Assessing the Feasibility of Water Quality Trading to Address Agricultural Sources of Pollution in Canada - Water and Agriculture: Sustainability, Markets and Policies - page 87

involvement with a discharge permit. Most agricultural non point sources wanted to see
good evidence that trading would benefit their bottom line before they would risk a
trading agreement. Also, these sources were very reluctant to draw any public attention to
themselves because of a perceived potential for negative publicity”.
Our study found significant support for this statement. In addition, the rural/urban
divide can limit the development of such programmes. Farmers were sometimes reluctant
to indirectly fund urban growth while, on the other hand, some municipalities hesitated to
be perceived as paying for pollution reductions outside of their communities
(Kramer, 2003).
Addressing the question of farmers' participation and buy-in appears to be one of the
most difficult issues in implementing water quality trading, requiring a substantial length
of set-up time to develop common language, concepts and trust through a transparent
process with legitimate representatives of farmers.
Breetz et al (2005) stressed that strategies to address the initial reluctance of farmers
to participate in water quality trading systems have to be developed if such programmes
are to be effective. Social factors are an essential element in the development of policy
tools, even those that are market-based.
Implications for agri-environmental policy in Canada
Based on this preliminary research on the feasibility of using WQT to address water
pollution from agricultural sources in Canada, the following initial conclusions can be put
forward:
There appear to be no strong legal or regulatory barriers to the development of trading
systems in Canada. Some provinces have already the basic tools available to go
forward.
While trading rations can overcome significant site-specific uncertainties, the existence
of well developed data sets for a particular watershed is required. This will undoubtedly
reduce the number of potential watersheds in Canada where water quality trading can be
easily implemented.
Provinces are increasingly establishing organisations responsible for the management of
watersheds, thereby establishing at least one obvious design and implementation
mechanism. Nonetheless, it appears that policy direction and design advice could be
useful to promote the use of WQT and, at the same time, help avoid the tendency of
stakeholders to engage in strategic behaviour geared towards anticipating the regulator's
next move(s). While policy guidance can be useful, each water quality initiative must
have the flexibility to reflect conditions particular to each watershed.
Further analysis of the links between cost-sharing for BMPs and water quality trading in
Canada is required. Attached to this issue is the question of to what extent Canadian
society will push for cleaner farming operations and the extent to which the urban
population is willing to pay to support this objective.