What’s Holding Up the Demand for Water Quality Trading in the U.S.?
Willamette Partnership’s Clean Water Project Manager Kristiana Teige Witherill coordinates the National Network on Water Quality Trading, a group of organizations working to advance to use of water quality trading.
While certain environmental markets, like the carbon offset market, have taken off in the U.S., the demand for water quality trading has been slow in comparison despite being a cost-effective alternative for water resource industries to meet their regulatory requirements. The National Network on Water Quality Trading will spend the next six months identifying opportunities to overcome the barriers to increasing demand for water quality markets.
The National Network on Water Quality Trading is working on identifying and addressing the barriers that are holding back the widespread use of water quality trading, a cost-effective alternative water resource industries can use to meet their regulatory requirements and create multiple ecological benefits in the process. Photo / Tualatin Soil and Water Conservation District
The National Network on Water Quality Trading (National Network) has been operating under the assumption that more buyers would join water quality trading markets if programs could get up and going more quickly and at a lower cost, and if trading programs were consistent, legally defensible, and based on clear state policies. The National Network and its participants have attacked each of these issues—publishing the comprehensive guide Building a Water Quality Trading Program: Options and Considerations; developing templates for state-level policy; and, hosting dialogues on program evaluation, market-based approaches to stormwater management, and engaging agriculture intermediaries.
But, demand for water quality trading has not materialized and it’s time for a new strategy to understand why we aren’t moving faster toward the widespread application of trading to achieve clean water in places where it makes economic, social, and ecological sense.
For the next six months, the National Network will focus on stimulating demand for water quality credits and other market-based programs as a compliance alternative by identifying the barriers and the opportunities to increasing demand from municipal and industrial wastewater and stormwater sectors.
To hone in on a subset of key barriers that the National Network can take steps to address, we’re undertaking a water quality trading demand assessment that includes the following:
- A rapid review of lessons learned about the demand drivers of other environmental markets—like carbon, wetlands, and endangered species—and how those lessons may apply to water quality trading.
- A set of conceptual models to illustrate the processes and key actors in accepting or rejecting the use of water quality trading, to confirm our understanding of the decision making structures through which trading is considered and approved. We’ll know who needs to be a part of the trading conversation and when.
- A spatial analysis of the biophysical, regulatory, institutional capacity, and economic factors influencing demand for water quality trading. We’ll identify national trends and regional differences that affect demand.
- A series of broader stakeholder interviews to understand the assessment methods and decision criteria applied to trading as an option. We’ll ask decision-makers what they see as the barriers and opportunities to using water quality trading.
The culmination of the assessment will be the development of a comprehensive and prioritized action agenda, specifying the products, processes, and campaigns that would address key barriers to launching new water quality trading programs.
This assessment is taking a hard look at the assumptions under which water quality trading has been operating and evaluating how well it matches the reality that decision-makers face. The action agenda will support the full suite of National Network participants in their individual and collective actions to move forward with water quality trading and market-based approaches to clean water.
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