US EPA Announces Final Water Quality Trading Policy


Courtesy of AECOM

On January 13, 2003, US EPA released its new National Water Quality Trading Program. This policy calls on states to develop programs for trading water pollution reduction credits, much as has been done with air pollutants for several years. This approach is consistent with the Bush Administration's preference for market-based solutions to environmental issues. Trading is likely to be helpful in addressing water quality impairments associated with non-point sources (NPS), such as agriculture, that are often beyond the reach of Clean Water Act regulation. NPS pollutants are the most common remaining cause of water body impairment and it is hoped that pollutant trading will encourage economic incentives to reduce these loadings.

The concept of pollutant trading has support from both the regulated and environmental communities. Despite this, the environmental community is concerned with many aspects of US EPA's final policy and has suggested that legal challenge is likely. Even in the presence of consensus on the policy, implementation on a case-by-case basis is likely to be challenging due to issues such as timing and location of the components of the trade, cost-sharing, monitoring requirements, as well as jurisdictional concerns. Thus, crafting a successful trade is likely to be more complicated than it is for air pollutants.

To date, NPDES-permitted dischargers have borne the burden of pollutant reduction even when a water body is impaired due to NPS. Pollutant trading provides another mechanism for NPDES-permit holders to achieve water quality control at reduced cost but it will take creativity to implement. Pollutant trading is likely to hold promise for nutrients and other constituents that exert their impacts over broad areas. For example, pollutant trading has been successful at reducing the costs of controls when nutrients are loaded throughout the watershed but exert an adverse impact at a downstream location such as an estuary. In this setting, NPS controls such as buffer strips separating streams from cropland may reduce nutrient loadings at a lower cost than increased wastewater treatment at a municipal facility. Trading of toxic constituents is likely to be of concern to the environmental community due to potential to create local areas with elevated concentrations of toxic compounds. For more on water pollutant trading, TMDLs, and NPDES-permitting

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