Protecting Public Health and the Environment.

Water Quality Pollutant Trading

Pollutant trading is a business-like way of helping to improve water quality by focusing on cost-effective, local solutions to problems caused by pollutant discharges to surface waters. Pollutant trading is voluntary and generally involves a party facing relatively high pollutant reduction costs who compensates another party to achieve an equivalent, though less costly, pollutant reduction. Parties trade only if both are better off as a result of the trade. Trading allows parties to decide how best to reduce pollutant loadings within the limits of certain guidelines. The appeal of trading emerges when pollutant sources face substantially different pollutant reduction costs.

The following are the major components of a pollutant trading system:

  • Trading parties (buyers and sellers)
  • A commodity (a pollutant such as phosphorus)
  • Credits or measurable amounts of a commodity to trade
  • Ratios to ensure environmental equivalency of trades in a watershed

Pollutant Trading in Idaho

Under Idaho’s water quality standards (IDAPA 58.01.02.055.06), pollutant trading (also known as water quality trading) may be conducted in conjunction with the development or implementation of water quality improvement plans known as total maximum daily loads (TMDLs), which are designed to restore water quality-limited water bodies to meet water quality standards and support beneficial uses.

Over the past several years, DEQ and EPA Region 10, which includes Idaho, explored using water quality trading as a means of meeting water goals. The first water quality trading framework was developed for the lower Boise River to be used by point and nonpoint sources to reduce total phosphorus. An additional water quality trading framework was developed for the Middle Snake/Upper Snake Rock watershed for point sources.

A trading framework and guidance was published in November 2003 and subsequently finalized in July 2010. Idaho’s Water Quality Pollutant Trading Guidance outlines the procedures for conducting water quality trading to improve water quality. The document specifies the conditions under which water quality trading may take place, establishes record-keeping and reporting procedures, and prescribes how best management practices (BMPs) are to be developed for each watershed where water quality trading occurs involving nonpoint sources. In addition, the guidance document includes stand-alone appendices for watersheds authorized to trade and their respective specific trading ratios and BMPs, where applicable.