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Development
of a StatewideWater Quality Trading
Framework
Wisconsin Department of Natural Resources
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What is Water Quality Trading?
Water quality trading is an exchange ofpollutant reduction credits.
A buyer with a high pollutant control cost canpurchase pollutant reduction or treatment
from a willing seller.
Trading can produce substantial cost savingsbut must result in an improvement in waterquality and a net reduction of the pollutantbeing traded.
Trading also can provide ancillaryenvironmental benefits such as floodretention, riparian improvement and habitat.
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Trading is a Potential Tool
Several options exist to meet WQBELs and TMDLallocations including:
Modifying wastewater treatment systems Modifying your production process to limit additives or
raw materials
Trading
Options can be used in combination
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TMDL = LA + WLA + MOS
Where:
LA = Load Allocation(Nonpoint Sources)
WLA = Wasteload Allocation(Permitted Point Sources)
MOS = Margin of Safety
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WLA and LA
Waste Load Allocation
Waste Water Treatment Plants(WWTPs )/ Publicly OwnedTreatment Works (POTWs)
Municipal Separate Storm SewerSystems (MS4s)
Concentrated Animal FeedingOperations (CAFOs)
General permits
Industries
Non-Metallic Mines
Construction Sites
Load Allocation
Background
Agriculture
Non-permitted urban
(no MS4 permit)
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Assemble a stakeholder group of thoseinterested parties in watershed based tradingissues and develop a trading framework
including any recommended rules or guidance tofacilitate watershedbased trading, and reportback to the Board no later than July 1, 2011.
June 2010 NRB Resolution
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Specific Objectives
Develop a water quality trading framework that:
Encourages water quality trading
Prevents exceedances of water quality standards
Results in more water quality improvement than in theabsence of trading
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Denny Caneff, River Alliance of Wisconsin
Paul Kent, Municipal Environmental Group
Betsy Lawton, Midwest Environmental Advocates
Melissa Malott, Clean Wisconsin
Kevin Schafer, Milwaukee Metropolitan Sewerage District Tom Sigmund, Green Bay Metropolitan Sewerage District
Pat Sutter, Dane County Land & Water Conservation Department
Dave Taylor, Madison Metropolitan Sewerage District
John Umhoefer, Wisconsin Cheese Makers Association
Paul Zimmerman, Wisconsin Farm Bureau
Meeting summaries: http://fyi.uwex.edu/wqtrading/
External Stakeholder Committee Members
http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/8/2/2019 Development of Statewide Water Quality Trading Framework Kevin Kirsch WIDNR
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WQT Framework Report
Summary
Introduction and Background
Part 1: Summary of Water Quality Trading Efforts
Part 2: Draft Framework
Part 3: Action/Recommendations
Appendices
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Wisconsins History with Trading
Fox River Basin Developed guidance,
element list, issuesummary, and reports.
Rock River Basin Developed a
framework andpursued some tradesbut lack of sufficient
economic incentivesprevent trades.
Red Cedar Basin City of Cumberland
Trade
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EPA Trading Program Structure
EPA Guidance for trading and NPDES permit programs:
Water quality trading programs must meet requirements of theClean Water Act.
The Clean Water Act provides legal authority for states and tribesto develop and administer trading programs.
EPA's 2003 National Water Quality Trading Policy(Trading Policy)
recommends basic ground rules for trading.
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WQT Framework Contents
Part 2: Draft Framework
2.1 Pollutant Parameters Acceptable for WQT
2.2 Appropriate Circumstances for WQT
2.3 Location and Geographic Scope
2.4 Credit Threshold
2.5 Trade Ratios
2.6 Timing of Credit Generation and Use
2.7 Trade Duration
2.8 Quantifying Credits2.9 Compliance and Enforcement
2.10 Trade Administration
2.11 Legal Issues and Statutory Changes
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2.1 Pollutant Parameters Acceptable for WQT
Nutrients
Phosphorus
Nitrogen
Sediment
Temperature
Dissolved Oxygen-related Parameters
e.g., Biochemical oxygen demand
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2.2 Appropriate Circumstances for WQT
WQT May be Used
Demonstrate compliance with WQBELs
Offset pollutant load from new or expanded discharger
WQT not allowed when localizedexceedances of water quality standards will occur
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2.3 Location and GeographicScope
Non-TMDL WQBELs
Credits must be generated upstream
TMDL WQBELs
Credits may be generated within the drainagearea for the impaired segment (segmentshed)
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Figure 1: No Impaired Waters
Reach A(100 ug/l)
Reach B(100 ug/l)
Reach C(100 ug/l)
Reach D(WQC 100 ug/l)
Reach E(75 ug/l)
Reach F(75 ug/l)
PS 1TBEL: 1,000 ug/lNR 217: 900 ug/l
PS 2TBEL: 1,000 ug/lNR 217: 800 ug/l
PS 3TBEL: 1,000 ug/lNR 217: 300 ug/l
Trade should occurupstream of pointsource.
If trading to meetWQBELs, trade should
occur in samewatershed and notcreate violations in localwater quality standards.
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Figure 2: Impaired Waters with TMDL
Reach A(100 ug/l)
Reach B(100 ug/l)
Reach C(100 ug/l)
Reach D(WQC100 ug/l)
Reach E(75 ug/l)
Reach F(75 ug/l)
PS 1TBEL: 1,000 ug/lNR 217: 100 ug/l
TMDL: 650 ug/l
PS 2TBEL: 1,000 ug/lNR 217: 800 ug/lTMDL: 600 ug/l
PS 3TBEL: 1,000 ug/lNR 217: 75 ug/lTMDL: 400 ug/l
Trade location setbased on thewaterbodyresponsible for theWLA.
The trade must occurin the watershed ofthat waterbodyassigning the WLA.
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2.4 Credit Threshold
Credits Generated by Point Source
Lesser of WQBEL or TBEL
Credits Generated by Nonpoint Source
Lesser of TMDL LA or Performance
Standard (e.g., ch. NR 151)
5-yr Interim Credit = Reduction from ExistingPollutant Load
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2.5 Trade Ratio
Uncertainty - Based on effectiveness and ease of verification of themanagement practices employed. Practices will be classified intodifferent categories and assigned ratios.
Lower Ratio 2:1 Ratio Higher Ratio
CompanionCrops
Buffer withupland
practices
TillagePractices
Fall covercrops
Buffer withoutsupportingpractices
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Management Practices Menu
ManagementPractice
AvailableCredits
(ApprovedMethod)
UncertaintyTrading
Ratio
Schedulefor Credit
Use
CreditAvailability
DateCredit Use
Restrictions
CompanionCrops
2.5 lbs P peracrePI-1in.
precipitation(SWAT)
1.2 Credits maybe bankedand usedover the
entire year.
First monthsecond cover
cropestablished
Credits maynot be carriedover from year
to year.
ConservationTillage
Nutrient
Management
Buffer Strips
VegetativeFilter Strips
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2.5 Trade Ratio Delivery (distance between generator and user)
TMDL Same factors used in TMDL
Non-TMDL USGS SPARROW model for P, N and sediment
Equivalency (form of pollutant) Not necessary with phosphorus Not yet specified for N and sediment
Retirement Concept addressed with interim credits
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2.6 Timing of Credit Generation andUse
Credits must be generated before they areused
Point source pollutant reduction must be measurable
BMP in-place and effective
Credit use timing depends on credit source
Point source Averaging period of limit Nonpoint Anytime during calendar year
(highly variable discharge exception)
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2.7 Trade Duration
Water Quality Trade ends:
At conclusion of BMP lifespan, or
When one of the trading partners endstrade agreement
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2.8 Quantifying Credits
Nonpoint Source Credits
SNAP-Plus and RUSLE2 for agricultural fieldpractices
SLAMM and P-8 for urban practices
Point Source Credits
Effluent monitoring
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2.9 Compliance andEnforcement
Credit Users WPDES Permit
WQBELs and Effluent Monitoring
Language Allowing Use of Credits Application Submittal Requirement
Effluent Limit when Trading (e.g. TBEL)
Reporting Requirements for Credits Used
Management Practice Certification
Annual Inspection of ManagementPractice
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2.9 Compliance andEnforcement
Application for Trading
Submitted by permittee credit user for Departmentapproval
Indentifies credit generator
Identifies credit generation method (e.g.,management practice)
Provides site location where credits are generated Provides amount of credits that will be generated
Provides date when credits become available
Provides trade ratio for each site and practice.
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2.10 Trade Administration
DNR intends to: Develop management practices menu
Issue WPDES with WQT conditions Track trades
DNR will not act as broker or central exchange
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2.11 Legal Issues and StatutoryChanges
Modify s. 283.84, Wis. Stats.
Eliminate pilot program reference
Eliminate 5-year trade limit
Provide authority for rulemaking Provide authority for WQT
permit conditions
No rule changes at this time
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