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Home FAQ Water Management Where will Water Quality Trading work?

Where will Water Quality Trading work?

Where watershed circumstances favor trading, it can be a powerful tool for achieving pollutant reductions faster and at lower cost. Water quality trading will not work everywhere, however. Trading works best when:

1) there is a "driver" that motivates facilities to seek pollutant reductions, usually a Total Maximum Daily Load (TMDL) or a more stringent water quality-based requirement in an NPDES permit;

2) sources within the watershed have significantly different costs to control the pollutant of concern;

3) the necessary levels of pollutant reduction are not so large that all sources in the watershed must reduce as much as possible to achieve the total reduction needed – in this case there may not be enough surplus reductions to sell or purchase; and

4) watershed stakeholders and the state regulatory agency are willing to try an innovative approach and engage in trading design and implementation issues.

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