At a recent environmental forum Ben Grumbles, the Maryland Secretary of the Environment mentioned "Water Quality Trading" as the upcoming trend in Maryland and the Chesapeake Bay Watershed. He touted "Water Quality Trading" as a method to control Nitrogen, Phosphorus and Sediment draining to the Chesapeake Bay.

What Is Water Quality Trading (also known as Nutrient Trading)?

The Maryland Nutrient Trading Tool (www.mdnutrienttrading.com) defines Nutrient Trading as a form of buying and selling nutrient reduction credits. The credits have a monetary value to be paid to the seller for installing Best Management Practices to reduce nitrogen or phosphorus (these practices are also known as stormwater quality management). Water Quality Trading utilized a market-based approach to increase cost-effectiveness and efficiency by letting the market determine the cost of credits. Trades can take place between point-source (such as wastewater treatment plants) and non-point source (possibly a farming operation), point source and point source, and non-point source and non-point source forms of discharge.

Why Nutrient Trading?

The state's transportation program and local governments are facing federal requirements to reduce stormwater pollution from both road projects and other previously developed impervious areas. To achieve nutrient reduction requirements under the Maryland Tributary Strategies, wastewater treatment plants are required to reduce their pollutant discharges to the level that would be accomplished through state-of-the art technology and maintain that level. One of the mechanisms that would allow treatment plants to operate or expand without costly upgrades would be though acquiring nutrient reduction credits (Water Quality Trading).

Farmers also have similar requirements to reduce nutrient discharge from their operations. Through agronomics management options and/or Best Management Practices (BMPs), some agricultural operations are able to meet or exceed their nutrient management requirements. The extra pounds of decreased nutrients generated by implementing additional BMPs beyond the minimum required can be sold as credits. Purchasing credits produced by a farm operation may be less expensive than the construction of the facilities needed to reduce the pollutant loading at a treatment plant, for a state road, or for another use that looks to purchase the credits.

Can Nutrient Trading work?

In Virginia, the Department of Environmental Quality (DEQ) has created a market for land conservation projects that protect water quality for future generations. Virginia's DEQ requires reductions of phosphorus runoff from certain types of road construction projects. Credits generated by farmers in the Potomac and James River watersheds whose farming practices have permanently reduced the amount of phosphorus draining into the rivers and ultimately the Chesapeake Bay are sold to the Virginia Department of Transportation (VDOT) to mitigate the increased phosphorus draining from new roadways. The farm practices are certified by the state as "nutrient credit banks" and are paid for by private funding. The credits cost VDOT approximately 50% less than what it would cost to design and construct new BMPs as part of the roadway projects. It's a win-win-win situation. VDOT saves money, farmers make money, and fewer pollutants are discharged to the Chesapeake Bay. Nutrient trading in Virginia is giving farmers additional income opportunities that can help keep agricultural lands in production. Pennsylvania has also developed a program that allows creation of credits from some agricultural operations to be sold to point source pollutant generators such as waste water treatment plants.

Nutrient Trading In Maryland?

Maryland had been awarded $750,000 in federal monies since 2008 to develop a marketplace for nutrient pollution credits. The state Department of Agriculture is poised to make nutrient trading happen and has set up an online trading website. Pollution "credits" can be registered and offered for purchase. According to agriculture officials at the end of 2014, more than 200 farms (about 2%) of the state's farm acreage had been evaluated for eligibility to sell credits. Approximately 60% of the farms evaluated could meet requirements for trading, but as of late 2014 just prior to Ben Grumbles becoming Secretary of the Environment, only two farms had registered pollution credits for sale, and no trades had taken place. According to a local Agricultural Planner, one likely reason for the lack of registered pollution credits is the mounds of paper work the farmer is required to address before qualifying their practices for the program.

"Water Quality/Nutrient Trading", however, appears to have found a strong ally in Maryland's new Secretary of the Environment, and there is evidence that it is working in Virginia. "Water Quality Trading" may, thus, hold promise in Maryland and potentially throughout the Chesapeake Bay Watershed in the near future.

Referenes:  

http://www.baltimoresun.com/features/green/blog

http://www.mdnutrienttrading.com

http://www.usda.gov/wps/portal/usda