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Issues in Water Quality Trading: Perspectives on the Market-Based Approach
HEBERLING, M. T. Issues in Water Quality Trading: Perspectives on the Market-Based Approach. Presented at 2010 Annual AWRA Conference, Philadelphia, PA, November 01 - 04, 2010.
To inform the public.
Market mechanisms and incentives can play an important role in addressing environmental problems. Potential advantages of using market-based approaches include reducing the costs of meeting environmental goals and encouraging innovation. One market mechanism that has been promoted by various agencies and grown in popularity in recent years is water quality trading. Water quality trading has potential as a flexible, low-cost way to achieve nutrient reduction goals and meet water quality standards. Water quality trading programs in the United States have usually included a point source facing a Total Maximum Daily Load restriction on nutrients where it has the option of building more capacity or purchasing nutrient reductions from nonpoint sources in the watershed, usually farmers. Nonpoint sources are not regulated under the Clean Water Act, so water quality trading is seen as a voluntary program for these types of sources. Many states and associations operating in large watersheds, such as the Mississippi River Basin, have been looking into using this economic approach. With all this interest, however, trading has not met its goals everywhere. Many challenges, such as the uncertainty of nonpoint source pollution and nuances of the Clean Water Act, need to be addressed in order to design working programs. Based on some of these issues, a Featured Collection for the Journal of the American Water Resources Association was proposed; we invited researchers and practitioners to present their perspective on water quality trading. Seven papers were submitted by authors ranging from researchers in Federal Agencies and Universities to practitioners overcoming challenges and facilitating successful water quality trading programs. All provide insight into the issues faced by water quality trading programs, but each has a different take on how to remedy some of these problems; the variety of perspectives enhances this Featured Collection. This presentation will provide an overview of water quality trading and the obstacles facing these types of programs; it will also describe the proposed Featured Collection, Issues in Water Quality Trading. The three presentations that follow are based on papers included in the Featured Collection.