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Water: Water Quality Trading

Fact Sheet on Water Quality Trading Toolkit for Permit Writers

The Water Quality Trading Toolkit for Permit Writers provides National Pollutant Discharge Elimination System (NPDES) permitting authorities with the tools they need to incorporate trading provisions into permits. The Toolkit is the first “how-to” manual for designing and implementing trading programs consistent with EPA’s 2003 National Water Quality Trading Policy. The Toolkit is a valuable aid for improving the quality of and providing national consistency among trading programs.

EPA issued its National Water Quality Trading Policy in January 2003, sending a clear signal of EPA support for this innovative, market-based approach to improving water quality. Water quality trading is a voluntary option that regulated point sources can use to meet their NPDES permit limits. In certain watersheds, trading can provide significant economic and environmental benefits.  For example, full scale implementation of trading could save $1 billion in wastewater treatment costs in the Chesapeake Bay (Chesapeake Bay Blue Ribbon Finance Panel Report, Oct. 2004). 

In 2004, EPA issued the Water Quality Trading Assessment Handbook which provides guidance on how stakeholders can environmentally and economically determine whether trading is feasible in their watershed.

The Water Quality Trading Toolkit for Permit Writers is the next step in EPA’s support for trading. Through the May 2006 Second National Water Quality Trading Conference, co-sponsored by EPA and USDA-NRCS, stakeholders expressed the need for more guidance on how to design and implement trading programs. The Toolkit is responsive to this need by expanding on EPA’s Trading Policy and featuring real-life examples. By providing guidance on design and implementation, EPA hopes to kick-start the creation of successful water quality trading programs.

About this Guidance Document
The Water Quality Trading Toolkit for Permit Writers provides NPDES permit writers with guidance on incorporating trading provisions into permits. While the Toolkit is geared toward state and regional permitting authorities, all stakeholders including permitted entities, agriculture and other nonpoint sources, watershed groups, and other parties interested in trading, will utilize the Toolkit.

The Toolkit discusses the relationship between pollutant trading and NPDES permits. To be implementable and enforceable under the Clean Water Act, trading provisions involving permitted point sources should be incorporated into NPDES permits. The Toolkit provides guidance and sample permit language for states to consider when creating and implementing a Clean Water Act-based pollutant trading program, as well as detailed case studies of existing trading programs.

The Toolkit provides detailed guidance on the important issues to be considered in a trading program.  It can be summarized in five keys to success.  Every water quality trading program should strive to be:

  • Transparent,
  • Real (reductions),
  • Accountable,
  • Defensible, and
  • Enforceable.


How to Get Additional Information
For a copy of this Toolkit, visit EPA’s Water Quality Trading website at: http://www.epa.gov/waterqualitytrading/WQTToolkit.html

EPA is interested in public comment on the Toolkit. Any comments received though the document’s website will be considered for future updates. For more information, contact Ginny Kibler, (202) 564-0596 or kibler.virginia@epa.gov, in the Office of Wastewater Management.

Office of Wastewater Management (Mail Code 4201M)
August 2007

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