Watershed-based trading (trading) is a fairly new strategy to clean up a watershed's problem pollutants-pollutants found in waters at concentrations high enough to cause harm to human health, fish, or other wildlife or interfere with public uses like fishing and boating. Phosphorus, a nutrient pollution found in runoff, is an example of a problem pollutant. Too much phosphorus causes algae blooms that can kill fish and pose health risks to people. Trading allows a pollution source (like a factory or waste water treatment facility) to buy controls that will reduce the amount of a problem pollutant elsewhere in the watershed or drainage basin. By buying such controls, the factory does not need to install tighter controls to lower the discharge of that pollutant from his or her own plant. Parties involved in the trade want to either: (1) trade directly with each other; or (2) create a market of 'credits' that represent a specific amount of pollutant reduction, as is currently done with trading air emission reductions. The intent of trading is to achieve expected reductions of a particular pollutant at a lower cost. If trading can deliver cost savings while achieving the same water quality improvement as required under the traditional regulatory approach, then public agencies should try it. Establishing pilot projects could help determine how successful this approach can be. However, the challenge with trading is to allow for innovative, market-based reforms without compromising the existing safeguards in environmental protection.