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Will Water-Trading Credits Help Reduce Pollution?

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Agriculture is a major polluter of waterways, dumping phosphorus, nitrogen and sediment into bodies of water all across the country. One market-based solution to limit such pollution is the water-trading programs available to farmers through the EPA and the USDA.

That’s raising hackles among environmental groups, which are unusually divided on the issue. “The idea has already gained some acceptance because of carbon trading and other schemes,” said Fred Tutman, head of an environmental watchdog group on Maryland’s Patuxent River, a tributary of the Chesapeake. “But these are money-raising schemes. They’re not pollution-reduction schemes. It’s creating a privatized interest in the resource.”

Under the Clean Water Act, regulators have to set total maximum daily loads for polluted waterways, specifying the amount of pollution that entities on that waterway can emit. “That sets the cap,” McGee explained. “It’s the driver for trading, if you will.”

The Clean Water Act makes a distinction between polluters. There are point source polluters — such as power plants, where pollutants emerge from a single pipe or point — or non-point source polluters, like most farms, where pollutants emerge from a diffuse area.

Point sources — including concentrated animal feeding operations — are required to have discharge permits, which set the allowable pollution they can emit. That would include factory farms or large livestock operations. But because most other farms are considered non-point sources, their pollution isn’t regulated under a permit.

The idea of trading credits between point sources is more straightforward because discharges can be measured more accurately. Not so between point sources and non-point sources. “The part of trading that gives people a lot of heartburn is when you start talking about trading between point sources and non-point sources,” McGee said. “The consternation is about the verification.”

In other words, some critics say, it’s difficult to gauge what a credit is worth and whether it’s actually reducing pollution. “Point sources have permits. They have to monitor their discharges, they have to report their results. There are public documents,” said Scott Edwards, who co-directs the Food and Water Justice Project at the environmental group Food and Water Watch. “Non-point sources like agriculture are not regulated by EPA. There are no monitoring requirements, no permitting requirements.”

The credits generated by farms are thus based largely on modeling and projections, although the requirements vary state by state. State regulators allot a certain amount of the pollution reduction targets under the Clean Water Act to certain sectors, giving agriculture or energy certain thresholds they have to meet.

Then, based on a model, and in some cases a visit to a farm, regulators will decide what percentage of that allotment a particular farm meets and what credit that generates. “They need to get up to a certain level of pollution reduction before they can sell credits,” McGee said of farmers. “They’re not getting a free pass.”

But that approach seems too imprecise for some critics. “It’s a crapshoot,” Edwards said. “No one will ever measure the runoff. We’re exchanging a clearly verifiable reporting system of pollution control for an unverified system based on modeling and guesswork.”

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