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Exploring Nontraditional Participation as an Approach to Make Water Quality Trading Markets More Effective
Citation:
Heberling, Matt, H. Thurston, AND C. Nietch. Exploring Nontraditional Participation as an Approach to Make Water Quality Trading Markets More Effective. JOURNAL OF THE AMERICAN WATER RESOURCES ASSOCIATION. American Water Resources Association, Middleburg, VA, 54(3):586-593, (2018).
Impact/Purpose:
Water quality trading programs that involve nonpoint sources generally do not work well because of a lack of participants. We cautiously consider the feasibility of non-traditional participants (e.g., drinking water treatment plants, households, recreationists) purchasing or selling nutrient abatement as one strategy to address the thin market problem. We propose a research approach for considering the feasibility of expanding thin water quality trading markets.
Description:
Water quality trading (WQT) under the Clean Water Act is a compliance option for water quality based effluent limitations in a National Pollutant Discharge Elimination System (NPDES) permit (i.e., the requirements for discharging, monitoring, and reporting). States that have enacted WQT programs that also include non-permitted entities such as agriculture have largely not seen robust markets develop. One reason is the lack of willing and able trading participants (i.e., thin markets). Current research tends to identify how to increase participation by traditional traders such as point sources and agricultural producers. As an alternative, but complementary approach, we question whether augmenting thin markets with non-traditional participants would help to increase the number of buyers and sellers. We contend that in certain cases benefits accrue to others who could participate as non-traditional buyers, such as drinking water treatment plants. Additionally, other sources of nutrients, besides agricultural producers, might produce low-cost abatement as non-traditional sellers, such as homeowners with septic systems. Existing literature on non-traditional participants in environmental markets tends to have centered more on air quality and only increasing citizen (or victim) participation as buyers. Here, we consider the issues for broadening participation (both buyers and sellers) in WQT and outline an approach to begin evaluating feasibility.
