For example, these other property owners could be farmers that contribute nitrogen and phosphorous from fertilizer runoff to the same stream that a community uses for outflow from its treatment plant. Under the water quality trading process, the city government would pay farm owners to install surface treatment such as filter strips or retention basins to catch and eliminate nutrients from entering the stream. This ends up being a good deal cheaper than removing the nutrients from the water at the municipal treatment plant. It has the added benefit of keeping streams clean upstream of the treatment plant.

Water Quality Issues

Evolution of Clean Water Act programs over the last decade has included a shift from a program-by-program, source-by-source, pollutant-by-pollutant approach to more holistic watershed-based strategies. The initial efforts to control point-source (from a specific entity) pollution has succeeded by controlling industry and treatment plant outflow, but the work of improving the nation’s water quality is still unfinished. Only 50-60% of Ohio’s surface waters meet the “unimpaired” level. Now the work must take a different approach to reduce non-point (diffuse, such as contaminated stormwater) pollution, especially from farm fields and urban areas.

     The term water pollution has created images of toxics emitted or dumped into streams by chemical companies, but there are many ways to kill a stream. One of the measures of stream quality is the bio-available oxygen level for animals. When oxygen is depleted, the stream cannot support life. Nutrient runoff stimulates algae growth that removes oxygen from the water, suffocating fish and other animal life.

Trading to Gain Cleaner Water

Ohio communities must pay for improving their treatment plants to comply with environmental requirements, but increasing costs are an economic hardship. Can cities improve water quality and bolster their economic future at the same time?  Several communities have done both by solving environmental problems with subsidies to local business. 

Building a new or updated sewage treatment plant is expensive, with millions of dollars in consulting and construction expenses. If a city can improve water quality by paying industry or farm owners to upgrade their operations in lieu of paying for a new treatment plant, then the money spent will both clean the water and support local business. This is the process of Water Quality Trading that is being promoted by the Ohio EPA’s Division of Surface Water.

Rules for Water Quality Trading have been drafted and final rules will be adopted this December. According to the Ohio EPA the purpose of their new rules is to:

• Facilitate watershed-based approaches to improving water quality.
• Improve water quality and reduce the costs of achieving and maintaining standards.
• Provide economic incentives for voluntary pollutant reductions.
• Achieve additional benefits beyond pollutant reductions.

 Water Quality Trading is just beginning in Ohio, but is already being practiced in several areas including:

• In the Tuscarawas River Basin, the Holmes (County) Soil and Water Conservation District is working with the Alpine Cheese Company. The company wanted to expand but was already in serious violation of its phosphorus limits. The factory agreed to filter the bulk of its phosphorus and then pay farmers to reduce the final amount of phosphorus. Reducing the final percentage by filtering would have been prohibitively expensive for the factory. The creek will benefit with less pollution, the factory will save money, the farmers will make money, and hiring new factory and pollution control workers will create jobs.
• The Miami Conservancy District in the Great Miami River Basin is acting as a third party broker for communities and private owners. Municipalities responsible for wastewater treatment will fund non-point pollution reduction.
• In the Upper Little Miami River Basin, requirements for phosphorous are being met in a point source/non-point source trade. 

What exactly is traded?

If a city must spend $50 million to redesign its treatment plant to improve water quality or spend $5 million to pay property owners to keep the water clean to the same degree, then the city will look at the latter alternative.  Farmers are encouraged to be creative to filter and reduce nutrient runoff into streams by using vegetative filter strips, catchment ponds, revised irrigation or reduced fertilizer. Industry buys additional filtering or cleaning equipment. The result is cleaner water without fines or heavy costs for cities struggling under bad economic times. Trading also encourages creativity and partnerships within the community, such as when farmers in a particular watershed are paid to work together to reduce pollution in a shared stream. Trading may lead to new sources  of income.

     For information on water quality trading and its implementation in Ohio, contact at Ohio EPA Division of Surface Water. Also visit the EPA website for information on water quality trading conferences, workshops, and specific efforts in Ohio and other states.

David Greene has a degree in landscape architecture and a masters in City and Regional Planning, both from Ohio State. He is a member of the Central Ohio Sierra Club’s Executive Committee.