state-wide water quality trading framework

8/2/2019 State-wide Water Quality Trading Framework

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DevelopmentDevelopment

of a Statewideof a StatewideWater Quality TradingWater Quality Trading

FrameworkFramework

Wisconsin Department of Natural Resources
http://dnr.wi.gov/


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What is Water Quality Trading?

Water quality trading is an exchange ofpollutant reduction credits.

A buyer with a high pollutant control cost canpurchase pollutant reduction or treatment

from a willing seller.

Trading can produce substantial cost savingsbut must result in an improvement in waterquality and a net reduction of the pollutantbeing traded.

Trading also can provide ancillaryenvironmental benefits such as floodretention, riparian improvement and habitat.


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Trading is a Potential Tool

Several options exist to meet WQBELs and TMDL

allocations including:

Modifying wastewater treatment systems Modifying your production process to limit additives or

raw materials

Trading

Options can be used in combination


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TMDL = LA + WLA + MOS

Where:Where:

LA = Load AllocationLA = Load Allocation

(Nonpoint Sources)(Nonpoint Sources)

WLA = Wasteload AllocationWLA = Wasteload Allocation

(Permitted Point Sources)(Permitted Point Sources)

MOS = Margin of SafetyMOS = Margin of Safety


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WLA and LA

Waste Load Allocation

Waste Water Treatment Plants

(WWTPs )/ Publicly Owned

Treatment Works (POTWs)

Municipal Separate Storm Sewer

Systems (MS4s)

Concentrated Animal Feeding

Operations (CAFOs)

General permits

Industries Non-Metallic Mines

Construction Sites

Load Allocation

Background

Agriculture

Non-permitted urban

(no MS4 permit)


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Assemble a stakeholder group of thoseAssemble a stakeholder group of thoseinterested parties in watershed based tradinginterested parties in watershed based trading

issues and develop aissues and develop a trading frameworktrading

framework

including any recommended rules or guidance toincluding

any recommended rules or guidance tofacilitate watershedfacilitate watershed based trading, and reportbased trading, and report

back to the Board no later than July 1, 2011.back to the Board no later than July 1, 2011.

June 2010 NRB ResolutionJune 2010 NRB Resolution


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Specific ObjectivesSpecific Objectives

Develop a water quality trading framework that:Develop a water quality trading framework that:

Encourages water quality tradingEncourages water quality trading

Prevents exceedances of water quality standardsPrevents exceedances of water quality standards

Results in more water quality improvement than in theResults in more water quality improvement than in theabsence of tradingabsence of trading


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Denny CaneffDenny Caneff, River Alliance of Wisconsin, River Alliance of Wisconsin

Paul KentPaul Kent, Municipal Environmental Group, Municipal Environmental Group

Betsy LawtonBetsy Lawton, Midwest Environmental Advocates, Midwest Environmental Advocates

Melissa MalottMelissa Malott, Clean Wisconsin, Clean Wisconsin

Kevin SchaferKevin Schafer, Milwaukee Metropolitan Sewerage District, Milwaukee Metropolitan Sewerage District Tom SigmundTom Sigmund, Green Bay Metropolitan Sewerage District, Green Bay Metropolitan Sewerage District

Pat SutterPat Sutter, Dane County Land & Water Conservation Department, Dane County Land & Water Conservation Department

Dave TaylorDave Taylor, Madison Metropolitan Sewerage District, Madison Metropolitan Sewerage District

John UmhoeferJohn Umhoefer, Wisconsin Cheese Makers Association, Wisconsin Cheese Makers Association

Paul ZimmermanPaul Zimmerman, Wisconsin Farm Bureau, Wisconsin Farm Bureau

Meeting summaries:Meeting summaries: http://http://fyi.uwex.edu/wqtradingfyi.uwex.edu/wqtrading//

External Stakeholder Committee MembersExternal Stakeholder Committee Members
http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/


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WQT Framework ReportWQT Framework Report SummarySummary

Introduction and BackgroundIntroduction and Background

Part 1: Summary of Water Quality Trading EffortsPart 1: Summary of Water Quality Trading Efforts

Part 2: Draft FrameworkPart 2: Draft Framework

Part 3: Action/RecommendationsPart 3: Action/Recommendations

AppendicesAppendices


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Wisconsins History with Trading

Fox River BasinFox River Basin Developed guidance,Developed guidance,

element list, issueelement list, issuesummary, and reports.summary, and reports.

Rock River BasinRock River Basin Developed aDeveloped a

framework andframework andpursued some tradespursued some tradesbut lack of sufficientbut lack of sufficient

economic incentiveseconomic incentivesprevent trades.prevent trades.

Red Cedar BasinRed Cedar Basin City of CumberlandCity of Cumberland

TradeTrade


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EPA Trading Program Structure

EPA Guidance for trading and NPDES permit programs:EPA Guidance for trading and NPDES permit programs:

Water quality trading programs must meet requirements of theWater quality trading programs must meet requirements of theClean Water Act.Clean Water Act.

The Clean Water Act provides legal authority for states and tribesThe Clean Water Act provides legal authority for states and tribesto develop and administer trading programs.to develop and administer trading programs.

EPA's 2003EPA's 2003 National Water Quality Trading PolicyNational Water Quality Trading Policy(Trading Policy)(Trading Policy)

recommends basic ground rules for trading.recommends basic ground rules for trading.


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WQT Framework ContentsWQT Framework Contents

Part 2: Draft FrameworkPart 2: Draft Framework

2.1 Pollutant Parameters Acceptable for WQT2.1 Pollutant Parameters Acceptable for WQT

2.2 Appropriate Circumstances for WQT2.2 Appropriate Circumstances for WQT

2.3 Location and Geographic Scope2.3 Location and Geographic Scope

2.4 Credit Threshold2.4 Credit Threshold

2.5 Trade Ratios2.5 Trade Ratios

2.6 Timing of Credit Generation and Use2.6 Timing of Credit Generation and Use

2.7 Trade Duration2.7 Trade Duration

2.8 Quantifying Credits2.8 Quantifying Credits2.9 Compliance and Enforcement2.9 Compliance and Enforcement

2.10 Trade Administration2.10 Trade Administration

2.11 Legal Issues and Statutory Changes2.11 Legal Issues and Statutory Changes


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2.1 Pollutant Parameters Acceptable for WQT2.1 Pollutant Parameters Acceptable for WQT

NutrientsNutrients

PhosphorusPhosphorus

NitrogenNitrogen

SedimentSediment

TemperatureTemperature

Dissolved Oxygen-related ParametersDissolved Oxygen-related Parameters

e.g., Biochemical oxygen demande.g., Biochemical oxygen demand


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2.2 Appropriate Circumstances for WQT2.2 Appropriate Circumstances for WQT

WQT May be UsedWQT May be Used

Demonstrate compliance with WQBELsDemonstrate compliance with WQBELs

Offset pollutant load from new or expanded dischargerOffset pollutant load from new or expanded discharger

WQT not allowed when localizedWQT not allowed when localized

exceedances of water quality standardsexceedances of water quality standards will occurwill occur


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2.3 Location and Geographic Scope2.3 Location and Geographic Scope

Non-TMDL WQBELsNon-TMDL WQBELs Credits must be generated upstreamCredits must be generated upstream

TMDL WQBELsTMDL WQBELs Credits may be generated within the drainageCredits may be generated within the drainage

area for the impaired segment (segmentshed)area for the impaired segment (segmentshed)


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Figure 1: No Impaired WatersFigure 1: No Impaired Waters

Reach A

(100 ug/l)

Reach B

(100 ug/l)

Reach C

(100 ug/l)

Reach D(WQC 100 ug/l)

Reach E

(75 ug/l)

Reach F

(75 ug/l)

PS 1TBEL: 1,000 ug/lNR 217: 900 ug/l

PS 2TBEL: 1,000 ug/lNR 217: 800 ug/l

PS 3TBEL: 1,000 ug/lNR 217: 300 ug/l

Trade should occur

upstream of point

source.

If trading to meet

WQBELs, trade should

occur in same watershedand not create violations

in local water quality

standards.


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Figure 2: Impaired Waters with TMDLFigure 2: Impaired Waters with TMDL

Reach A

(100 ug/l)

Reach B

(100 ug/l)

Reach C

(100 ug/l)

Reach D(WQC100 ug/l)

Reach E

(75 ug/l)

Reach F

(75 ug/l)

PS 1

TBEL: 1,000 ug/l

NR 217: 100 ug/l

TMDL: 650 ug/l

PS 2

TBEL: 1,000 ug/l

NR 217: 800 ug/l

TMDL: 600 ug/l

PS 3

TBEL: 1,000 ug/l

NR 217: 75 ug/l

TMDL: 400 ug/l

Trade location set

based on the

waterbody

responsible for the

WLA.

The trade must occur

in the watershed of

that waterbody

assigning the WLA.


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2.4 Credit Threshold2.4 Credit Threshold

Credits Generated byCredits Generated by Point SourcePoint Source

Lesser of WQBEL or TBELLesser of WQBEL or TBEL

Credits Generated byCredits Generated by Nonpoint SourceNonpoint Source

Lesser of TMDL LA or PerformanceLesser of TMDL LA or Performance

StandardStandard (e.g., ch. NR 151)(e.g., ch. NR 151)

5-yr Interim Credit = Reduction from Existing5-yr Interim Credit = Reduction from ExistingPollutant LoadPollutant Load


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2.5 Trade Ratio2.5 Trade Ratio

Uncertainty - Based on effectiveness and ease of verification of theUncertainty - Based on effectiveness and ease of verification of the

management practices employed. Practices will be classified intomanagement practices employed. Practices will be classified into

different categories and assigned ratios.different categories and assigned ratios.

Lower RatioLower Ratio 2:1 Ratio2:1 Ratio Higher RatioHigher Ratio

Companion CropsCompanion Crops Buffer withBuffer withupland practicesupland practices

Tillage PracticesTillage Practices

Fall cover cropsFall cover crops Buffer withoutBuffer withoutsupportingsupportingpracticespractices


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Management Practices MenuManagement Practices Menu

ManagementManagementPracticePractice

AvailableAvailableCreditsCredits

(Approved(ApprovedMethod)Method)

UncertaintyUncertaintyTrading RatioTrading Ratio

Schedule forSchedule forCredit UseCredit Use

CreditCreditAvailabilityAvailability

DateDate

Credit UseCredit UseRestrictionsRestrictions

Companion CropsCompanion Crops 2.5 lbs P per2.5 lbs P peracrePIacrePI-1-1in.in.

precipitationprecipitation(SWAT)(SWAT)

1.21.2 Credits may beCredits may bebanked andbanked and

used over theused over theentire year.entire year.

First monthFirst monthsecond coversecond cover

crop establishedcrop established

Credits may notCredits may notbe carried overbe carried over

from year to year.from year to year.

ConservationConservationTillageTillage

NutrientNutrientManagementManagement

Buffer StripsBuffer Strips

Vegetative FilterVegetative FilterStripsStrips


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2.5 Trade Ratio2.5 Trade Ratio

Delivery (distance between generator and user)Delivery (distance between generator and user) TMDL Same factors used in TMDLTMDL Same factors used in TMDL Non-TMDL USGS SPARROW model for P, N and sedimentNon-TMDL USGS SPARROW model for P, N and sediment

Equivalency (form of pollutant)Equivalency (form of pollutant) Not necessary with phosphorusNot necessary with phosphorus Not yet specified for N and sedimentNot yet specified for N and sediment

RetirementRetirement Concept addressed with interim creditsConcept addressed with interim credits


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2.6 Timing of Credit Generation and Use2.6 Timing of Credit Generation and Use

Credits must be generated before they areCredits must be generated before they are

usedused Point source pollutant reduction must be measurablePoint source pollutant reduction must be measurable

BMP in-place and effectiveBMP in-place and effective

Credit use timing depends on credit sourceCredit use timing depends on credit source

Point source Averaging period of limitPoint source Averaging period of limit Nonpoint Anytime during calendar yearNonpoint Anytime during calendar year

(highly variable discharge exception)(highly variable discharge exception)


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2.7 Trade Duration2.7 Trade Duration

Water Quality Trade ends:Water Quality Trade ends:

At conclusion of BMP lifespan, orAt conclusion of BMP lifespan, or

When one of the trading partners endsWhen one of the trading partners endstrade agreementtrade agreement


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2.8 Quantifying Credits2.8 Quantifying Credits

Nonpoint Source CreditsNonpoint Source Credits SNAP-Plus and RUSLE2 for agricultural fieldSNAP-Plus and RUSLE2 for agricultural field

practicespractices

SLAMM and P-8 for urban practicesSLAMM and P-8 for urban practices

Point Source CreditsPoint Source Credits Effluent monitoringEffluent monitoring


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2.9 Compliance and Enforcement2.9 Compliance and Enforcement

Credit Users WPDES PermitCredit Users WPDES Permit

WQBELs and Effluent MonitoringWQBELs and Effluent Monitoring

Language Allowing Use of CreditsLanguage Allowing Use of Credits Application Submittal RequirementApplication Submittal Requirement

Effluent Limit when TradingEffluent Limit when Trading (e.g. TBEL)(e.g. TBEL) Reporting Requirements for Credits UsedReporting Requirements for Credits Used

Management Practice CertificationManagement Practice Certification

Annual Inspection of ManagementAnnual Inspection of ManagementPracticePractice


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2.9 Compliance and Enforcement2.9 Compliance and Enforcement

Application for TradingApplication for Trading

Submitted by permittee credit user for DepartmentSubmitted by permittee credit user for Departmentapprovalapproval

Indentifies credit generatorIndentifies credit generator

Identifies credit generation method (e.g.,Identifies credit generation method (e.g.,management practice)management practice)

Provides site location where credits are generatedProvides site location where credits are generated Provides amount of credits that will be generatedProvides amount of credits that will be generated

Provides date when credits become availableProvides date when credits become available

Provides trade ratio for each site and practice.Provides trade ratio for each site and practice.


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2.10 Trade Administration2.10 Trade Administration

DNR intends to:DNR intends to: Develop management practices menuDevelop management practices menu

Issue WPDES with WQT conditionsIssue WPDES with WQT conditions Track tradesTrack trades

DNR will not act as broker or central exchangeDNR will not act as broker or central exchange


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2.11 Legal Issues and Statutory Changes2.11 Legal Issues and Statutory Changes

Modify s. 283.84, Wis. Stats.Modify s. 283.84, Wis. Stats.

Eliminate pilot program referenceEliminate pilot program reference

Eliminate 5-year trade limitEliminate 5-year trade limit

Provide authority for rulemakingProvide authority for rulemaking Provide authority for WQTProvide authority for WQT

permit conditionspermit conditions

No rule changes at this timeNo rule changes at this time


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state-wide water quality trading framework

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