The Chesapeake Bay has been placed on the Environmental Protection Agency’s list of Impaired Waters due to nutrient pollution. The state of Maryland, in response to the Bay’s health, has suggested implementing a nutrient trading market. The nutrients that are being focused on in the market are nitrogen and phosphorus, found in fertilizer. This market would help reward farmers for their responsible management practices, while keeping run-off pollutants out of the Bay. “In these markets, farmers who reduce pollutants below a set level would earn credits. They would sell these credits to other operators, such as sewage and water treatment facilities or power plants that have difficulty meeting environmental targets.” The use of government subsidies would not need to be involved. This program would be effective because efficiency and cost-effective results would be increased under this market-based approach since the market determines the cost. Trades to achieve a “desired load reduction can take place between point sources, between point and nonpoint sources, or between nonpoint sources." The nutrient trading project would financially incentivize farmers to manage fertilizers in a responsible way because, if rewarded with credits, extra revenue would become available to them.
An additional idea to the nutrient trading program is whether to connect it with carbon trading, as well. Maryland, along with a couple other states, has been investigating whether the combination of the carbon and nutrient markets would be an effective way to fight climate change and pollution. A main question for policy makers is “whether farmers who achieve reductions in watershed pollution while also capturing CO2 should be able to sell credits in both markets and, in effect, get dual payments for single action.” The carbon trading network is already set up, and along with carbon, the Worlds Resouce Institute has created NutrientNet to facilitate market-based approaches by reducing transaction costs, standardizing calculations of nonpoint source reductions, and public participation and oversight.
If other states were to also adopt this nutrient trading market, the Chesapeake Bay would greatly benefit from the reduction of runoff in its watershed. If this were expanded and the market applied to the Bay area as a whole, then credits could be exchanged across state boundaries and among the rivers. Total Maximum Daily Loads (TMDL) set up by the EPA would be much easier to achieve with a Bay-wide system. According to a paper by the Worlds Resource Institute, depending on credit prices, trading potentially could:
- Generate new revenue for the agricultural sector and other credit generators at an amount comparable to current levels of annual public funding for agriculture conservation cost-share programs for the Bay
- Reduce nitrogen removal costs for some in the wastewater sector by as much as 60 percent
- Save the municipal stormawater sector hundreds of millions of dollars per year
I think this is a wonderful idea. I live in Maryland near the Chesapeake Bay and have learned about how horribly it is polluted since elementary school. Something clearly needs to change. I think this idea is great simply because of the predicted outcome. Something needs to happen to reduce pollution levels in the bay as soon as possible. This system seems somewhat complicated, but the benefits would outweigh any costs. The combination of carbon and nitrogen markets seems to be an idea that is worth seriously looking into.
ReplyDeleteLike Jenna, I think this is a great idea, but it does seem a little complicated. Despite this, I love that farmers gain incentives for their wise use of fertilizers, and I think it's completely necessary. Farming is difficult and their livelihood depends on how many crops they grow; therefore, who can blame them for using readily available and effective fertilizers. Especially if there is no incentive to NOT use fertilizers. The reduction in pollution from agricultural runoff would significantly improve the health of the Chesapeake Bay, but would this trade really make a difference in sewage and water treatment facilities? And does the state regulate non point source pollution to the extent that they should?
ReplyDeleteI’m very glad to see policies that will be benefiting an area so close to Virginia. The Chesapeake Bay is such a big part of Virginia and Maryland’s livelihood, but still many don’t realize that. By using this type of credit based program, farmers with have a great incentive to clean up their practices. Fertilizers are a top reason of why there are dead zones in the bay, which are killing off the, once bountiful, oyster population. I’m mildly concerned with what will prove to be an increase of leniency for sewage and water treatment facilities, but the benefits to this idea outweighs the costs in my mind. Newer and cleaner farmer practices have been need for many years and by using this type of system with a well known body of water, such as the bay, will also create positive press for this type of ideas to spread to other parts of the country.
ReplyDeleteI also agree that this is a great idea. The Chesapeake Bay used to be considered one of the most productive estuaries in the world, however; the health has steadily been decreasing over the years. I think that nutrient trading would be an effective way to reduce pollution levels since an economic incentive would be offered. However, as others said above, I also feel as if this system is slightly complex so implementation may prove to be difficult. I think that initially a nutrient trade system should be put in place; and if it proves to be effective then later the carbon trade system can be incorporated.
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