Agriculture Reference
In-Depth Information
Connecting potential buyers and sellers
Information ensures potential buyers and sellers can make transactions by knowing
what is being offered and at what cost. In both cases reviewed, coordinating committees
of government departments and stakeholders ensure that these signals are passed, and that
roles and responsibilities are well defined and understood.
In the South Nation system, the SNACK acts as a broker in a trading programme that
has been built around an existing cost-share programme (O'Grady and Wilson n.d.). In
fact, the trading element of the programme is not highlighted to farmers seeking funding
to implement a selection of BMPs according to their needs. For the SNACK,
municipalities who buy pollution reduction credits instead of investing in new treatment
technologies provide a supplementary source of funding for the cost-share programme.
Reducing costs
Apart from the financial savings from lower abatement costs, the administration costs
are expected to be lower than under a traditional regulatory approach. Lessons from non-
water trading programmes suggest that the transitional or start-up costs can be high
(OECD 2004). However, it is likely that as the role of government decreases over time,
public costs would become lower than under the traditional regulatory approach.
The Lower Boise system plans to limit administrative costs through a self-reporting
verification system. The South Nation system used an existing cost-share programme as
a delivery mechanism and an existing peer-monitoring system to lower the administrative
burden.
Providing increased certainty through policy guidance
Policy guidance can clarify to the regulated entities that trading will meet
environmental obligations. Several states in the United States as well as the
Environmental Protection Agency at the federal level have adopted such a policy
(US EPA 2003). In Ontario, the province adopted the Total Phosphorus Management
policy to allow trading (Birt et al 2004). In the United States, guidelines were also drafted
to provide stakeholders with basic tools to help assess the appropriateness of a WQT
system for their watershed.
Stakeholder involvement and the role of farmers
An important lesson of water quality trading systems is that all important stakeholders
must be included in the development phase. This includes both those directly involved in
trading and those with doubts about the environmental effectiveness of trading.
The problem of including the farming community in trading has been summarised as
follows by Kramer (2003:6-7): “Agricultural nonpoint sources were very reluctant to get
involved with trading discussions and agreements because they perceived that they had
little to gain and much to lose. This group of sources has enjoyed near immunity from
regulations regarding runoff to surface waters Also, having a long history of being
subject to market and production factors that are beyond their control farmers have
been understandably reluctant to voluntarily expose themselves to yet another -
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