Agriculture Reference
In-Depth Information
NutrientNet: providing a trading infrastructure and facilitating implementation
Recognising that nutrient trading had the potential to play a significant role in
meeting U.S. water quality goals, WRI and partners from the Michigan Department of
Environmental Quality started to think about how to efficiently implement these markets.
Furthermore, we recognised that nutrient trading faced a number of obstacles that made
its widespread implementation complicated, including high transaction costs, initially thin
markets, and no actual marketplace for trades to occur.
Our solution was to develop an on-line marketplace, NutrientNet
(www.nutrientnet.org), to overcome these obstacles. There are two prototype versions of
NutrientNet currently available—one for phosphorus in the Kalamazoo watershed in
Michigan and the other for nitrogen in the Potomac watershed in the Chesapeake Bay. In
addition there are three other sites currently under development:
A water quality trading market (involving both point and non-point sources) for
nitrogen in the Susquehanna watershed, Pennsylvania
A reserve auction pilot programme in the Conestoga watershed in Pennsylvania
An updated Kalamazoo watershed market with improved BMP estimation algorithms
for nutrient losses.
The NutrientNet site comprises two key components:
1. Standardised tools for estimating point and non-point source nutrient contributions
to surface waters, exploring nutrient reduction options, and estimating the cost of
achieving reductions.
NutrientNet currently incorporates on-line calculation tools that enable farmers and
wastewater treatment facility managers to estimate nutrient loads from their operations
and the cost of reducing nutrient loads through various mitigation options. The rules for
converting reductions into tradable credits are also incorporated into the calculation tools.
This includes the discount factors used to ensure fungibility, such as trading ratios, spatial
delivery ratios, and equivalence ratios.
The NutrientNet estimation tool utilises a Geographical Information System (GIS)
interface that allows the users to identify the geographical location of their operation. The
GIS interface retrieves the relevant information for each type of discharge from a
geographic database which is used to estimate baseline phosphorus and nitrogen loads.
The types of GIS information used include aerial photographs delineating roads, streams
and land uses, distance to streams, topography and soil type.
In addition to the geographical data, NutrientNet requires specific information
relevant to each operation to estimate baseline nutrient loads. For point sources users
provide information about their specific facility, such as current flow rates, nutrient
concentration and regulatory nutrient discharge limits. Using the total annual permitted
load as a baseline, NutrientNet calculates the total credits needed for compliance (for
those who exceed their regulatory limit), or the total credits generated (for those who are
under their regulatory limit). Generated credits are calculated by subtracting the actual
load from the baseline limit and applying the appropriate attenuation factor or spatial
delivery ratio.
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