Water quality trading is a market-based approach providing a farmer the opportunity to get paid for implementing conservation practices leading to improved water quality. For every pound of phosphorus or nitrogen farmers keep from leaving their fields by using new management practices credits are earned.
Farmers can trade these credits with a business or municipality which is also required by law to reduce wastewater pollutants. The farmer gets paid for the trade.
The program will serve as the basis for the three states to implement pilot trades through 2015 among at least three power plants or other participants and up to 30 farms.
This is the first time several states have developed and implemented an inter-state trading program under the same rules, and where a water quality credit generated in one state can be applied in another.
The agreement provides businesses and municipalities a better option to reduce nitrogen and phosphorus loading in rivers, lakes and streams through agricultural conservation and best management practices in a watershed.
By working together, the business or municipality will partner with farmers to provide financial assistance to implement conservation practices improving water quality. These partnerships offer a more cost effective water quality improvement tool.
“In addition to producing food and fiber, farmers provide many ecosystem benefits – clean water, clean air, improved soil quality and wildlife habitat to name a few,” said Larry Antosch, Ohio Farm Bureau Federation senior director of policy development and environmental policy. “Participation in pilot trades provides farmers with the unique opportunity to help shape the multistate nutrient trading program.”
Leading the effort
“For farmers, water quality trading creates opportunities to work within their communities to implement conservation practices that improve water quality and protect and enhance valuable farmland soils,” said John Scholl, president of American Farmland Trust, which is supporting the effort led by the Electric Power Research Institute (EPRI).
“This trading plan is a win-win for utility companies, agriculture and ultimately, consumers and the environment,” said Scholl.
Over the next two years, Soil and Water Conservation District staff in the three states will be reaching out to farmers to see if they are willing to participate in the pilot trades.
The water quality pilot trades will take place in up to 16 counties in Ohio, Kentucky, and Indiana, implementing agricultural conservation best management practices on up to 20,000 acres. In Ohio, pilot projects will take place in Columbia, Jefferson, Mahoning, Morgan and Washington counties.
At full-scale, the project could include up to eight states in the Ohio River Basin and would potentially create credit markets for 46 power plants, thousands of wastewater facilities and other industries, and approximately 230,000 farmers.
The pilot project is also receiving regional support from the Ohio Farm Bureau Federation and the Ohio River Valley Water Sanitation Commission; federal support from the U.S Environmental Protection Agency and the U.S. Department of Agriculture Natural Resources Conservation Service (USDA NRCS); and industry support from American Electric Power, Duke Energy and Hoosier Energy.
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