Assessing environmental equivalents for water quality trading

Abstract

Water quality trading (WQT) is a market-based approach to improve water quality. It is an innovative, voluntary program that connects point source (PS) dischargers who need to reduce their pollutant loads with land managers who could offset those loads with nonpoint source (NPS) reductions to economically achieve water quality improvements in a watershed. The potential issues impeding WQT are its inability to address trading risks and quantify the uncertainty of potential load reduction in trades between PS and NPS. Recent research has also shown that trading information level and transaction costs cause problems in implementing WQT. Therefore, the goals of this study were to quantify the uncertainties of pollutant load reduction and delivery effect for potential trades, to estimate their spatiotemporal variations, and to provide information for stakeholders to reduce intangible costs of WQT. This study simulated agricultural cropland with more than 225 alternative land management practices to identify trends among these scenarios. Both total nitrogen and total phosphorus loads were modeled with SWAT and EUTROMOD for 36 years to analyze the potential load reduction, in-field uncertainty ratio, in-stream delivery ratio, and overall trading ratio (TR) in Lower Kansas watershed, Kansas. The analyses of site-specific effects in both geospatial and temporal aspects were also applied on subbasin level. The variant loading patterns and time distributions of each subbasin showed strong site-specific phenomena. The ANOVA of in-field nutrient load showed significant differences among the design criteria of scenarios. The results also showed a significant delivery and lake effects within the subbasins. The overall TR ranged from 1 to 2.2 or more in different scenarios. The advanced cluster analysis presented a potential method to eliminate the problems involved in fixed TRs while keeping the method simpler than finer-resolution floating TR system. Based on WQT geospatial data model, a three-tier GIS-based web interface Water Quality Trading Information Platform System (WQTIPS) was then developed for WQT information and assessment. A case study demonstrated WQTIPS can provide systematic, spatially information for stakeholders to assess the potential environmental benefit changes from the land management shifts using a simple interface. This study demonstrated that it is possible to automate water-quality trades, use watershed models to minimize trading risk and maximize water-quality benefits, and prioritize among possible trades both spatially and by BMP.