Building a Water Quality Trading Program: Options and Considerations
A Product of the National Network on Water Quality Trading
This report aims to provide a reference on common elements and decisions inherent in water quality trading (WQT) program design, especially point-nonpoint WQT programs and the range of available options.
It is intended to help establish WQT programs, provide greater transparency about what WQT programs can accomplish, and assist WQT program developers and broader stakeholders to meet their clean water goals.
A water quality trading program should be designed to be consistent with the 2003 U.S. EPA Trading Policy and the CWA, and consider the following guiding principles:
Effectively accomplish regulatory and environmental goals;
Be based on sound science;
Provide sufficient accountability, transparency, accessibility, and public participation to ensure that promised water quality improvements are delivered;
Produce no localized water quality problems;
Be consistent with the CWA regulatory framework; and
Include appropriate compliance and enforcement provisions to ensure long-term success.
Characteristics of Successful WQT: Common Elements
We have identified 11 elements common to many trading programs that should be considered when designing and implementing WQT programs. Regarding each of these elements, there is no “one size fits all solution.” Instead, there are considerations that make different options more or less viable under different conditions. The elements that should be considered in the design of a new WQT program include:
Establishing/identifying regulatory instruments to support trading;
Defining who is eligible to trade, where trading can occur, and what is being traded;
Defining eligibility for participants in the trading program;
Quantifying water quality benefits;
Managing risk and uncertainty in the trading program;
Defining credit characteristics;
Establishing project implementation and assurance guidelines;
Establishing procedures for project review, certification, and tracking;
Ensuring compliance and enforcement;
Establishing adaptive management guidelines for ongoing program improvement and performance tracking; and
Defining roles, responsibilities, transaction models, and stakeholder engagement processes.
The United States has made significant progress in cleaning its rivers, lakes, and oceans. Investment in wastewater treatment plant technology, conservation practices with land managers, and restoration of natural systems is working in many places. The public continually supports clean water, yet there is still a long way to go in achieving the vision of fishable, swimmable waters. More than half of the country’s streams, lakes, and estuaries are not meeting the water quality standards established under the Clean Water Act to provide clean drinking water, recreation, fish and wildlife habitat, and other designated uses.
The work that lies ahead to achieve clean water will require additional tools and new approaches that can account for watershed dynamics, allow flexibility on how to achieve clear, enforceable goals, and target investment where it can most effectively improve water quality. Water quality trading, under the right conditions, can fit these criteria.
About the National Network on WQT
This report was developed by the National Network on WQT, a dialogue among 18 diverse organizations representing agriculture, wastewater utilities, environmental groups, regulatory agencies, and the practitioners delivering WQT programs. The purpose of the National Network is to establish a national dialogue on how water quality trading can best contribute to achieving clean water goals. That includes providing options and recommendations to improve consistency, innovation, and integrity in water quality trading.
The organizations below participated in the development of this report through a series of workshops and communications held between 2013-2015:
American Farmland Trust
Association of Clean Water Administrators
Chesapeake Bay Foundation
Electric Power Research Institute
Environmental Defense Fund
Kieser & Associates, LLC
Maryland Department of Agriculture
Mississippi River Collaborative
National Association of Clean Water Agencies
National Association of Conservation Districts
National Milk Producers Federation
The Freshwater Trust
The Ohio Farm Bureau Federation
U.S. Water Alliance
U.S. Department of Agriculture
Water Quality TradingVisit Project
Advancing voluntary and market-based solutions for improving water quality in a manner that maximizes economic efficiency and maintains environmental integrity.Part of Water