Priority Actions for Advancing Water Quality Trading

By Willamette Partnership Staff

Water quality trading is a cost-effective way to meet clean water goals and deliver multiple benefits for people, fish, and wildlife. Yet, compared to other environmental markets (think: carbon offsets), interest and demand for water quality credit trading have been slow to catch on. A new report, Breaking Down Barriers: Priority Actions for Advancing Water Quality Trading, investigates what’s keeping water quality trading on the sidelines and proposes a detailed action agenda to help get water quality trading on the ground in more watersheds across the United States.  

A new report from the National Network on Water Quality Trading

When designed well and combined with other approaches, water quality trading can increase flexibility and reduce cost for regulated entities trying to meet NPDES permit requirements; spur watershed-scale coordination and investment in natural resource restoration; diversify revenue streams for agricultural producers; provide a vehicle for both public and private investments; and create new wildlife habitat or recreation opportunities for local communities.

The report is a product of the National Network on Water Quality Trading (“National Network”), a network of diverse organizations working to advance water quality trading in the United States. The National Network is coordinated by Willamette Partnership.

The report’s action agenda is a multi-stakeholder plan to:

1. Simplify water quality trading program design and application.
2. Ensure state regulatory agencies have adequate capacity and resources to engage on water quality trading.
3. Clarify each administration’s and the U.S. EPA’s position on water quality trading.
4. Actively address real and perceived risks for buyers.
5. Identify and address risks of litigation.
6. Create guidance on trading for stormwater.
7. Build stakeholder relationships and trust.

The action agenda can help inform budgeting, grant-making, work-planning, and fundraising efforts for meeting clean water goals with water quality trading. And, it includes specific steps for  state regulatory agencies, U.S. EPA, credit buyers, and nonprofit or foundation partners to, for example, provide clarity around models that quantify credits, create templates that ease program design, offer realistic expectations around the time and expenses involved, and ensure grant-making programs are better designed to support trading program development, among other efforts.

In addition to an action agenda for increasing demand for water quality credit trading, the report includes maps of where to look for creative water quality problem-solving, lessons learned from other environmental markets, and models that represent how large clean water agencies and state regulatory agencies makes decisions about trading and when trading should be considered during utility capital improvement planning, NPDES permitting, and TMDL development. Higher scores on the above map (shown in darker, blue areas) indicate where more interest in water quality trading may exist. / National Network

“We think it should be faster and easier to build good, defensible programs that give permittees credit for investing in their watersheds, through trading and other types of market-based approaches. The suite of priority actions proposed in this report provide a path forward for breaking down the barriers that have kept water quality markets from advancing in the United States,” says Kristiana Teige Witherill, who facilitates the National Network for Willamette Partnership.

Witherill also coordinated the four-part demand assessment to understand the barriers that keep credit buyers from pursuing new water quality trading programs or purchasing credits in existing markets. That analysis included:

• Over 50 stakeholder interviews on the barriers and opportunities that exist today.
• Review of lessons learned about demand drivers from other environmental markets in the United States.
• Examination of the timelines and decision-making processes associated with implementing water quality trading.
• Mapping the core predictors of demand for agricultural water quality credits and stormwater trading across the U.S.

To learn more about what actions can help move water quality trading forward, download the report below. If you or your organization would like support from the National Network on taking any of the proposed actions, please contact the National Network at nnwqt@willamettepartnership.org.

The National Network is funded through a cooperative agreement with USDA NRCS. Learn more about the National Network at www.nnwqt.org.