By now, many Americans are familiar with the concept of the carbon cap-and-trade system, in which companies that discharge excessive levels of carbon dioxide are required to buy credits from companies that pollute less. A “cap,” or limit, is set for the amount of carbon that can be discharged, and once that cap is exceeded, credits must be purchased. It’s one of Obama’s environmental platforms, part of his New Energy for America plan to reduce greenhouse gas emissions 80 percent by 2050. (Carbon cap-and-trade is part of the American Clean Energy and Security Act, which was just passed by the House Energy and Commerce Committee.) Last week on the Daily Show with Jon Stewart, Environmental Protection Agency Administrator Lisa Jackson exalted the carbon cap-and-trade system.
The Chesapeake Bay, which is affected by nutrient polluters originating in five states. Image via flickr.
What few Americans know is that water quality, too, is being traded in the United States, as well as in Australia, New Zealand and Canada. Recently, the World Resources Institute released the first comprehensive overview of the 57 water quality programs worldwide. In southwest Ohio’s Miami Valley, for example, which encompasses the greater Dayton area, municipal wastewater treatment plants buy water-quality credits from 50 local farmers. The goal of water quality trading is to reduce the amount of nitrogen* and phosphorus that is washing into waterways. Over-enrichment by nutrients can be deadly or severely degrading to coastal marine ecosystems. According to a 2008 study by the World Resources Institute, there are 415 coastal zones worldwide which suffer from eutrophication, and only 13 of those zones show any sign of recovery. The Great Miami program, which began trading water quality credits in 2006, reports that it has lowered phosphorus pollution by 324 tons.
Nutrient pollution makes its way to waterways through three key sources: waste water treatment plants, industrial facilities (for example, manufacturers, mining, the service industry) and farms. In water quality terminology, water treatment plants and industrial facilities are referred to as “point sources” because they are single, localized sources of pollutants, which they discharge directly into waterways. Farms are called “non-point sources” because they discharge pollutants (from manure and synthetic fertilizers) through storm runoff, which washes into soil and waterways. In most water-quality trading programs, point sources purchase credits from non-point sources when they have gone above their “cap” in nutrient pollutants.
Trading between point and non-point sources was developed because it is much less expensive, for example, for a water treatment plant to pay a farm to reduce nutrient pollution than to pay for upgrades at the treatment plant. Thus, the trading program becomes a cost-effective way to improve water quality. But it also acts as a catalyst to reform agricultural practices which harm the environment (especially because the EPA does not have jurisdiction over agriculture). Money the farmers make from selling the credits must be applied to projects which reduce nitrogen and phosphorus runoff from their farms. For example, a farmer can plant trees or grass along a stream bank, which will suck up the nutrients before they hit the water.
Despite the obvious benefits of water-quality trading, many of the U.S.-based programs are either inactive or still in development. Up until now, there have not been regulatory limits set for nutrient pollution, so participation by municipalities and industrial sources is not driven by enforcement. Nutrient caps have been local and are the result of a set maximum for water bodies, or a Total Maximum Daily Load. Sometimes the TMDL is set high enough that the point sources aren’t in danger of hitting the cap and therefore have no reason to offset their pollution by buying credits. In other cases, trading programs are being developed in anticipation that a limit will be put in place.
Nitrogen and phosphorus are not under regulation by the EPA, though the agency does have task forces on the matter, such as the Mississippi River/Gulf of Mexico Nutrient Task Force, which is made up of ten states and five federal agencies. But for all its efforts, in the end, all the task force does is make recommendations for loads. That helps some, but not enough. Despite the fact that federal regulations are not yet the driver behind nutrient pollution reduction, the EPA can assert control over discharges of nutrients through NPDES** permits to point sources. Those permits are just beginning to regulate nutrients. In 2010 states that discharge water into the Chesapeake Bay will begin issuing NPDES permits with nutrient discharge limits. Five states discharge water into the Chesapeake, including Maryland and Virginia. Even more states drain into the Gulf of Mexico. If the EPA can assume control of nutrient polluters along the Mississippi River, then the body of water that it winds out into – the Gulf of Mexico, which has long suffered nutrient pollution – could have a real chance at recovery.
*Nitrous oxide is also a green house gas and can trap a jaw-dropping 310 times more heat in the atmosphere than the same amount of carbon.
**The National Pollution Discharge Elimination System, the permit system set by the Clean Water Act