Hearing

Today, we will hear from several public and private sector stakeholders on the potential use of water quality trading as an innovative, market-based mechanism to cost-effectively achieve local water quality improvements.

The quality of our nation’s waters has improved dramatically in the United States since the enactment of the Clean Water Act in 1972.  However, water quality challenges remain, and achieving the next step in water quality improvement is becoming more difficult.

Many of today’s remaining water quality problems are more dispersed, and removing additional pollutants from private industrial and public wastewater facilities is becoming extremely expensive and difficult to achieve.  Addressing these remaining water quality problems will require new tools and new and innovative forms of implementation.

Water quality trading is increasingly being looked at as an innovative, market-based mechanism to cost-effectively achieve water quality improvements in some watersheds.  The basic theory behind trading is that certain pollutant sources in a watershed may be able to achieve the same degree of control as others in the same area, but at lower cost.  Trading programs allow sources with relatively low costs to generate credits by reducing loads in amounts greater than what is required of them.  These credits can then be sold to others for whom the costs to achieve the same reductions are relatively much higher, thus achieving the same or better water quality improvement at lower overall cost.

Water quality trading gained my attention several years ago when I was a member of the Ohio House of Representatives and assisted in the creation of a successful water quality trading program in Holmes County, Ohio.  A local cheese producer in Holmes County was facing a regulatory dilemma with its plans to expand its operations and create new jobs.  To do so would cause the company to exceed its nutrient allowances under its NPDES permit unless it installed prohibitively expensive wastewater treatment.

To solve the problem, the company partnered with the Holmes Soil and Water Conservation District, Ohio State University, Ohio EPA, and local farmers in the watershed to manage nutrient runoff, ultimately resulting in a trading program that enabled the company to grow and the watershed’s health to improve.

This was a win-win both for the economy and for the environment.  One of our witnesses today, Dr. Richard Moore, was a direct participant in creating the program.

At today’s hearing, we will hear from a variety of witnesses about other trading programs around the nation, and the issues surrounding water quality trading as a means for improving the environment and reaching compliance under the Clean Water Act