WASHINGTON,
Dec. 9, 2015 - Since the 1980s, water quality trading (WQT) has been a
concept that many farmers, businesses and municipalities have embraced as a
voluntary way to reduce nutrient pollution, and in some cases, generate
additional revenue. But a recent report by the environmental advocacy group
Food and Water Watch (FWW) is sharply critical of WQT operations in several
states and calls for an end to the practice, alarming WQT advocates who say
newer WQT systems are working better than ever.
The
trading systems allow pollution point sources – like power plants and
concentrated animal feeding operations (CAFOs), which are regulated under the
Clean Water Act – to purchase “credits” to offset the amount of effluent they
discharge over what is allotted by their EPA-issued, state-administered National Pollution
Discharge Elimination System (NPDES) permit.
The
credits are generally generated and sold by farmers who have agreed to reduce
the amount of nutrient leaving their own operations, using conservation best
management practices (BMPs), in exchange for compensation. Policymakers have
taken particular interest in WQT systems in recent years because implementing
BMPs on agricultural land upstream is considered a cheaper and faster way of
reducing nutrient pollution than upgrading point source effluent systems to
comply with their NPDES permits.
FWW’s
report took aim at the state-led WQT
market in Pennsylvania, claiming the program couldn’t verify that farm credits
were actually being generated. Scott Edwards, a co-director of FWW’s legal arm,
the Food and Water Justice Project, told reporters as the assessment was being
released that FWW was “looking to challenge water pollution trading in the
courts… because this isn’t how the Clean Water Act was supposed to work.”
Pennsylvania’s WQT
program, which was
initiated in 2005, gave brokerage firms the responsibility of helping farmers
pick BMPs to use, verifying the effectiveness of the BMPs, and selling the
credits generated by those BMPs at auction. This set-up, FWW claims, explains
why just 0.16 percent of the phosphorous credits and 7.66 percent of the
nitrogen credits generated between 2005 and November 2015 were sourced through
comparatively more expensive “on-farm” BMPs, like buffer strips or reduced
tillage.
The vast
majority of the credits farmers generated were through the export of poultry
manure, or litter, to areas outside the Chesapeake Watershed, and poultry
litter combustion, according to Pennsylvania Department of Environmental
Protection (DEP) data compiled by FWW.
The U.S.
EPA had the same concerns, and in April 2014 told the DEP to
establish additional eligibility and credit calculation requirements, or it
would no longer issue new NPDES permits. At the start of October, the DEP
implemented a 3-to-1 trading ratio – meaning farmers will have to reduce their
nutrient runoff three times over to earn one credit – as an interim step until
it could develop a performance-based tool that establishes baseline eligibility
for nonpoint sources. The state agency will also require that all
credit-generating poultry litter exports be applied to certified nutrient
deficient fields.
Mark
O’Neill, the media and strategic communications director for the Pennsylvania
Farm Bureau, said the state’s original WQT program “was embraced” by
Pennsylvania farmers and garnered “modest” farmer participation, but it wasn’t
“a windfall program” or “as good… as farmers thought it would be.” Now, with
the newly imposed changes, O’Neill said farmers will be even less likely to
participate.
Neil
Shader, DEP’s press secretary, told Agri-Pulse
that his agency is reviewing FWW’s 28-page report, and intends to evaluate “the
efficacy and design” of its WQT program “with the goal of improving its
effectiveness.”
“Like
anything new, emerging environmental markets have experienced disappointments
and failures,” Brent Fewell, an attorney with Troutman Sanders, the firm that
represents the National Water Quality Trading Alliance, wrote shortly after FWW report’s
release. “Learning from mistakes is a good thing, and these markets continue to
evolve and improve with greater public transparency, accountability, and
scientific rigor.”
Fewell testified before
Congress last year
that the current WQT pilot program running in Ohio – spearheaded by the
industry-backed Electric Power Research Institute (EPRI) in 2012 – is a good
example of how WQT programs are improving with time. Ohio’s first WQT pilot
program, which ran between 2007 and 2011, received criticism from FWW for poor
record keeping, unverified farmer-generated credits and numerous NPDES permit
violations.
James Lee,
media relations manager with Ohio EPA, told Agri-Pulse
Tuesday that FWW “inaccurately” characterized the number and type of permit
violations the first pilot incurred over the five-year program, and stressed
that “in the right circumstances,” the agency still believes “water quality
trading can be a tool for water quality improvement and more cost effective
nutrient reduction by point sources.”
EPRI’s project spans the Ohio River Basin, but
focuses its efforts in Kentucky, Indiana and Ohio. It uses scientific tools to measure nutrient runoff
baselines and the effects of BMPs on farms, and has a strict and transparent
credit system that is coordinated by the American Farmland Trust (AFT), an
organization that works to protect farmland nationwide. By the end of the pilot
this year, EPRI expects to have reduced phosphorous pollution in the basin by
30,000 pounds and nitrogen pollution by 66,000 pounds – the equivalent of 2,950
50-pound bags of fertilizer.
According
to Brian Brandt, a spokesman for AFT, the EPRI project will continue, but it
could be six months to a year before the project partners decide on what “the
next phase will look like.” In late October, the project received nearly $2 million in grants from
the U.S. Endowment for Forestry and Communities and USDA’s Natural Resources
Conservation Service.
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