Watershed Based Pollutant Trading

Watershed based pollutant trading allows one entity to remove or prevent additional pollutant discharges while allowing another to discharge more, under the control of an agreement between the two parties involved in the trade. From the economic side, watershed based trading is a tool to be used in watershed management whereby all sources contribute to reducing pollution without any one entity bearing an excessive financial burden. This shift in responsibility may result in a more equitable, efficient, cost-effective means to address water quality problems in a watershed.

The following is the fourth (2002) report to the Governor, the Secretary of Administration and the Land and Water Conservation Board on the trading of water pollution credits. The report describes the progress and status of each pilot project in coordinating state and local efforts to improve water quality through trading.

Although the four years of implementing these trading pilot projects have not resulted in actual trades, they have created a greater understanding of why trading may or may not be successful. The report provides additional detail, but the following points summarize what has been learned to date:

• Most wastewater treatment plants can more economically meet an effluent limit of 1 mg/l phosphorus through plant upgrades than through trading.
• For trading to be effective, a broker, such as the County Land Conservation Department or the Department, should assume the administrative costs. The broker will need a source of funds to function in this capacity.
• Trading is more likely to be economical if the phosphorus load to be traded is relatively small.
• The effluent limit of 1 mg/l phosphorus is not an adequate driver to support trading in most instances. A TMDL, performance standard or water quality based limit is needed to elicit interest based primarily on cost considerations.
• An agreed-upon set of tools is needed to quantify phosphorus reduction loads from nonpoint sources.

See the four annual reports below for further background information.

PROGRESS REPORTS ON THE TRADING OF WATER POLLUTION CREDITS

• 2004: Cumberland Pollutant Trading Annual Report - 2004 [PDF 418KB]

  Cumberland does phosphorus pollution trading in the Hay River watershed in lieu of removing it at its treatment plant. Its WPDES permit requires removal of 4400 pounds of phosphorus within the Hay River watershed each year. It has been doing this for four years.

  Cumberland removed 9500 pounds of phosphorus at a cost of $17,700 in 2004. Two practices were used: No-Till planting acreage and Conservation Tillage acreage. The summary report for the last four years is part of this report. 31,500 pounds have been removed at a cost to Cumberland of $58,000.

• 2002: 2002 Pollution Trading Report
• 2001: No report for 2001
• 2000
  • Transmittal Letter From George Meyer for 2000 Report
  • 2000 Pollutant Trading Report [PDF 43KB]
• 1999
  • Map of Wisconsin's Pollutant Trading Pilot Study Areas [PDF 30KB]
  • Text of the transmittal letter for the 1999 Pollutant Trading Pilot
  • 1999 Pollutant Executive Summary [PDF 8KB]
  • 1999 Pollutant Trading Report [PDF 61KB]
  • May 1999 Pilot Status Update
  • 1998 Executive Summary [PDF 61KB)
  • 1998 Pollutant Trading Report [PDF 97KB]

USEPA's Pollutant Trading Site [exit DNR]

Pollutant Trading Publication

As part of our efforts to develop a framework for watershed based trading (pollutant trading), a study was conducted on the cost and effectiveness of best management practices (BMPs) to control nonpoint pollution.

The Bureau of Integrated Science Services completed a literature review and published a document entitled "A review of Agricultural and Urban Best Management Practices for the Reduction of Phosphorus Pollution". The report divides the practices up into Agricultural (Cultural, Structural and Management) BMPs and Urban (Storage Basins, Infiltration Structures, Street Sweeping, Nutrient Management) BMPs. Summary tables identify the percent phosphorus and sediment reduction and the cost per unit to install (or incentive payments if non-structural).

PUBL-SS-943-99, author Chad Cook. Paul Garrison supervised the research.

If you are interested in receiving a copy you can contact Paul Garrison