Key Considerations for Water Quality Trading


Around the country, water quality trading continues to gain interest as a viable market-based alternative to addressing water pollution. Just last week, the U.S. Senate Subcommittee on Water and Wildlife held a hearing to examine the status of water quality trading and how these programs can achieve real water quality improvements at less cost. As a potentially significant buyer of water quality credits, publicly-owned treatment works (POTW) or clean water agency participation is a critical piece in getting these markets off the ground. So, what do clean water agencies need to see in a water quality trading market to purchase pollution reduction credits from outside sources like agriculture?

A recent article NACWA published in WaterWorld attempts to answer this question by examining several of the key elements of a water quality trading program that POTWs would look for when considering the purchase of water pollution reduction credits. These include establishing a robust monitoring and enforcement system to ensure best management practices remain in place, and trade ratios that are technically-based and factor in uncertainty due to unforeseen events, like extreme weather, which are outside of participants’ control.

Clean water agencies also need to have continued assurance from EPA and state agencies that water quality trading is an approved and supported means to address water quality impairments. It is good to see EPA continue to stand by its Water Quality Trading Policy, which was released nearly 10 years ago. Yet, as this approach gains more attention, more newcomers are coming to the table that need to hear frequent, vocalized support from the top.

Clean water agencies may be initially motivated to participate in a water quality trading program for financial reasons, but the bottom line is that utilities will only invest in markets that are environmentally-sound. It is simply not worth the risk of noncompliance and sacrifices in water quality gains that could have otherwise been made.

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