Restoring the ecological health of the Chesapeake Bay will require reducing nutrient pollution in urban stormwater runoff. Planning, designing, and constructing the local stormwater management projects that are needed will take many years and be very expensive. Implementing nutrient trading in the stormwater sector in Maryland and Virginia could provide significant benefits to stormwater jurisdictions. The purchase of credits as a “gap-closing” mechanism would enable jurisdictions to maintain compliance with tight deadlines while they continue to implement stormwater projects. In addition, the use of credits as a permanent component of the stormwater program could lower overall costs. This study examined how trading could help three stormwater jurisdictions in Maryland and Virginia.

Key Findings

This study of three counties (Arlington County in Virginia, and Montgomery and Queen Anne’s Counties in Maryland) found three key factors for successfully introducing nutrient trading in municipal stormwater programs:

  1. Clear, well-developed trading policy, regulation, or legislation is needed in order to facilitate assessment and planning
  2. MS4 permitting strategies and WIP numerical targets must facilitate trading
  3. The agricultural community must be approached effectively through:
    1. Using a trusted intermediary
    2. Listening
    3. Avoiding having an agenda
    4. Showing the economic case for nutrient trading

Executive Summary

Restoration of the Chesapeake Bay will require significant nutrient and sediment load reductions from the wastewater, agricultural, and urban stormwater sectors. The cost of doing so, particularly in the stormwater sector, is daunting. Previous analysis by World Resources Institute and others indicated that the economic benefits of a nutrient trading market could be significant in the Chesapeake Bay watershed for all three of these sectors (Jones et al. 2010). Working with three Maryland and Virginia counties facing significant stormwater runoff nutrient reduction requirements, we explored the feasibility and potential benefits that nutrient trading could offer them and sought to facilitate actual trades. A second goal of the project was to inform the development of new policy, regulation, and stormwater discharge permitting strategy where needed. While no trades were completed, Arlington County, Virginia, decided to purchase credits when needed; Queen Anne’s County, Maryland, made a decision to issue a request for proposals for the potential purchase of nutrient credits; and Montgomery County, Maryland, is considering the purchase of credits in the future. We concluded three factors are critical to successfully introducing nutrient trading in the stormwater sector: the existence of a clear regulatory basis for trading, a stormwater discharge permitting strategy that allows and facilitates trading, and effective outreach to the agricultural community.