Agriculture Reference
In-Depth Information
Results from one study indicate some possible compatibility issues, such as overlap
and potential double support between subsidy programmes and a water quality
programme (Sauvé et al. 2005). A possible option is to build the trading programme
within existing cost share programmes (not in addition to it), where there is only one
payment to farmers for each BMP implemented.
Key design elements of trading systems
The trading system has to be designed to minimise transaction, implementation, and
administrative costs. This involves ensuring that:
trades are easily recognised by regulators as a means for buyers to meet their
environmental responsibilities;
potential buyers will easily connect with sellers and contracting can proceed;
these requirements are achieved at least cost; and
there is limited uncertainty with programme elements, including liability.
The Lower Boise trading pilot in the Northwest of the United States and the South
Nation pilot in Ontario, Canada, highlight some general lessons.
Recognising trades as valid means to meet environmental obligations
One of the main goals of most of these initiatives is to provide flexibility to the
regulated in achieving discharge levels and providing certainty on pollution reduction
credits.
The trade approval process in the case of the Lower Boise pilot is made relatively
simple by establishing in advance a list of acceptable BMPs, and includes a process to
revise or add to the list. Once a BMP makes it through the list, there is no need to
establish a trade-by-trade approval process, thus reducing uncertainty for all actors.
Added flexibility is provided by ensuring new BMPs can make it through the list.
It is crucial to establish where liability lies in the case when the expected
environmental benefits are not realised or when BMPs are not implemented as planned.
In the Lower Boise, the regulated point source must ensure the credit is valid. In the
South Nation, the South Nation Conservation Authority (SNACK), 7 the institution
managing the programme and acting as broker, incurs the risks since it buys and sells the
credits and must guarantee the credit's validity to the provincial department of the
environment.
In both these examples, the regulator's role is limited to evaluating whether the
regulated are in compliance. This involves verifying that dischargers are at or below their
limit or, if not, they have enough credits.
7.
Ontario Conservation Authorities are watershed-based organisations created by the province of
Ontario in the 1940s. They are autonomous organisations developed to promote the protection
and wise use of water resources. While a number of other provinces have recently begun the
development of watershed-based organisations, the Ontario experience is unique by its longevity.
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