Setting the Table for Water Quality Trading

Setting the Table for Water Quality Trading

As one of our partners at EPA says, “Water quality trading is not for the faint of heart.” One reason is because developing a successful water quality trading program takes the collaboration of multiple stakeholders in the watershed, including many whose paths don’t often cross (need a refresher on water quality trading? We have that for you here). In this way, setting the table for a productive discussion about water quality trading is a struggle. But it’s also a strength. It is through this process that real progress is made – the process of bringing people together to develop a common vision of watershed health and common understanding of how we get there. The result can be powerful, even if it is not always easy. When we set up to talk trading, we typically think about five core groups: regulatory agencies, clean water utilities, agricultural groups, environmental advocates, and trading practitioners. Let’s dig in on who’s who and what they bring to the table.

Regulatory Agencies


As the primary implementers of the Clean Water Act, regulatory agencies, such as state Departments of Environmental Quality or the EPA, are charged with making rivers and streams clean enough for fishing, drinking, and swimming. They have the authority and responsibility of issuing permits to identifiable sources of pollution, also known as a point source, like a wastewater utility company. These permits establish limits on how much pollution can be safely discharged into our waterways. If a point source would like to invest in restoring the vegetation along a waterway to meet those limits, they probably need wording to allow trading in their permit; and our friends at state, interstate, and federal agencies are the ones who make that happen. Further, regulatory agencies know that meeting clean water goals means going beyond pointing fingers and doing the bare minimum, and often provide a meaningful, supportive voice for collaboration.

Environmental AdvocatesEnvironmentlAdvocates

Environmental groups play a key role in representing the public in the regulatory process and helping promote accountability and enforcement of clean water goals. Local watershed groups and environmental advocates — think Environmental Defense Fund or a local watchdog group near you — are a voice at the table that often pushes for trading programs to be designed with integrity and to be used appropriately to meet Clean Water Act goals. Many environmental groups will stand steadfast for maximizing watershed improvements, rigorous program oversight, and conservative approaches to uncertainty that may put the public and the waterway at risk. It’s a necessary perspective, and the healthy dialogue and debate that occurs when the watershed ideal meets economics strengthens the resulting program.

Clean Water UtilitiesWasteWaterUtility

Utilities can buy or generate credits for trading. The development of credit-generating restoration projects hinges on the willingness of buyers, like clean water utilities, to engage and purchase credits. Utilities have the interest of their rate payers at heart, and they are most likely to participate where trading meets compliance obligations at a lower cost than traditional treatment approaches. Utilities may also see trading as an important tool in engaging point sources that have not historically been regulated.


Producers — farmers and ranchers — generate credits by installing conservation and restoration practices on their private property. Across the country, producers understand the benefits of conservation practices to their farms, soil, and operations. Going “green,” however, is not always cheap, especially when it involves work across hundreds or even thousands of acres. Producers often need resources to invest in the implementation of new practices. When it’s time to talk trading, producers can describe what it would take to gain their involvement, and provide critical input regarding the best ways to improve efficiency of their operations and resulting water quality.


Practitioners are the individuals and organizations that help design and build a water quality trading program, facilitate market operations, and work with landowners to generate a credit. They are the third-parties that help diverse interests come together and fill important gaps in terms of skills, capacities, and ability to manage risk in a water quality trading program. Practitioners can play a wide variety of roles. They are drawn to the promise that water quality trading can help improve water quality faster, at a watershed scale, and at a lower cost. Practitioners will care most that A) there is a sustainable demand for purchasing water quality credits; and B) that there is a framework, guided by clear standards and expectations, that will help create a robust trading market.


So next time you set the table for a delicious meal and a meaningful conversation about improving water quality, don’t forget to invite these key players… and don’t forget the (Salmon Safe) wine.

Figures in this post courtesy of Environmental Incentives except for the graphic representing Clean Water Utilities.

Carrie Sanneman was Willamette Partnership’s Clean Water Program Manager. She specializes in collaboration for clean water and natural infrastructure. Carrie holds an interdisciplinary Master’s degree in Environmental Science and Management from UC Santa Barbara’s Bren School and Bachelors of Science in Biology and Environmental Studies from Iowa State University.


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