The Joint Legislative Air and Water Pollution Control Conservation Committee chaired by Rep. Hutchinson (R-Venango) held its first Environmental Issues Forum of the year this week on the issue of watershed-based nutrient trading.

Andrew McElwaine, President and CEO of the Pennsylvania Environmental Council offered an overview of the trading pilot project in the Conestoga River Watershed in Lancaster County that resulted in the first true trade of nutrient credits in the United States

Trading programs involve establishing a budget of nutrient pollution going into a watershed from point sources like wastewater treatment plants and nonpoint sources—runoff from farm fields and stormwater from streets and development.

One tool for establishing these budgets is the Total Daily Maximum Limits (TMDL's) for streams and watersheds required by the federal Clean Water Act. TMDLs establish a budget for how much pollution a body of water can take and still meet water quality standards.

To meet pollution reduction goals, agencies like the Department of Environmental Protection can either use its regulatory power to enforce strict limits on pollution discharges into the watershed through very prescriptive limits, or businesses, municipalities and farmers can make voluntary agreements to reduce by trading credits for each unit of pollution they reduce.

Businesses that install pollution controls or farmers that adopt Best Management Practices (BMP's) that reduce the amount of nutrients that runoff their fields into the watershed earn "credits" in a credit bank.

Those businesses or farmers that need to further reduce water pollution can buy those credits from the businesses and farms.

McElwaine pointed out this was not a substitute for basic environmental regulations, but it is another method of reaching the same goal. He outlined a number of benefits of a trading program--

• Reduces cost by taking advantage of differences in control costs among sources, saving anywhere from 10 percent to 50 percent or even more;
• Generates market demand for new, innovative technologies;
• Provides greater and improved recreation and tourism opportunities;
• Allows sellers going beyond minimum requirements to create credits that can be sold, banked or retired;
• Targets locations of reductions to priority areas;
• Reductions in nutrients are achieved sooner
• ecological restoration, ecosystem protection, improved wildlife habitat, recreation and aesthetic amenities; and
• Creates healthier waterways overall

McElwaine also described the Conservation Innovation Grants Program (CIG) which is operated through U.S Department of Agriculture. (See related story on CIG in this Digest.) These grants can fund a "Reverse Auction" where farmers essentially compete (through the use of BMP's) to be chosen by buyers. The winning bids come from farmers that can produce low cost reductions, i.e. the more cost effective a farmer's Best Management Practices, the better chance he or she has of winning a bid. A special website, www.nutrientnet.org is used to make all the calculations.

Rep. Hutchinson announced the next Issue Forum would be held March 14 on the Innovative Uses of Coal.

2/4/2005