The Virginia Nutrient Credit Trading Program – how program structure and pricing affects willingness to participate and the ability to develop optimal compliance plans through trading

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The Chesapeake Bay is impaired by nutrients and the Bay states have developed TMDL-like “tributary strategies” and related programs to restore water quality.. In addition to programs addressing non-point sources – the largest share of the nutrient load – Virginia has embarked upon an ambitious program to reduce point source nutrient loads by 2010, or as soon as possible thereafter. Point source dischargers have been assigned individual wasteload allocations (WLAs) to be implemented through a Clean Water Act watershed general NPDES permit (General Permit) for nitrogen and phosphorus. Other aspects of the program include innovative point source-point source and point source-nonpoint source nutrient trading, state grant funding, and low-cost state revolving loans. In the absence of nutrient trading, all 127 significant Virginia wastewater treatment facilities, both municipal and industrial, would be required to meet their WLAs independently. For most facilities, this would involve treatment plant upgrades to be completed by 2010. The resultant demand for designers, construction contractors, skilled labor, and materials could significantly increase the capital cost of compliance, already estimated at approximately two billion dollars ($2 B). Virginia wastewater dischargers are now in the process of building and implementing a large-scale trading program to improve the overall cost effectiveness of the Chesapeake Bay nutrient reduction effort, to avoid the anticipated “construction crunch” and the associated cost impacts and time delays, and to accommodate continued economic growth and development within the watershed.

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