Topic: market trading

ADVISORY: WRI Experts to Speak at Annual Conference on Ecosystem Services in Ft Lauderdale

James Anderson — Mon, 10 Dec 2012 17:11:03 -0500

Experts from the World Resources Institute will be joining leaders from business, government, and environment communities at the annual ACES and Ecosystems Markets 2012 Summit. The summit will take place from December 10 – 14 in Ft. Lauderdale, FL.

The goal of the summit is advance ecosystem services science and practice in conservation, restoration, resource management, and development decisions. It is being organized by the University of Florida and sponsored by the U.S. EPA, U.S. Forest Service, American Forest Foundation, World Resources Institute, and others.

WRI experts will discuss ecosystems-for-water programs, coastal ecosystem evaluations in the Caribbean, and processes for incorporating ecosystem services into public and private decision making.

Ecosystem goods and services – like freshwater, fiber, food, flood control, water purification and waste treatment – provide important benefits to business and society. Improving how ecosystem services are incorporated into decision making impacts ecosystems and the quantity, quality and profitability of the benefits they provide.

Full Agenda: http://www.conference.ifas.ufl.edu/aces/glance.html

WRI Experts available for interviews:

Craig Hanson, Director, People and Ecosystems Program

Janet Ranganathan, Vice President, Science and Research

Lauretta Burke, Senior Associate, Coral Reefs Initiative

Todd Gartner, Senior Associate, Conservation Incentives and Markets

For more information, please contact:
James Anderson, Press Officer, World Resources Institute, janderson@wri.org, (202) 729-7608

MEDIA ADVISORY: 4th Annual Ecosystem Markets Conference - Making Ecosystems Work

Lauren Zelin — Mon, 27 Jun 2011 14:18:28 -0400

Experts and innovators meet to chart the future of ecosystem conservation

The World Resources Institute (WRI) and the American Forest Foundation (AFF) co-host the 4th annual Ecosystem Markets Conference in Madison, Wisconsin, June 29 – July 1, 2011. Hundreds of experts, innovators, land owners, government officials, investors and academics will discuss how to make ecosystem markets work to conserve natural resources; followed by a field trip through Aldo Leopold’s backyard to see ecosystem services in action.

At a time when state and federal budgets for conservation are dwindling, ecosystems are being degraded and threats to natural resources are increasing, more market-driven solutions are necessary to open the next chapter in conservation. Through ecosystem markets, the many benefits that well-managed lands provide, such as clean water and wildlife habitat, are assigned a value that results in payments to landowners for providing these services. This win-win for the public and landowners is necessary to protect the planet’s natural resources.

The 2011 conference theme “Ecosystem Markets: Making Them Work” underscores the need for innovative thinking to bridge the gap between ecosystem market potential and reality. Participants will gather for two days of open-format meetings on topics including payments to landowners, policy and ethics, private investment, water quality, bioenergy, and more.

The conference will open with a video address by Harris Sherman, Under Secretary for Natural Resources and Environment, U.S. Department of Agriculture. Senior representatives from the host organizations along with ecosystem services experts from around the world will participate in the conference and will be available for interviews.

What:
4th Annual Ecosystem Markets Conference. Website: http://ecomarketconference.com/

When:
June 29-30, 2011, conference sessions
July 1, 2011, field trip to working ecosystems and Aldo Leopold’s shack

Where:
The Madison Concourse Hotel and Governor’s Club
1 W. Dayton Street, Madison, WI
(Free parking is provided for our conference group)

Media Highlights:

Wednesday, June 29, 2011
* 8:15 a.m. – Welcome and video address by Harris Sherman, Under Secretary for Natural Resources and Environment, U.S. Department of Agriculture
* 8:35 a.m. – Plenary Session 1: The Current State of Ecosystem Markets
* 10:20 a.m. – Plenary Session 2: Policies to Support Ecosystem Services and Markets
* 12:40 p.m. – Lunch and preview of Green Fire documentary, hosted by the Aldo Leopold Foundation and followed by a Q&A session

Friday, July 1, 2011
* 8:00 a.m. – Field trip; See below for details. * Experts available for interviews during the tour

For the full conference agenda, visit http://ecomarketconference.com/agenda/.

RSVP and Media Requests:

Amanda Cooke | AFF | ACooke@forestfoundation.org | 202-463-2731
Lauren Cole | WRI | LCole@wri.org | 202-729-7736

Follow the Twitter conversation - #ecomarkets2011

Field Trip Information - PHOTO OPPORTUNITY

What:
Tour the Leopold family shack and farm, and see sites conserved for ecosystem services through public/private partnerships, including the Leopold Waterfowl Production Area, Baraboo Oak Street dam removal site, and the Leopold Memorial Reserve constructed wetland. Detailed agenda: http://ecomarketconference.com/field-trip/.

When:
July 1, 2011 from 8:00 a.m.-3:30 p.m.

Where:
Meet at the Madison Concourse Hotel for bus departure.

Who:
Experts from WRI, AFF and other conference attendees will be available for interviews and photo opportunities during the Field Trip. Please contact Amanda Cooke or Lauren Cole to RSVP.

Thanks to the Aldo Leopold Foundation and the Sand County Foundation for their generous assistance in hosting and organizing the field trip.

Comparison Tables of State Nutrient Trading Programs in the Chesapeake Bay Watershed

Maggie Barron — Wed, 18 May 2011 14:43:50 -0400

Over the last ten years, four Chesapeake Bay states—Maryland, Pennsylvania, Virginia, and West Virginia—introduced nutrient trading programs to provide wastewater treatment plants with flexible options for meeting and maintaining permitted nutrient load limits. At least one other bay state, Delaware, also convened a work group to discuss developing such a program. Through these programs, wastewater treatment plants may purchase credits or offsets generated by other wastewater treatment plants or farms that reduce the nutrients they release to impaired water bodies. States are also exploring options for construction and urban stormwater programs to buy and sell credits and offsets.

To date, most credit transactions have occurred between buyers and sellers in the same state. Efforts to enact the recent Chesapeake Bay total maximum daily loads (TMDLs), however, could provide more opportunities for interaction by trading partners from different states. For example, regulated entities could seek credits or offsets from other states when the supply in their own state has been exhausted. In addition, entities in states that do not have a trading program could seek credits or offsets from entities in states that do have such a program.

Although the elements of many of the trading programs are identical or very similar, such as calculation platforms, included pollutants, and allowable participants, there are several differences as well. Examples are the time period that defines the life of a credit or offset and the varying types and values of trading ratios. States may need to address these and other differences before permitting more cross-state transactions. Regardless of how these differences are resolved, government regulations require credit transactions to be documented in the public record.

The World Resources Institute (WRI) has compiled into comparison tables the key design elements of the four state trading programs. The tables comprise a reference document for policymakers and others addressing the programs’ differences. These design elements are grouped into twelve categories based on their common characteristics. All the information is current as of May 2011; was paraphrased directly from the statute, regulation, policy, or guidance documents; and has been reviewed by trading experts. Nonetheless, this information will undoubtedly change as the states refine their strategies for implementing the TMDLs.

List of Tables

Legal Authorities and Guidance Documents
Pollutants and General Eligibility Requirements
Point Source Participation Requirements
Market Functionality
Baseline Requirements
Trading Ratios
Credit or Offset Restrictions
Certification and Verification Processes
Septic Hookup Provisions
Compliance and Enforcement Provisions
Risk Management Provisions
Registry Vehicles and Oversight Agencies

NEWS RELEASE: Chesapeake Bay Farmers Could Benefit from Nutrient Trading

Jessica Forres — Thu, 05 Aug 2010 14:56:32 -0400

Farmers in Pennsylvania, Maryland and Virginia could earn thousands a year in additional revenue if Congress passes legislation to create an interstate nutrient trading program – a cost-effective solution to restoring the health of the Chesapeake Bay.

An analysis by the World Resources Institute (WRI) of nine farm scenarios across the three states, finds that farmers who participate in a bay-wide trading program could potentially increase their profits by an average of $11,000 per year with a credit price of $20 per pound of nitrogen or make a 55 percent return on their investment in nutrient reduction practices. The reports use a WRI-created Farm Profit Calculator tool that takes into account capital, maintenance, land rental, and transaction costs farmers face when investing and maintaining such practices.

“By investing in cover crops, riparian buffers, and other nutrient-reduction practices, farmers in the Bay area could earn substantial profits from participating in nutrient trading,” said John Talberth, a senior economist at WRI and lead author of the reports.

Under a trading program, farmers who reduce nutrient pollution from their farms could sell credits to other sources of nutrient pollution, such as wastewater treatment plants. Farmers, however, first have to meet baseline requirements representing their farm’s portion of their state’s Bay clean-up goal, before investing in additional pollution reducing measures and trading credits.

“Many but not all farms will profit from trading since profitability depends on the type and location of the farm and availability of state payments to share the cost of baseline practices, among other factors,” said Cy Jones, WRI’s Water Quality Team Leader and co-author of the reports. “It’s clear from our analysis that trading is not only a cost-effective investment for some farmers but also a cost-saving mechanism to clean up the Bay.”

How Nutrient Trading Could Benefit Pennsylvania Farms is the last report in the three-part series. How Baywide Nutrient Trading Could Benefit Maryland Farms is the second report and How Baywide Nutrient Trading Could Benefit Virginia Farms is the first.

How Baywide Nutrient Trading Could Benefit Pennsylvania Farms

Maggie Barron — Thu, 05 Aug 2010 12:11:33 -0400

Summary

Chesapeake Bay, the largest estuary in the United States, is a vital economic, cultural, and ecological resource for both the region and the nation. But the water quality and the overall ecology of the bay have been harmed by excess runoff and discharges of nutrients, particularly nitrogen and phosphorus, from farms, pavement, wastewater treatment plants (WWTPs), and other sources responsible for creating excess algal growth.

In response, Congress is considering proposals to improve the health of the Chesapeake Bay watershed.. The “Chesapeake Clean Water and Ecosystem Restoration Act of 2009” (S. 1816, H.R. 3852) would provide significant new resources and tools to help restore the bay, including a baywide (interstate and interbasin) nutrient trading program. With nutrient trading, entities that can reduce below target levels the runoff of nutrients like nitrogen would be able to sell their surplus reductions as “credits” to entities with higher nutrient reduction costs. Nutrient trading thus offers a cost-effective, market-based mechanism for accelerating the achievement of the baywide cleanup goals.

Agricultural sources typically have lower nutrient reduction costs per pound than do other sources of nutrients, such as wastewater treatment plants and municipal stormwater systems.1 This cost advantage opens a window of economic opportunity for farms to sell nutrient credits to those sources facing more expensive nutrient control options. The combination of the government’s cost-sharing agricultural best management practices (BMPs) and the proposed baywide nutrient trading market could benefit Pennsylvania’s farms. First, these cost-sharing programs and conservation payments would cover many of the expenses of the practices that are required before trading can begin. Second, nutrient trading could be a source of new revenue and profit for many (but not all) farms, with the benefits likely varying according to location, preexisting implementation of BMPs, and other factors. Third, a baywide nutrient trading program could increase the demand for credits generated from Pennsylvania farms beyond that of a nutrient trading program restricted to Pennsylvania.

Additional Information

How Nutrient Trading Could Help Restore the Chesapeake Bay

How Baywide Nutrient Trading Could Benefit Maryland Farms

How Baywide Nutrient Trading Could Benefit Virginia Farms

How Baywide Nutrient Trading Could Benefit Maryland Farms

Maggie Barron — Tue, 01 Jun 2010 12:36:14 -0400

Congress is considering proposals to improve the health of the Chesapeake Bay watershed. The “Chesapeake Clean Water and Ecosystem Restoration Act of 2009” (S. 1816, H.R. 3852) would provide significant new resources and tools to help restore the bay, including a baywide (interstate and inter-basin) nutrient trading program. Nutrient trading provides a cost effective market-based mechanism for accelerating achievement of the upcoming baywide clean-up goals. With nutrient trading, entities that are able to reduce runoff of nutrients such as nitrogen below target levels are able to sell their surplus reductions as “credits” to entities facing higher nutrient reduction costs.

Agricultural sources typically have lower nutrient reduction costs per pound than other sources of nutrients such as wastewater treatment plants and municipal stormwater systems. This cost advantage opens a window of economic opportunity for farms—selling nutrient credits to sources facing more expensive nutrient control options.

The combination of existing government agricultural best management practice cost-share programs and the proposed baywide nutrient trading market could yield benefits to Maryland farms.

First, existing government cost-share programs and conservation payments could cover many of the costs associated with practices that are required before trading can occur.
Second, nutrient trading could be a source of new revenue and profit for many (but not all) farms, with the benefits likely varying among farms based on location, pre-existing implementation of best management practices (BMPs), and other factors.
Third, a baywide nutrient trading program could increase demand for credits generated from Maryland farms beyond the demand from a nutrient trading program restricted only to Maryland.

Additional Information

How Nutrient Trading Could Help Restore the Chesapeake Bay

How Baywide Nutrient Trading Could Benefit Virginia Farms

How Nutrient Trading Could Benefit Pennsylvania Farms

Obama Administration Releases New Strategy to Clean Up Chesapeake Bay

Evan Branosky — Fri, 14 May 2010 09:33:54 -0400

The federal commitment to develop and support environmental markets could have national significance.

The most apparent challenge to restoring the Chesapeake Bay involves a balance between the competing needs of ecosystems and humans. Kingman and Heritage Islands Park, a tract of 50-forested acres along the Anacostia River in the District of Columbia, appeared to balance those needs pretty well on Wednesday morning. Great blue herons fed within walking distance of Metro’s Orange Line as the Chairperson of the White House Council on Environmental Quality, Administrator of the Environmental Protection Agency (EPA), Secretary of Agriculture, and other senior officials unveiled President Obama’s new Bay clean-up strategy.

The Strategy for Protecting and Restoring the Chesapeake Bay Watershed kicks-off the most comprehensive Bay restoration effort ever, and it does it in part though unprecedented support for environmental markets.

A New Federal Strategy for Bay Cleanup

The Bay is in bad shape, with just 12 percent of its waters having met Clean Water Act standards for dissolved oxygen between 2007 and 2009. Partially for this reason, President Obama issued an Executive Order on May 12, 2009 that required EPA and the departments of Agriculture, Commerce, Defense, Homeland Security, Interior, and Transportation to launch a new restoration effort based on collaborative action. The guiding strategy has four priorities: restoring clean water, recovering habitat, sustaining fish and wildlife, and conserving land and increasing public access.

The priorities will be achieved, in part, through four cross-cutting strategies, one of which is the development of environmental markets.

Environmental Markets and Nutrient Trading

The emphasis on environmental markets was welcome news for me and my colleagues on the Water Quality Team at WRI. Our team has worked on nutrient trading, a type of environmental market, for over ten years. With nutrient trading, regulated point sources, such as wastewater treatment plants, can comply with Clean Water Act regulations at the lowest possible cost.

Nutrient pollution has been a huge problem for the Chesapeake Bay in recent decades. When nutrients such as nitrogen and phosphorus (from sources like wastewater treatment plants, farms, and cement surfaces) run off into the Bay, they can cause algal blooms and hurt water quality.

Pollution controls can be expensive, which is where nutrient trading can provide a welcome solution. EPA policy shows how entities such as wastewater treatment plants that face high costs to reduce their nutrient discharge could purchase reductions from other sources in the form of “credits.” Farms, for example, can often reduce their runoff at a lower cost than wastewater treatment plants, so they can be a source of credits. The flexibility of market exchanges also lets new wastewater treatment plants and stormwater programs expand as more people demand the services they provide. Credit purchases reduce the impacts of additional discharges on water quality.

WRI works with states to develop nutrient trading guidance and regulations. We are also building support for linking those programs into a bay-wide trading program by forecasting the financial benefits of producing and acquiring nutrient credits from the agriculture, wastewater, stormwater, and additional sectors. Our most recent analysis found that a representative 200-acre farm in Virginia could realize $8,200 per year from participating in a bay-wide nutrient trading market under a modeled scenario.

A Template for Environmental Markets Nationwide

The strategy requires the Department of Agriculture to lead an “Environmental Markets Team” of seven agencies and the EPA. The Team will establish infrastructure for environmental markets in the Bay watershed, which includes developing tools that measure ecosystem benefits from land management practices; establishing “baseline” requirements that a farmer would need to meet before participating in a market; and establishing a platform for registering, reporting, and tracking practices to generate credits; among other tasks.

The federal commitment to develop and support environmental markets could have national significance. The strategy notes that:

Successful environmental markets in the Bay watershed might be used as a template for environmental markets nationwide.

Nutrient trading markets, of which 23 exist in various stages of development throughout the United States, could be used to achieve cost-effective reductions in nutrient pollution in other regions beyond the Chesapeake Bay watershed. WRI, for example, is evaluating the potential for markets to reduce the nitrogen and phosphorous pollution in the Gulf of Mexico (which each year suffers from a nutrient-induced “dead zone” the size of Massachusetts).

The federal effort will have the greatest impact if it involves as many stakeholders as possible. The Team should consult throughout the process—and not just at the end through public comment—with: a) the state environment agencies that ultimately decide whether or not credits count toward complying with discharge limits, b) the buyers and sellers in the markets that will provide real-world insight into the most cost-effective market designs, c) the finance community that will leverage market exchanges to achieve maximum savings, and d) the non-governmental organizations who can share their experience in market-development and analysis.

If stakeholders beyond the federal government are included during the development phase, the resulting bay-wide trading program is more likely to become the cost-effective policy mechanism we all are hoping for to help restore the Bay. In addition, it will serve as a model for impaired water bodies throughout the United States.

Water Quality Trading

admin — Mon, 10 May 2010 15:35:47 -0400

Water Quality Today

Eutrophication, the over-enrichment of freshwater and coastal ecosystems with nutrients (nitrogen and phosphorus), is a rapidly growing environmental crisis. Worldwide, the number of coastal areas impacted by eutrophication stands at over 500. In coastal areas, occurrences of dead zones, which are caused by eutrophic conditions, have increased from 10 documented cases in 1960 to 405 in 2008. In addition, many of the world’s freshwater lakes, streams, and reservoirs suffer from eutrophication. Ecologically and economically valuable water bodies like Long Island Sound, the Chesapeake Bay, the Gulf of Mexico and Puget Sound are severely affected.

While nutrient pollution is a global problem, the causes vary. In developing countries, a lack of infrastructure means that most nutrients come from untreated or inadequately treated sewage and agricultural runoff. In developed countries with better waste management, nutrient pollution largely comes from agricultural runoff (chemical fertilizers and manure), urban stormwater runoff and other dispersed “non-point” sources, including significant contributions from atmospheric deposition.

Designing an effective response to nutrient pollution is a challenge. Some pollutant sources are regulated but others are not. Nutrient pollution can impact water bodies great distances from the discharges. Yet there are emerging best practices that can address the sources of pollution and protect water quality efficiently and cost-effectively.

Nutrient Trading and Reverse Auctions

Point source practices (such as upgrades to wastewater treatment plants and retrofits to stormwater systems) generally cost more than nonpoint source practices (like grass buffers along streambeds).

This cost differential creates an ideal environment for nutrient trading. Trading allows sources with higher pollution control costs to purchase pollution reductions from sources with lower costs. Those with higher costs can save money, while those with lower costs can earn new revenue.

In addition, moneys spent for nutrient reductions from nonpoint sources could be better distributed in order to achieve more pollution reduction per dollar spent. A reverse auction can accomplish this goal. Farmers in a reverse auction bid against each other for a limited amount of funding, and awards are given to the bidder who can reduce the greatest amount of pollution runoff for the lowest cost.

WRI’s Work on Water Quality Trading

The World Resources Institute (WRI) is a leading expert in using performance- and market-based mechanisms for watershed management. We research best practices and helps to implement programs in watersheds that could benefit from nutrient trading or reverse auctions. WRI contributes to the development of water quality trading and reverse auction programs by:

Performing financial analyses of nutrient trading: WRI forecasts potential revenue to farmers and cost savings to wastewater treatment plants and municipal stormwater programs under an interstate-interbasin nutrient trading program for the Chesapeake Bay watershed.
Designing nutrient pollution reduction programs: WRI works with local, state, and federal government, the private sector, and civil society to develop effective performance- and market-based mechanisms for addressing water quality.
Developing nutrient trading tools: WRI developed NutrientNet, an online credit estimation tool and marketplace, for nutrient credit buyers and sellers in existing and planned state trading programs.
Performing feasibility analyses of nutrient trading: WRI is currently assessing the feasibility of large-scale nutrient trading in the Mississippi River basin to reduce the Gulf of Mexico hypoxic zone.

Photo credit: flickr/ronzzo1

How Baywide Nutrient Trading Could Benefit Virginia Farms

Maggie Barron — Thu, 29 Apr 2010 15:28:30 -0400

Summary

Congress is considering proposals to improve the health of the Chesapeake Bay Watershed. The “Chesapeake Clean Water and Ecosystem Restoration Act of 2009” (S. 1816, H.R. 3852) would provide significant new resources and tools to help restore the bay, including a baywide (interstate and inter-basin) nutrient trading program. Nutrient trading provides a cost effective market-based mechanism for accelerating achievement of the upcoming baywide clean-up goals. With nutrient trading, entities that are able to reduce runoff of nutrients such as nitrogen below target levels are able to sell their surplus reductions as “credits” to entities facing higher nutrient reduction costs.

Agricultural sources typically have lower nutrient reduction costs per pound than other sources of nutrients such as wastewater treatment plants and municipal stormwater systems.1 This cost advantage opens a window of economic opportunity for farms—selling nutrient credits to sources facing more expensive nutrient control options.

The combination of existing government agricultural best management practice cost-share programs and the proposed baywide nutrient trading market could yield benefits to Virginia farms. First, existing government cost-share programs and conservation payments could cover many of the costs associated with practices that are required before trading can occur.

Second, nutrient trading could be a source of new revenue and profit for many (but not all) farms, with the benefits likely varying among farms based on location, pre-existing implementation of best management practices (BMPs), and other factors. Third, a baywide nutrient trading program could increase demand for credits generated from Virginia farms beyond the demand from a nutrient trading program restricted only to Virginia.

Additional Information

How Nutrient Trading Could Help Restore the Chesapeake Bay

How Nutrient Trading Could Benefit Maryland Farms

How Nutrient Trading Could Benefit Pennsylvania Farms

How Nutrient Trading Could Help Restore the Chesapeake Bay

Cy Jones — Mon, 22 Feb 2010 09:58:20 -0500

Summary

The largest estuary in the United States, the Chesapeake Bay is a vital economic, cultural, and ecological resource for the region and the nation. Excess runoff and discharges of nutrients—particularly nitrogen and phosphorus—from farms, pavement, wastewater treatment plants (WWTPs), and other sources have placed the bay on the Environmental Protection Agency’s (EPA’s) List of Impaired Waters. This nutrient pollution is responsible for creating large algal blooms that lead to “dead zones” in the bay. Despite decades of restoration efforts, progress has been slow, and the rivers and streams that drain into the Bay remain polluted.

The proposed “Chesapeake Clean Water and Ecosystem Restoration Act of 2009” (H.R. 3852/S. 1816) would provide signifi cant new resources and new approaches to help restore the bay. Nutrient trading is one such approach. In a nutrient trading market, sources that reduce their nutrient runoff or discharges below target levels can sell their surplus reductions or “credits” to other sources. This approach allows those that can reduce nutrients at low cost to sell credits to those facing higher-cost nutrient reduction options. Nutrient trading, therefore, could allow sources of pollution such as WWTPs and municipal stormwater programs to meet their pollution targets in a cost-effective manner and could create new revenue opportunities for farmers, entrepreneurs, and others who implement low-cost pollution reduction practices.

The bill would establish a baywide nutrient trading market for the Chesapeake Bay watershed, allowing credits to be exchanged across state lines and among the watershed’s nine major river basins. A baywide nutrient trading market would build on the existing and pending state-level nutrient trading programs in Maryland, Pennsylvania, Virginia, and West Virginia. A baywide nutrient trading market could help states and sectors more cost-effectively achieve courtordered nutrient pollution limits called Total Maximum Daily Loads (TMDLs) that are being developed by the EPA. These TMDLs will set limits on nutrient loads to the bay and its tributaries for the agricultural, wastewater, municipal stormwater, and other sectors.

Preliminary analyses indicate that the economic benefits of a baywide nutrient trading market for nitrogen could be signifi cant for the agricultural, wastewater, and municipal stormwater sectors in the Chesapeake Bay watershed. Depending on credit prices, trading potentially could:

Generate new revenue for the agricultural sector and other credit generators at an amount comparable to current levels of annual public funding for agriculture conservation cost-share programs for the bay;
Reduce nitrogen removal costs for some in the wastewater sector by as much as 60 percent; and
Save the municipal stormwater sector hundreds of millions of dollars per year.

Additional Information

How Baywide Nutrient Trading Could Benefit Virginia Farms

How Baywide Nutrient Trading Could Benefit Maryland Farms

How Baywide Nutrient Trading Could Benefit Pennsylvania Farms

Fact Sheet: How Nutrient Trading Can Help Restore the Chesapeake Bay

Cy Jones — Mon, 14 Dec 2009 10:42:53 -0500

A new Fact Sheet on nutrient trading in the Chesapeake Bay region covers issues such as potential costs and revenues, and how farmers and other stakeholders can benefit.

Note: This fact sheet has been updated as a working paper, available here.

Congress is considering proposals to revise and strengthen the Clean Water Act for the Chesapeake Bay region and improve the health of the region’s streams, rivers, and wetlands. Senator Cardin’s and Representative Cummings’s proposed legislation, The Chesapeake Clean Water and Ecosystem Restoration Act of 2009, provides significant new resources and tools to help restore the Bay. Water quality trading for nutrients, or “nutrient trading”, is one such tool. It could make it possible to achieve Bay restoration goals faster and at lower cost. It also could create an additional source of revenue for farmers.

Download the PDF (PDF, 331 Kb)

Eutrophication: Policies, Action, and Strategies to Address Nutrient Pollution

Maggie Barron — Mon, 21 Sep 2009 14:58:51 -0400

Nutrient overenrichment of freshwater and coastal ecosystems—or eutrophication—is a rapidly growing environmental crisis. Worldwide, the number of coastal areas impacted by eutrophication stands at over 500. In coastal areas, occurrences of dead zones, which are caused by eutrophic conditions, have increased from 10 documented cases in 1960 to 405 documented cases in 2008. In addition, many of the world’s freshwater lakes, streams, and reservoirs suffer from eutrophication; in the United States, eutrophication is considered the primary cause of freshwater impairment.

In order to reverse eutrophication trends and mitigate nutrient losses to aquatic ecosystems, policymakers should:

Implement research and monitoring programs to characterize the effects of eutrophication, collect water quality data, and inform adaptive management strategies. Information is a key element in the development of robust strategies to reduce eutrophication.
Raise awareness of eutrophication. Eutrophication and its effects are not well understood by the public or policymakers. Public awareness campaigns, school environmental education programs, and targeted outreach and technical assistance are all important components of raising the profile of eutrophication within communities and building a foundation and support for effective actions to reduce nutrient losses and eutrophication.
Implement regulations to mitigate nutrient losses, such as standards, technology requirements, or pollution caps for various sectors.
Create fiscal and economic incentives to encourage nutrient reducing actions using taxes and fees, subsidies, or environmental markets.
Preserve and restore natural ecosystems that capture and cycle nutrients.
Establish strong, engaged, and coordinated institutions to address eutrophication. Effective institutions to implement and enforce policies are important to the success of any eutrophication strategy, especially where multiple jurisdictions are involved.
Capitalize on environmental synergies when designing comprehensive policies to address eutrophication. Many policies and activities associated with reducing nutrient pollution have synergies with other environmental problems such as climate change, smog, and acid rain. Policies selected and implemented should seek to maximize environmental benefits.

Additional Links

This policy note is third in a series. Click below to read the other two:

Options for Addressing Early Action Greenhouse Gas Reductions and Offsets in U.S. Federal Cap-and-Trade Policy

admin — Mon, 24 Aug 2009 14:40:26 -0400

New Hope for the Chesapeake Bay, Maybe

Cy Jones — Fri, 15 May 2009 13:19:06 -0400

Presidential intervention has raised the stakes in a decades-long effort to clean up Chesapeake Bay.

Amid great fanfare, the Chesapeake Bay Executive Council recently announced new, short-term interim goals for reductions in nutrient loads reaching the Bay due to human activity. The first deadline, 2011, sets specific nitrogen and phosphorus goals that call for significantly greater progress from the watershed states – Virginia, Maryland, Pennsylvania, New York, Delaware, West Virginia and the District of Columbia. After 2011, new goals will be established every two years, and all measures needed to restore the Bay are expected to be in place by 2025.

Adding political weight to this announcement was an Executive Order by President Obama, issued the same day, which:

Adopted the goal of restoring the Bay as a national priority;
Directed the EPA to use its full authority under the Clean Water Act to compel the actions necessary to restore the Bay;
Authorized the creation of a Bay Federal Leadership Committee to coordinate federal action; and
Directed USDA working lands and land retirement programs to target priority watersheds, and focus on reducing nutrient and sediment loads to the Bay.

These are promising new strategies and tools. What remains to be seen is if there is sufficient political will to follow them through.

Implementing the Executive Order in the manner required to successfully restore the Bay will entail actions that politicians have avoided until now - either because they would be politically unpopular or because they would involve raising substantial new revenues from the public through taxes and fees.

The Chesapeake Bay Blue Ribbon Finance Panel (PDF) estimated in 2003 that cleaning up the Bay would cost $28 billion dollars, a figure that dwarfs existing and planned federal and state spending. This shortfall represents a serious impediment to the adoption of interim and accelerated goals, and to the increased emphasis on enforcement mandated by the President. Yet no mention of costs was made in Tuesday’s announcements. A second serious impediment to success is that some elements of the current tributary strategies for restoring the Bay are either impractical or prohibitively expensive.

On the positive side, the Executive Order embraces an adaptive management approach that will enable states to take incremental steps in the right direction. If done properly, this will result in available resources being directed to the most efficient and cost-effective strategies for improving the Bay’s health.

Based on WRI’s long track record of working on Bay clean-up strategies, here are some realistic, effective actions that states can take now as part of an adaptive management strategy.

Eliminate or modify unrealistic components of tributary strategies: Current urban stormwater strategies would require about $15 billion to implement yet would achieve relatively small nutrient load reductions. Cost-effectiveness could be dramatically improved by allowing local jurisdictions to meet their stormwater-related nutrient obligations by purchasing some nitrogen and phosphorus credits on the trading market. Existing septic strategies also suffer from unaffordable costs and small nitrogen and phosphorus load reductions, as well as being impractical to implement. In Maryland, for example, it would cost at least $4 billion to upgrade all of the state’s 440,000 septic systems under the state’s open-to-all grant program. The strategy could produce far greater nitrogen load reductions, much more cheaply, if it mainly targeted septic systems in the Chesapeake Bay Critical Area (within 1,000 feet of the Bay shoreline).
Improve the cost-effectiveness of conservation funding: To maximize environmental return on investment, federal and state conservation programs that make payments to farmers and other landowners should be revised to target funding to critical watersheds and should incorporate a “pay for performance” approach. One example is to award conservation funding competitively, based on cost-per-pound of nutrient reduction.
Implement a Bay-wide nutrient trading program: Pennsylvania, Virginia, Maryland, and West Virginia have implemented in-state nutrient trading programs, or are in the process of doing so. These seek to reduce the cost of achieving nutrient loading goals and to accommodate growth in the face of tight nutrient caps. Broadening the nutrient trading market to the entire Bay watershed would increase the robustness and stability of the market, improve credit supply and demand dynamics, maximize competition, and reduce overall costs.
Find ways to remove nutrients already in the Bay and its tributaries: Proven methods, such as constructing wetlands or restoring tidal marshes, already exist. Additional innovations have been proposed but await compelling demonstration of their benefits. One such approach is oyster aquaculture, which has the potential to result in the removal of significant amounts of nitrogen and phosphorus. Algal Turf Scrubbing (ATS) is another promising technology with the potential to remove large amounts of nutrients. Neither new nor speculative, it simply awaits a serious demonstration of its potential capabilities.

The public is out of patience with the Bay restoration effort. The President and the Governors have recognized this and promised to take the tough actions necessary to make real progress. Among the first actions taken should be a genuine commitment to cost-effectiveness and implementability.

Water Quality Trading Programs: An International Overview

Tim Herzog — Mon, 09 Mar 2009 18:07:59 -0400

Water quality trading is gaining traction in a number of watersheds around the world. It is a market-based approach that works alongside water quality regulation to improve water quality, providing flexibility in how regulations are met and potentially lowering regulatory compliance and abatement costs. Our research identified 57 water quality trading programs worldwide. Of these, 26 are active, 21 are under consideration or development, and 10 are inactive or are completed pilots with no plans for future trades. The majority of programs were located in the United States, with only six programs existing outside the United States—four in Australia, one in New Zealand, and one in Canada.

From our assessment of these water quality trading programs, we identified five key factors that stakeholders believed were important for the successful implementation of their trading programs:

Strong regulatory and/or non-regulatory drivers, which helped create a demand for water quality credits;
Minimal potential liability risks to the regulated community from meeting regulations through trades;
Robust, consistent, and standardized estimation methodologies for nonpoint source actions;
Standardized tools, transparent processes, and online registries to minimize transaction costs; and
Buy-in from local and state stakeholders.

Before going to the expense of developing a water quality trading program, we recommend that the relevant bodies—either governmental or nongovernmental—ensure these factors are in place.