To date, water quality trading (WQT) in the U.S. has focused on development of various bi-lateral trades, in-state watershed-based programs or state-based trading rules. Few, if any trading programs have successfully achieved, or even attempted, trading at a regional or interstate scale. Trading at such a scale requires similar regulatory drivers or goals that create significant demand for fungible credits. As such, small-scale trading efforts have resulted in fragmented markets, high transaction costs, expensive program development, and limited trades. Collectively, these constraints have hindered opportunities across geo-political boundaries where far-field water quality impacts are in play. This particular dilemma has stymied large-scale trading opportunities in critical water resource areas such as the Chesapeake Bay. These same issues will confound efforts that target hypoxic conditions in the Gulf of Mexico if the concept of a regional trading framework is not first established.

The Electric Power Research Institute (EPRI) with the assistance of K&A and other partners, has recently completed a preliminary feasibility analysis for multi-state water quality trading in the Ohio River Basin. This effort presented a strong case for  development and promotion of a regional, interstate trading program.  Substantial benefits for management of nutrient discharges associated with more restrictive wastewater discharge permit limits expected with forthcoming instream nitrogen standards were noted with trading.

The project team comprised of EPRI, K&A and others will work to implement a WQT program at the interstate level for the Ohio River Basin. With EPA and USDA funding, the team will work to engage both buyers and sellers of WQT credits through the implementation of agricultural BMPs and purchase of credits from regulated dischargers. (See: EPRI.com/OhioRiverTrading)