Water Quality Trading in Ohio

Abstract

The economic policy instrument (EPI) discussed in this case study involves nutrient credit trading between point source wastewater treatment plants (WWTPs) and non-point (diffuse) sources (agriculture) in the Great Miami River Watershed of Ohio (USA). Commonly referred to as water quality trading (WQT) in the USA, this EPI is a market-based approach to pollution control in which pollutant reductions are treated as commodities. This case study describes how a watershed-based flood control agency in southwest Ohio developed and managed a WQT program to provide a cost-effective alternative for WWTP compliance. WWTPs will soon face more stringent effluent limits as a result of impending numeric nutrient standards being assigned to rivers and streams receiving treated wastewater. Lessons learned from this case study have substantial merit as an EPI because this program provides an economic framework for applying and using WQT in a regulatory setting. This program is one of the largest and most successful WQT programs of its kind in the USA, negotiating nutrient credit trades between five point source buyers and hundreds of non-point source sellers. Of note is the use of a reverse auction for securing lowest-cost credit contracts for point source buyers.