States release joint recommendations for improving water quality through trading

The Problem: Water quality trading is a market-based approach to achieving water quality goals for pollutants such as nitrogen, phosphorus, and temperature. Through trading, some permitted emitters with high costs of reducing pollution are able to negotiate equal or greater pollution reductions from sources with lower cost. This effort focused specifically around trading between non-point and point sources.

Launched in March 2013, this effort came in response to the growing interest in trading in the Northwest region as well as the wide diversity of proposed approaches.  The participants wanted to ensure that water quality trading programs have the quality, credibility, and transparency necessary to be consistent with the Clean Water Act (CWA) and state water quality laws. To do this, the workgroup identified the critical components of water quality trading programs and recommended a number of approaches to address these components. These recommended approaches are intended to increase the confidence of participants and observers that trades will produce their intended water quality benefits and will result in compliance with state and federal law.

The Solution: Water quality agency staff from Idaho, Oregon, and Washington, U.S. EPA Region 10, Willamette Partnership, and The Freshwater Trust released draft recommendations on approaches to water quality trading in the Pacific Northwest. The recommendations are based on the group’s evaluation of policies, practices, and programs across the country, which helped to identify some common principles and practices to guide consistent approaches to water quality trading in the region.  Willamette Partnership and The Freshwater Trust facilitated the group through a US Department of Agriculture Conservation Innovation Grant.

Establishing a credible water quality trading program is not simple and trading may not be appropriate for many water quality problems.  However, when designed well and combined with other tools, the participating states believe that trading programs can help achieve water quality goals in a way that is consistent with the CWA, avoids localized water quality problems, is based in sound science, provides sufficient accountability that water quality benefits are being delivered, and is beneficial for the environment, landowners, and communities.

Results: Beginning in 2014, the participating states have committed to testing their recommendations and are currently working to identify pilot projects. The states and EPA will then reconvene to discuss their pilot experiences and, if needed, refine the guiding principles and draft recommendations for water quality trading by the fall of 2015. Since the documents produced from this process are not guidance or policy, the respective state participants that choose to develop trading guidance or rules in the future will do so according to their individual state processes. For questions or comments, please contact:

Idaho Department of Environmental Quality – Marti Bridges

Oregon Department of Environmental Quality – Ranei Nomura

Washington Department of Ecology – Helen Bresler

Willamette Partnership – Carrie Sanneman

The Freshwater Trust – Joe Furia

Documents: Several key documents have been prepared as part of this process. Workshop materials and meeting summaries are available upon request.

Regional Recommendations (Executive Summary)

Regional Recommendations (Full document)

Joint Statement from states

U.S. EPA Region 10 letter of support