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What is Nutrient Trading?

April 26, 2017nutrient trading

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What is Nutrient Trading?

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In 2002 the US Environmental Protection Agency issued guidance regarding the establishment of nutrient trading programs to improve water quality in impaired watersheds. A nutrient reduction trade involves an exchange of effluent control responsibility between discharge sources. The control responsibility is expressed in terms of “allowance” or “credit” which specifies the quantity of effluent the discharger is allowed to release. An exchange of allowances or credits does not increase the overall effluent discharge. Increased discharges by one source are offset by decreased discharges by another source. Market based approaches place a cost or price on the source’s decision to continue to discharge effluents. In a trading system, the cost is the price to purchase allowances from another source. Within a properly operating trading system, the financial incentives for dischargers to reduce costs drive the search for more effluent control strategies.