Water Trading Can Save Billions
On Chesapeake Bay Cleanup: Study

The Chesapeake Bay is on life support, and the medical bills are hefty – with some estimates approaching $1.5 billion per year just to reduce runoff to a manageable level. A new study says that water-quality trading can slash costs by more than 75% – but only if the types of buyers is expanded beyond cities and factories.

8 May 2012 | As waterbodies go, the Chesapeake Bay is a fragile thing. It’s only 21 feet deep on average and covers just 4,500 square miles, but dirty water gushes into it from farms, factories, towns, and cities spread across more than 64,000 square miles in six states and Washington, DC.

With that water comes a suffocating 250 million pounds of nitrogen per year, as well as 20 million pounds of phosphorus, and the result is a national treasure full of rotting seaweed and bacteria, with only the occasional fish or clam.

The federal government has ordered the Bay states to clean up their act, and that won’t be cheap. The Chesapeake Bay Commission says it will cost $1.47 billion per year just to get runoff down to a manageable level – unless they embrace water-quality trading (WQT), and in a big way.

In a study published this week entitled in “Nutrient Credit Trading for the Chesapeake Bay”, the Commission says WQT can slash costs as much as 80% – a savings of $1.2 billion per year across the watershed – but only if WQT programs change dramatically from the way they are structured right now.

Widen the Scope; Expand the Savings

Four Bay states are experimenting with WQT, but the only entities that can buy credits in any of those programs are cities and factories designated as “Significant point sources” (SigPS) – a designation that doesn’t include stormwater runoff from cities and “concentrated animal feeding operations” (CAFO).

The new study models the potential cost savings under different project designs that include CAFOs and stormwater managers as offset buyers, and that look at programs structured according to geography compared to those structured according to jurisdiction.

It concludes that the greatest savings come when a program covers the most territory and the most sectors – and that the savings to be gained by expanding to include new sectors outweighs by far the savings to be gained by ratcheting up the degree of participation within sectors already covered.

We’ll be posting a deep-dive on this later in the week, but you can explore it on your own in here (and feel free to contact me at [email protected] if have any insights you’d like to add.

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