October 01, 2015

The Case Against Water Quality Trading

Zach Corrigan

Twelve years ago, the EPA rolled out its controversial Water Quality Trading Policy (Trading Policy or policy), establishing a framework for states to implement trading of pollution credits to achieve water quality goals. So-called “water quality trading,” which some might call “pollution trading,” is a market-driven alternative to the traditional regulatory-mandated programs under the Clean Water Act (CWA or the Act). In the years since this guidance, trading has become particularly enticing both to industries who are looking to avoid more stringent CWA discharge permits and to regulators seeking to reduce pollution from agricultural sources, which have been largely unregulated and remain the largest source of nutrient pollution in U.S. waterways. As of 2008, the World Resources Institute estimates that there were forty-one trading programs that are active or under development. Thirty-two of these involved nonpoint sources, including agricultural operations. In 2013, the U.S. Department of Agriculture (USDA) and Environmental Protection Agency (EPA) announced an expanded partnership to support trading, with the goal that agricultural operations would reduce discharges of nutrients and generate credits to offset such discharges from industrial and municipal facilities.

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