Virginia’s Nutrient Trading Program Aims To Clean Up The Chesapeake Bay

16 December 2014 | In the US, there is an increasing number of programs that use a credit trading system to stem the flow of nutrient pollution flowing into waterways. The Pacific Northwest continues to assess possible approaches and in the Midwest, the Electric Power Research Institute is spearheading a program in the Ohio River Basin.

Now this market-based approach, called nutrient or water quality trading, has officially reached the Chesapeake Bay, a watershed so heavily polluted by nitrogen and phosphorous nutrients that President Barack Obama issued an executive order to restore water quality in the Bay in 2009.

Restoring water-quality is the intention of Virginia’s nutrient trading program. The initiative was recognized today by the Environmental Protection Agency (EPA), the US Department of Agriculture (USDA) and the Council on Environmental Quality (CEQ) among other stakeholders. It was not only recognized for its potential to help the Chesapeake Bay but also for its ability to serve as a model for other watersheds dealing with similar problems.

“The Chesapeake Bay faces numerous challenges, and the Commonwealth of Virginia is responding with innovative thinking and collaboration across sectors, said Mike Boots, who leads the White House Council on Environmental Quality. “Not only do creative approaches like these provide new markets for private investors and generate new revenue for farmers, they also bolster the strength of our natural resources, improving their resilience to threats posed by a changing climate and other stressors.

Virginia’s Department of Environmental Quality initiated this innovative program Boots is referring to. It created a supply and demand market for land conservation projects that help to minimize water quality impacts in the Bay. The agency’s stormwater program requires that road project developers reduce the phosphorus runoff pollution their development causes. They are able to do this through purchasing phosphorous credits from state-certified credit banks. The credits project developers purchase is generated from farmers operating in the Bay watershed that have permanently reduced their nutrient pollution through more sustainable land practices.

It’s a cost-effective approach. Purchasing the credits cost Virginia’s Department of Transportation-the agency developing and, in turn, impacting water quality-is half the cost of traditional infrastructure like underground filters and detention ponds. Also, implementing the sustainable agricultural activities comes from private investors so the program relies less on public funds. And because farmers sell their nutrient reduction credits to credit banks, the program opens up a new revenue stream for them as well.

Aside from the monetary advantages, the Bay’s ecosystem benefits from a more natural approach. Overall land preservation that includes restoring wildlife habitat and stream buffers are positive byproducts of the trading approach.

“Virginia’s nutrient trading program is a strong example of how to create economic opportunity and new income for rural America while protecting and improving local waterways and the Chesapeake Bay, said EPA Administrator Gina McCarthy. “The program is a win for the environment and our economy and we encourage states to look at Virginia as a model and a resource as they adopt similar programs.

Federal support for nutrient trading, and environmental markets as a whole, is likely to increase in the coming year. The USDA and the EPA have a web-based water quality trading roadmap tool in the works that’s slated to come out in early 2015. Also in 2015, the agencies will sponsor a national conference on trading with the intention to move forward with the approach.