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Water Quality Trading Program
Science/Engineering issues related to Water Quality Trading
Pollutant
It is important to determine the suitability of a pollutant before developing
a trading program. Not all pollutants are suitable for trading. Toxic
chemicals for example are not suitable for trading. The pollutant should
also be easily characterized and measured, so that the effect of trades
can be monitored.
Modeling
Scientific modeling plays a critical role in constructing a water quality
trading program. Any trade is based on the expectation that it will improve
water quality in the watershed. Comprehensive water quality models can
simulate different trading scenarios, and predict their effects on water
quality.
Key issues:
• Strengths and weaknesses of the water quality modeling methodology
• Levels of uncertainty in the model and adequate safety factors
• Source dataset and data quality used to generate the model
• Accuracy of the model in quantifying nonpoint source loads
• Ability of model to account for population growth in the watershed
• Ability of model to calculate the effect of geographic location
in comparing pollution from different sources: Is the pollution from a
source which is closer to the impacted area more significant than the
same pollution level discharged from a source farther away?
Monitoring
Continuous monitoring of pollutant levels in the target water body helps
quantify if a trade has improved water quality. Monitoring also can verify
or refute model predictions, and ensure compliance of trading parties
with their obligations.
Key issues:
• Data collection parameters and methodology
• Data analysis
• Are other factors causing eutrophic conditions, such as light
availability, low flow, stream bottom characteristics, etc.
Avoidance of
hot spots
Water quality trading should not result in localized areas of unacceptably
high pollutant concentration, or hot spots. When designing the trading
program, always consider the pollutant characteristics, watershed conditions,
location of trading parties, and type of trades (point or nonpoint).
The EPA recommends the following options:
• Limit the direction of trades – Favor upstream trades over
downstream trades
• Impose special limits on dischargers likely to cause hot spots
• Restrict the number of credits that can be used by a discharger
Quantifying
the effectiveness of nonpoint source (NPS) controls
This is an ongoing challenge and area of research. It is difficult to
quantify with high certainty the effectiveness of both agricultural and
non-agricultural best management practices (BMPs), such as riparian buffers
or stormwater management methods. However, trading with nonpoint sources
cannot function without estimates of their pollutant reductions.
Key issues:
• Measuring NPS pollution
• Quantifying BMP effect on NPS pollutant reduction
• Setting a trading ratio to reflect uncertainty in NPS pollutant
reductions
