Water Quality Trading
Water quality trading is an innovative, market-based approach that if used in certain watersheds can achieve water quality standards more efficiently and at lower cost than traditional approaches.
Water quality trading is a tool that offers a flexible, more cost-effective approach to reducing pollution in our waterways than more traditional engineered solutions.
An alternative to installing expensive technology to meet requirements, point sources, like wastewater facilities, can work with landowners within the watershed to implement conservation and restoration practices that reduce pollutants at a lower cost.
Landowners are compensated for their efforts, and after the water quality benefits are verified, which can be used by point sources to meet regulatory requirements.
Water quality trading can create new sources of revenue for farmers, land managers, and conservation groups. In addition, trading projects may provide a range of additional environmental benefits, such as air quality improvements, fish and wildlife habitat creation, and climate change mitigation.
Nutrient Trading Credits
In water quality trading there are point source and nonpoint source participants. Point source on the most basic level, is pollution that comes from a single, discrete place, typically a pipe. Nonpoint source refers to pollution from diffuse sources such as runoff from agricultural areas.
Trading between point source buyers and nonpoint source sellers provides an opportunity to meet water quality standards by capitalising on the cost discrepancy of reducing pollutants at a point source than reducing pollutants at a nonpoint source.
Taking the concept of PES into account a water quality trading system could look like the figure to the left (below on mobile devices).