Sustainable water quality management policy : the role of trading : the U.S. experience

After the success of the Acid Rain Program, pollution trading became a more acceptable policy in dealing with pollution problems. Trading of pollution credits and allowances helps to achieve environmental goals faster and more co- effectively. Although for the past 20 years water pollution trading had been in effect for as long as air pollution trading, many water quality trading programs - as compared to air pollution trading programs - lack success in the implementation of trading. The motivation factor for my work came from an interest in learning and understanding what the differences were that culminated in different levels of success being achieved between water pollution trading programs and air pollution trading programs. Moreover, another incentive was not only to understand what the role of trading should be for managing water quality, but also how to better improve the water quality trading programs in order to become successful. This book focuses on the examination of problems existing within a mark- based system for water pollution control policy in the United States, and provides essential information for introducing market-based instruments for water quality management, presents general situations where trading may or may not work, and offers a recommendation for those interested in developing new water trading programs as a suitable option for solving localized water pollution, for ?ne-tuning the system after implementation, and for overcoming trading obstacles. The book is divided into 5 chapters.

Preface	p. xi
Chapter 1 Background	p. 1
Introduction	p. 1
1.1 Definition of Water Quality and Water Pollution	p. 2
1.1.1 Water Quality	p. 2
1.1.2 Water Pollution	p. 3
1.1.3 Water Pollution System	p. 3
1.1.4 Water Quality Indicators	p. 6
1.2 Water Quality Regulation and Policy Reviews	p. 7
1.2.1 Brief History and Evolution of Water Pollution Policy in the US	p. 7
1.2.2 Progress and Challenges for the Trading Approach	p. 12
1.3 Introduction to Water Quality Trading	p. 13
1.3.1 Description	p. 13
1.3.2 Incomplete Experience of Effluent Trading in the US	p. 15
1.3.3 Comparison between Air and Water Trading	p. 15
Chapter 2 Concept, Framework and Considerations for Water Quality Trading	p. 19
Introduction	p. 19
2.1 Concept about Tradable Permit Systems	p. 20
2.1.1 Definition and Classification	p. 20
2.1.2 Type of Tradable Permit	p. 20
2.1.3 Permit Lifetime	p. 22
2.1.4 Allocation Strategy	p. 22
2.1.5 Tradable Permit Schemes	p. 23
2.2 Framework for Establishing WQT Systems	p. 28
2.2.1 Legal Elements	p. 28
2.2.2 Economic Elements	p. 29
2.2.3 Technical Elements	p. 30
2.3 Considerations in Establishing Tradable Permit Schemes	p. 30
2.3.1 Legal and Institutional Consideration	p. 31
2.3.2 Economic Consideration	p. 35
2.3.3 Environmental Consideration	p. 42
Chapter 3 Overview of Observations in Water Quality Trading	p. 45
Introduction	p. 45
3.1 Overview of Water Trading Programs in the US	p. 46
3.1.1 Program Structures	p. 48
3.1.2 Pollutants	p. 52
3.1.3 Market Structure	p. 54
3.1.4 Size of the Watershed	p. 56
3.1.5 Number of Participants in a Trading Program	p. 58
3.1.6 Trading Ratios	p. 60
3.2 Observations Derived from Trading Programs	p. 60
3.2.1 Banking and Borrowing	p. 61
3.2.2 Number of Trades Occurring in Each Program	p. 61
3.2.3 Transaction Costs	p. 63
3.2.4 Cost Savings	p. 65
Chapter 4 Potential Role of Trading in Water Area	p. 69
Introduction	p. 69
4.1 A Specific Role of Trading	p. 69
4.1.1 Grassland Area Farmers Trading Program (CA)	p. 69
4.1.2 Tar-Pamlico Trading Program (NC)	p. 72
4.1.3 Lake Dillon Trading Program (CO)	p. 74
4.1.4 Rahr Malting Company Trading Program (MN)	p. 75
4.1.5 Long Island Sound Nitrogen Trading Program (CT)	p. 75
4.1.6 Passaic Valley Sewerage Commissioners (PVSC) Pretreatment Trading Project (NJ)	p. 77
4.1.7 The Truckee River Water Quality Settlement Agreement and Truckee Meadows Wastewater Reclamation Facility Permit (NV)	p. 78
4.1.8 Chesapeake Bay Nutrient Trading Program (VA, MD, PA and Washington DC)	p. 79
4.2 Important Barriers Hindering the Role of Trading	p. 80
4.2.1 Regulatory Related Barriers	p. 81
4.2.2 Economic Related Barriers	p. 84
4.2.3 Technical and Environmental Related Barriers	p. 88
4.3 Generic Roles of Water Quality Trading	p. 88
Chapter 5 Conclusion	p. 93
Introduction	p. 93
5.1 What Distinguishes the Success of One WQT Program versus Another?	p. 94
5.2 How Well Do the WQT Programs within the US Perform?	p. 95
5.3 Why Did WQT Programs Fail to Have Active Trading	p. 98
5.3.1 Regulatory Related Barriers	p. 98
5.3.2 Economic Related Barriers	p. 99
5.3.3 Environmental Related Barriers	p. 100
5.4 What Should the Roles of Trading Be in Water Quality Management?	p. 101
5.5 What Is the Suggested Guidance for Designing WQT Programs?	p. 104
5.5.1 Relevant Issues	p. 104
5.5.2 Principles	p. 105
5.6 How to Promote a WQT Implementation?	p. 111
5.6.1 Develop a Real Cap-and-Trade Program for WQT	p. 111
5.6.2 Encourage a General Permit or a Multi-Party Permit	p. 112
5.6.3 Promote a Statewide Trading Policy	p. 113
5.6.4 Set Up a Hybrid Trading System	p. 114
5.6.5 Support a Pilot Program/Simulation	p. 115
Appendix: Summary Details of Water Quality Trading Programs	p. 117
A.1 Part I Regarding Activity, Type of Participants, Pollutants and Market Structure	p. 117
A.2 Part II Regarding Size of Watershed, Number of PS, Trading Ratio, Number of Trade, and Characteristics of Participants	p. 121
A.3 Part III Regarding TMDL in the Program, Cost-Saving and References	p. 126
A.4 Summary of Analysis Results from Appendices A-1, A-2, A-3	p. 130
References	p. 135

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