Water: Water Quality Trading
Targeted Watersheds Grants: Water Quality Trading Projects
2008 Targeted Watersheds Grants Project Summaries and Final Grant Reports
In 2008, EPA awarded $3.7 million in Targeted Watersheds Grants (TWG) to encourage innovative water quality trading and other market-based programs designed to reduce nitrogen, phosphorus, sediment, and other pollutants that cause low oxygen levels in the Northern Gulf of Mexico. The projects focused on three Mississippi River Sub-basins with the highest nutrient loads contributing to hypoxia: the Ohio River, the Upper Mississippi River, and the Lower Mississippi River. EPA awarded grants to the following organizations:
- Conservation Technology and Information Center
- Electric Power Research Institute
- Iowa State University (three projects)
- Miami Conservancy District
- The Nature Conservancy
- The Ohio State University
- The Wetlands Initiative
- University of Kentucky
- West Virginia University
- World Resources Institute
Conservation Technology and Information Center
The Conservation Technology and Information Center will assess whether a water quality trading market for nitrogen, phosphorus, or sediment is environmentally and economically feasible in the Wabash River Watershed. These pollutants contribute to the hypoxic zone in the Northern Gulf of Mexico. The Wabash River Watershed is located primarily in the State of Indiana and is in the Ohio River Basin.
Electric Power Research Institute
The Electric Power Research Institutes' project will design a water quality trading program for the entire Ohio River Basin, which includes portions of over fourteen states. It will develop a legal framework for interstate trading, targeting nitrogen and phosphorus to help reduce the hypoxic zone in the Northern Gulf of Mexico.
Iowa State University
Iowa State University will assess the market feasibility assessment of a water quality trading program as well as a reverse auction for nitrogen, phosphorus, and sediment reductions in the Raccoon River Watershed, Iowa. The Raccoon River Watershed is located in the Upper Mississippi River Basin. The project will simulate the potential conditions of the nutrient reduction targets needed to achieve the goals stipulated in the Gulf of Mexico Hypoxia Action Plan.
Iowa State University will conduct a feasibility assessment for a reverse auction for nitrogen and phosphorus reductions in the Walnut Creek Watershed, Iowa. The Walnut Creek Watershed is located in the Upper Mississippi River Basin. The project will estimate willingness of farmers to accept a variety of conservation practices as influenced by different auction designs and will determine if the economic feasibility of a reverse auction differs based on the design of the auction.
Iowa State University will perform a market feasibility assessment of various reverse auction bidding designs to sell nitrogen, phosphorus, and sediment reductions achieved from the installation of agricultural best management practices in the Boone River Watershed, Iowa. The study will assess the incentives required for agriculture to adopt conservation practices to sell pollutant reductions to decrease the hypoxic zone in the Northern Gulf of Mexico. The Boone River Watershed is located in the Upper Mississippi River Basin.
Miami Conservancy District
The Miami Conservation District plans to continue a water quality trading program in the Great Miami River Watershed, Ohio, for two more years by continuing funding for agricultural Best Management Practices that will reduce nitrogen and phosphorus runoff. The Great Miami River Watershed is located in the Ohio River Basin. This trading program utilizes economic incentives to encourage wastewater treatment plants to participate prior to having a regulatory obligation to reduce nutrients.
The Nature Conservancy
The Nature Conservancy will determine if market-based approaches, including water quality trading, for wetlands restoration are feasible in three Tennessee rivers located in the Lower Mississippi River Basin: the Lower Hatchie, the Loosahatchie, and the Wolf. The project will estimate the credit demand of potential buyers and estimate the potential credit supply from sellers for nitrogen, phosphorus, and sediments. Modeling will estimate the effects of contaminant removal on the Lower Mississippi River and the hypoxic zone in the Gulf of Mexico.
The Ohio State University
Ohio State University will undertake a market feasibility assessment for a water quality trading program in the Upper Scioto Watershed, Ohio. This project builds on the progress of an EPA Clean Water Act's Section 319 grant, Sugar Creek Alpine Water Quality Trading Project. The feasibility assessment will focus on determining the potential costs and benefits for the City of Columbus and other wastewater treatment plants in the watershed for trading phosphorus, nitrogen, and sediment to help reduce the hypoxic zone in the Northern Gulf of Mexico.
The Wetlands Initiative
The Wetland Initiative (TWI) proposes to undertake a market feasibility assessment to develop a water quality trading program for nitrogen and phosphorus within the Big Bureau Creek (BBC) Watershed in Illinois. TWI will focus its assessment of trading on two land management practices: grade control and wetland restoration to assist in reducing the hypoxic zone in the Northern Gulf of Mexico. The BBC Watershed is located in the Upper Mississippi River Basin.
University of Kentucky
The University of Kentucky's water quality trading market feasibility assessment will target two Kentucky sub-basins: The Green River and Kentucky River Watershed, both located within the Ohio River Basin. The main pollutants of study are nitrogen, phosphorus, and sediment. The Green River is one of the most biologically diverse rivers in the US, and reducing nutrient loads will help reduce the size of the hypoxic zone in the Northern Gulf of Mexico.
West Virginia University
West Virginia University aims to determine the economic and social viability of adapting the West Virginia Potomac River Basin Water Quality Trading Program to the Kanawha River Basin in the Ohio River drainage of West Virginia. Nitrogen and phosphorus will be the key pollutants of the study. The project will develop a pollutant source loading inventory and aims to reduce the hypoxic zone in the Northern Gulf of Mexico.
World Resources Institute
The World Resource Institute will examine the feasibility of establishing water quality trading markets in the Upper Mississippi, the Lower Mississippi, and the Ohio River sub-basins and includes portions of more than 21 states. The project targets nitrogen and phosphorus to help reduce the hypoxic zone in the Northern Gulf of Mexico. The credit demand will be extrapolated from the potential credit needs of two representative wastewater utilities: Sanitary District 1 of Northern Kentucky and the Metropolitan Water Reclamation District of Greater Chicago. The credit supply analysis will be based on agricultural sellers in the Lower Mississippi River Basin.
- Nutrient Trading in the MRB — A Feasibility Study for Using Large-Scale Interstate Nutrient Trading in the Mississippi River Basin to Help Address Hypoxia in the Gulf of Mexico (130 pp, 1.7MB, About PDF)
For more information on water quality trading go to www.epa.gov/waterqualitytrading.