These costs often include those associated with research, bargaining and decision, traveling to sites, monitoring and enforcement (Stavins 1995).
- STEP 3: Designing BMPs and overseeing their implementation The Rutgers University project investigators will provide oversight for the design and implementation process of the required BMPs at agricultural sites with the watershed. As discussed in the Phase I final report, filter strips were found to be the most cost effective BMP for the watershed. As such, following negotiations with a particular farmer, the project investigators will provide technical assistance in designing the filter strips required to meet the target load reduction identified in Phase I for a given farm. In Phase I of the project, the average width of a filter strip required to limit the discharge of sediment bound phosphorus was determined to be 26 feet (NRCS 2006). As such, the trading market will likely be negotiated to meet this requirement.
- STEP 4: Taking it a step further—enhancing the environmental benefits from trading A portion of the funding requested for Phase II of this project will be used for project supplies. This will go towards the enhancement of the trading market to provide a more improved environmental than with the average 26 foot wide filter strip suggested to achieve the desired load reductions of total phosphorus. In other words, the additional funding will be used to implement enhanced agricultural BMPs that achieve better phosphorus reductions, reductions of other types of pollution, better management of water quantity management (runoff from larger storms), groundwater recharge, and/or an enhanced ecological function. Enhancements will include, but will not be limited to, widening the 26 foot wide filter strip originally constructed as part of the trade to a width of 50 feet. Other options are implementing forested buffers, bioretention swales and/or rain gardens (bioretention systems). Concept designs were prepared in Phase I by the student design team and will be used. However, additional site considerations will have to be evaluated such as determining grading plans after land surveying. Again, the project investigators will oversee the design and implementation of the enhanced BMP projects.
Rutgers University is currently working on a point to point source trading project in the non-tidal portion of the Passaic River as part of an EPA Targeted Watershed Initiative. Dr. Obropta has been working closely with NJDEP on this project so the concept of water quality trading is not foreign to the State regulators. Throughout the Passaic River project, the NJDEP as well as the wastewater treatment plants have been very supportive of water quality trading. It is fairly amazing that millions of dollars have been spent on water quality trading demonstration projects throughout the country and yet, only a handful of trades have actually been made. This P3 project with the initial funding of $10,000 could result in more point to nonpoint source trades than have been completed throughout the country.
With bilateral negotiations each trade between a different farmer and the SBRSA requires the significant exchange of detailed information that is specific to each agricultural site. This information includes topography, soil characteristics, proximity to the stream, lot size, etc. Both sides must be comfortable with the transaction, which requires a certain level of trust. Since Rutgers University is thought of as an unbiased organization, we can help lend credibility to the process and help promote the trust needed during these sensitive negotiations of bilateral trades. Rutgers is currently involved in this type of effort on other watershed management projects where our unbiased nature allows us to get parties to the negotiation table that normally would not be comfortable speaking to each other. When all the stakeholders are part of the process, a better product is typically produced.
The project investigators for Phase II will enhance this process by providing technical support regarding site considerations for BMP designs. Also required for this market structure is the need to monitor the effectiveness of the BMPs, which will be a requirement under a trading contract between the two parties and necessary to ensure proper enforcement by the NJDEP. Again, this process will be enhanced with the support of the Phase II project investigators who have experience in developing water quality monitoring plans.
In addition to agricultural BMPs, the trading market will also be enhanced by including urban BMPs. Although vegetative filter strips for agriculture were identified as the most cost-effective BMP for trading in Phase I, BMPs in urban areas also have a potential to improve water quality within the watershed. Additionally, runoff from the urban lands will input different types of pollution, different concentrations of pollution, and different hydrologic conditions to the Beden Brook compared with agricultural lands. Thus, it is important to address these concerns as well to improve the overall health of the waterway. As such, Phase II funding will also be used to design and implement urban BMPs. In Phase I, a concept design for retrofitting an existing urban detention basin was created by the student design team. The design will be used for this and other sites within the municipality and modified for site specific considerations as needed. Implementation will be achieved by collaborating with the land owner or municipality as needed. Hopewell Township and Hopewell Boro are the municipalities of concern within the Beden Brook Watershed.
One concept among trading projects is to offer to sell credits to non-dischargers in the watershed such as watershed associations, land conservancies, and other non-profits. The purchase of credits by these organizations will result in the credits being “retired,” thereby providing a higher load reduction in the watershed. This will improve water quality beyond the state criteria, resulting in cleaner water. Additionally, the groups could simply by the enhanced portion of the credit. For example, if a 26 foot wide filter strip is required to remove phosphorus but a 50 foot wide filter strip is required to improve wildlife habitat, why not let the wastewater treatment plant pay for the 26 foot buffer and a nonprofit organization that is interested in creating wildlife habitat purchase the additional 24 feet of buffer to increase the buffer width to 50 feet for enhanced wildlife habitat? Furthermore, can the increased biodiversity be sold or the increased ability to sequester carbon due to the newly planted vegetation? This is something that will be explored by a student as part of an independent study course at Rutgers University (see “Educational Tool” section below). The additional sale of ancillary benefits provides more funding to a struggling agricultural industry that will help them remain viable. It will also provide the farmer more incentives to participate in the trading program and more incentive for NJDEP to expedite a permit modification.
Success of the Phase II project will occur if trades actually occur and the proposed basic and enhanced BMPs are actually implemented within the Beden Brook Watershed. This builds off of Phase I in which an economic feasibility study was conducted and concept designs for BMPs were created.
The tasks described within this proposal will be conducted by faculty and staff from Rutgers University with student support. Two upper-class undergraduate and/or graduate students from the Environmental Policy, Institutions and Behavior and Bioresource Engineering Academic Programs will be recruited to assist with the project in exchange for academic credit (three credits per semester).
Supplemental Keywords:
water quality, trading, watershed, stormwater, runoff,, RFA, TREATMENT/CONTROL, Sustainable Industry/Business, Sustainable Environment, Technology for Sustainable Environment, Water Pollution Control, wastewater treatment, sustainable development, environmental sustainability, effluent, environmental regulations, water quality tradingRelevant Websites:
http://www.water.rutgers.edu/Projects/trading/WQTrading.htm Exit
http://www.raritanbasin.org Exit
The perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.