Watershed or water quality trading is a practical method for reducing and re-allocating pollutant loads and improving water quality within a watershed. Watershed trading  is the sale, purchase or lease of credits within a regulatory framework.  Dischargers (such as a factory or wastewater treatment facility) can buy or lease credits at a move-from location and transfer them to their facility within the same watershed or drainage basin. This is an emerging market. WaterBank® is the online marketplace that brings buyers and sellers together.

     Waterborne pollutants, such as excess nutrients, are a threat to the environment and public health. Watershed trading can provide local governments and industrial facilities with flexibility and incentives for reducing pollutant loads while benefiting the watershed environment.

     As states implement Total Maximum Daily Loads (TMDLs) and other water quality improvement measures, watershed trading will become an important means of offsetting costs.

     Watershed trading involves assignment of a numerical pollutant value for each discharge.  A credit is created when an existing user reduces contaminant discharge.  Contaminant discharge may decrease for many reasons including better treatment technology or reduced production by an agricultural user or an industrial facility, for example.  A farm or production facility that relocates to another basin or that goes out of business creates a credit that has a market value to a water user who is increasing discharge while still using the best water treatment technology.   The value of the credit can offset the cost of implementing best available technology.

     A discharger will want to sell its credits if it is required to reduce its discharge of a particular pollutant as part of a TMDL.  If a discharger needs to increase its discharge (as in the case of a facility expansion), but is subject to discharge restrictions it will need to offset the additional discharge with credits purchased from elsewhere in the watershed. A municipal wastewater treatment plant, instead of installing tighter phosphorus pollution controls, might choose to pay for less expensive phosphorus removal practices elsewhere in the watershed, whether this is at another treatment plant, at an agricultural operation, or part of some other effort, such as a streambank stabilization project.

     The incentive to trade is particularly great when there is a significant difference in the cost of controlling pollutants among different sources.

     Some conditions for a trade include:

  • The trading program is developed within a TMDL or other equivalent analytical and management framework;
  • Assurance that trading will not cause adverse environmental impacts (such as the creation of "hot spots" or highly degraded localized areas in the stream or lake), Clean Water Act restrictions always apply. This includes consistency with water quality standards, the application of anti-backsliding provisions, and applicable technology based requirements for point source dischargers;
  • Ability to monitor the pollutant in question;
  • Multiple treatment or control options; and
  • Identification of more than one source discharging the same pollutant in the watershed.

     WaterBank® provides the market-based approach to trading within a regulatory framework so that environmental safeguards are not compromised

     Governments create the rules for transfers of credits within watersheds. WaterBank®creates the online marketplace that brings buyers and sellers together within the framework of National Pollutant Discharge Elimination Systems (NPDES) permits and TMDLs.

     Watershed trading programs are already underway for the Chesapeake Bay region.  The State of Oregon is also well along on its program.  Others will follow.

     If you want to buy, sell or lease watershed credits, please contact us.

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