Water Quality Water Quality Pollutant Trading Pollutant Trading Marco Graziani Marco Graziani Minnesota Pollution Control Agency Minnesota Pollution Control Agency February 27, 2007 February 27, 2007
Water Quality Trading Rule Water Quality Trading Rule Development Development � Our objective is to develop a draft rule by June Our objective is to develop a draft rule by June � 2008 2008 � Operate on the assumption that we will develop Operate on the assumption that we will develop � viable water quality pollutant trading processes viable water quality pollutant trading processes � The advisory committee process is intended to The advisory committee process is intended to � obtain guidance from the numerous interested obtain guidance from the numerous interested sectors sectors
Water Quality Trading Potential Water Quality Trading Potential � Water quality trading is an exchange of pollutant credits Water quality trading is an exchange of pollutant credits � between sources between sources � Sources with high pollutant control costs may be able to Sources with high pollutant control costs may be able to � purchase equivalent or superior pollutant reduction purchase equivalent or superior pollutant reduction credits from sources whose pollution control costs are credits from sources whose pollution control costs are relatively low relatively low � Credits are generated through “over control” of regulated Credits are generated through “over control” of regulated � pollutants or through the implementation of best pollutants or through the implementation of best management practices (BMPs) that reduce pollutant management practices (BMPs) that reduce pollutant delivery from unregulated sources delivery from unregulated sources � Credits may be used by sources in order to meet Credits may be used by sources in order to meet certain certain � regulatory requirements regulatory requirements � System must provide reasonable certainty that trades will System must provide reasonable certainty that trades will � adequately address pollutants of concern adequately address pollutants of concern
Water Quality Trading Options Water Quality Trading Options � Point sources purchasing offset credits created Point sources purchasing offset credits created � by other point sources by other point sources � Point sources purchasing offset credits created Point sources purchasing offset credits created � by non- -point sources point sources by non � Point sources offsetting pollutant loads between Point sources offsetting pollutant loads between � multiple outfalls (intra- -plant trading) plant trading) multiple outfalls (intra � Non Non- -point sources purchasing credits created by point sources purchasing credits created by � other non- -point sources point sources other non � Pretreatment trading between industrial users of Pretreatment trading between industrial users of � a publicly owned wastewater treatment facility a publicly owned wastewater treatment facility
Water Quality Trading Goals Water Quality Trading Goals � Improve water quality Improve water quality � � Manage growth and development in impaired Manage growth and development in impaired � and unimpaired watersheds and unimpaired watersheds � Flexible and cost effective water quality Flexible and cost effective water quality � management management � Derive improvements from “ancillary benefits” Derive improvements from “ancillary benefits” � that may result from BMP implementation that may result from BMP implementation
Potential Environmental Potential Environmental Benefits of Water Quality Benefits of Water Quality Trading Programs Trading Programs Point Source Non- -Point Point Point Source Non Upgrade Source BMPs Upgrade Source BMPs Pollutant of Concern Yes Yes Pollutant of Concern Yes Yes Other pollutants Maybe Yes Other pollutants Maybe Yes Habitat creation Habitat creation No Yes No Yes Canopy establishment No Yes Canopy establishment No Yes Stream bank stabilization No Yes Stream bank stabilization No Yes Velocity attenuation No Yes Velocity attenuation No Yes Wetland creation Wetland creation No No Yes Yes Floodplain management No Yes Floodplain management No Yes
Tradable Water Quality Tradable Water Quality Pollutants? Pollutants? Flow Flow � � Sediment Sediment � � Nutrients Nutrients � � Phosphorus � Phosphorus � Nitrogen Nitrogen � � Temperature Temperature � � Others? Others? � � CBOD CBOD � � TSS � TSS � Ammonia Ammonia � � Mercury � Mercury � Can trading help with future water quality problems Can trading help with future water quality problems � � caused by pollutants that are not yet on the radar caused by pollutants that are not yet on the radar screen? screen?
Trade Ratios Trade Ratios � Trade ratios are frequently applied pollutant Trade ratios are frequently applied pollutant � trading programs in order to: trading programs in order to: � Retire credits for water quality improvement Retire credits for water quality improvement � � Account for uncertainty in trades Account for uncertainty in trades � � Account for pollutant delivery dynamics Account for pollutant delivery dynamics � � Generally, the greater the uncertainty and/or the Generally, the greater the uncertainty and/or the � dissimilarity between sources, the greater the dissimilarity between sources, the greater the trade ratio trade ratio
US EPA Office of Water US EPA Office of Water Water Quality Trading Policy (2003) Water Quality Trading Policy (2003) Trading Objectives Trading Objectives EPA supports implementation of water quality trading by states, interstate agencies and tribes where trading: A. Achieves early reductions and progress towards water quality standards pending development of TMDLs for impaired waters. B. Reduces the cost of implementing TMDLs through greater efficiency and flexible approaches. C. Establishes economic incentives for voluntary pollutant reductions from point and nonpoint sources within a watershed. D. Reduces the cost of compliance with water quality based requirements. E. Offsets new or increased discharges resulting from growth in order to maintain levels of water quality that support all designated uses.
US EPA Office of Water US EPA Office of Water Water Quality Trading Policy (2003) Water Quality Trading Policy (2003) Trading Objectives Trading Objectives EPA supports implementation of water quality trading by states, interstate agencies and tribes where trading: F. Achieves greater environmental benefits than those under existing regulatory programs. EPA supports the creation of water quality trading credits in ways that achieve ancillary environmental benefits beyond the required reductions in specific pollutant loads, such as the creation and restoration of wetlands, floodplains and wildlife and/or waterfowl habitat. G. Secures long-term improvements in water quality through the purchase and retirement of credits by any entity. H. Combines ecological services to achieve multiple environmental and economic benefits, such as wetland restoration or the implementation of management practices that improve water quality and habitat.
When can trading occur? When can trading occur? � Trading in unimpaired waters Trading in unimpaired waters � � To maintain or improve water quality � To maintain or improve water quality � Trading in Impaired Waters without TMDL Trading in Impaired Waters without TMDL � � To achieve early reductions to improve water quality and gain � To achieve early reductions to improve water quality and gain more favorable TMDL terms or eliminate the need for a TMDL more favorable TMDL terms or eliminate the need for a TMDL � Trading in Impaired Waters with TMDL Trading in Impaired Waters with TMDL � � To implement TMDL load and wasteload allocations � To implement TMDL load and wasteload allocations � Pretreatment Pretreatment � � To manage source loads to a permitted wastewater facility � To manage source loads to a permitted wastewater facility � Intra Intra- -plant plant � � To manage overall discharge loads from multiple outfalls � To manage overall discharge loads from multiple outfalls
When can trading NOT When can trading NOT occur? occur? � Trading cannot be used to meet technology Trading cannot be used to meet technology � based effluent limitations based effluent limitations � Trades cannot result in non Trades cannot result in non- -attainment of attainment of � applicable water quality standards applicable water quality standards � Trading may not adversely affect water quality at Trading may not adversely affect water quality at � an intake for drinking water supply an intake for drinking water supply � Trading cannot allow a discharger to exceed a Trading cannot allow a discharger to exceed a � cap established under a TMDL cap established under a TMDL
Minnesota Experience with Minnesota Experience with Water Quality Pollutant Trading Water Quality Pollutant Trading � Rahr Rahr Malting NPDES Permit(1997) Malting NPDES Permit(1997) � � Southern Minnesota Sugar Beet Southern Minnesota Sugar Beet � Cooperative NPDES Permit (2000) Cooperative NPDES Permit (2000) � Minnesota River Basin General Minnesota River Basin General � Phosphorus NPDES Permit (2005) Phosphorus NPDES Permit (2005)
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