A New Approach to Water Quality Trading: Applying Lessons from the Acid Rain Program to the Lower Boise River Watershed

Abstract

Water quality trading is receiving great interest as a potential tool for achieving a watershed's water quality goals at less cost. It appeals to both regulators and watershed stakeholders as a voluntary, businesslike approach attracting a category of sources to the table that regulators have been unable to control using traditional enforcement tools—nonpoint sources. Non-point source pollution is a major source of the water quality problems still needing to be addressed in watersheds throughout the United States. Following the remarkable success of the Acid Rain Program's sulfur dioxide emissions trading system, however, expectations have been raised for all pollution trading systems. To date, water quality trading projects across the US have failed to deliver on those expectations because of the predominance of the “offset” trading model in their program design, which is characterized by significant costs in both time and resources to support trades. In this article, we argue that, although critical differences exist between water quality trading and the “cap and trade” model of the Acid Rain Program, water quality trading programs should consider incorporating certain key design elements that have contributed to the Acid Rain Program's success. We describe Idaho's Lower Boise River water quality trading framework as an example of how this can be done.