Nutrient Trading – A Water Quality Solution? - Water and Agriculture: Sustainability, Markets and Policies - page 91

Chapter 7.
Nutrient Trading - A Water Quality Solution?

Suzie Greenhalgh and Mindy Selman 1

The over-enrichment of rivers and estuaries by excessive levels of nutrients, such as
nitrogen and phosphorus, is a persistent and growing water quality problem around the
world. Even though there have been significant improvements in water quality, most of
these improvements have resulted from regulating point sources - industrial and
municipal wastewater treatment facilities; today the predominant source of nutrients is
non-point sources, especially agricultural and urban runoff.
Innovative solutions are needed to provide incentives for non-point sources, whose
nutrient discharges are difficult to regulate, to reduce their nutrient contributions. One
such solution is nutrient trading. Trading involves setting a goal for the total amount of
nutrients entering streams and rivers within a watershed and allowing sources, both point
and non-point, to trade nutrient reduction credits in order to meet the local and regional
water quality goals.
Nutrient trading is being explored and implemented as a viable mechanism to reduce
nutrient pollution in a number of areas in the U.S. and internationally. To facilitate the
establishment of these markets, we have developed an on-line marketplace, NutrientNet,
for point and non-point sources to estimate their nutrient loads and achievable
reductions, and provide a marketplace for trades to occur and a registry that allows
trades to be tracked.

Setting the scene

Water quality is rapidly becoming one of the most pressing environmental concerns
facing many parts of the world today. In the U.S. alone, 39 per cent of assessed rivers and
streams, 45 per cent of assessed lakes, reservoirs and ponds, and 51 per cent of assessed
estuaries were threatened or impaired for their designated uses in 2000 (USEPA, 2002).
Nutrient over-enrichment — one of the leading causes of water quality impairments
in the U.S. — has led to the eutrophication of many of the nation's rivers and streams,
and to the formation of hypoxic zones in the Gulf of Mexico and Chesapeake Bay.
A majority of these nutrients come from non-point sources, principally agricultural
sources. Approximately 82 per cent of the nitrogen and 84 per cent of the phosphorus in
1. World Resources Institute, Washington, D.C., United States.