Using a market-based solution to improve water quality

By Sarah Hippensteel Hall, water resources manager
Guest contributor

Although water quality in our rivers and streams has seen great improvements over the past few decades, about 40 percent still fail to meet water quality standards. Excess nutrients – nitrogen and phosphorus — are a main cause. This failure is triggering additional regulations focused on wastewater treatment plants that could lead to rising costs for consumers like you and me.

More than 70 percent of the land that drains to the Great Miami River is used for agriculture, so the majority of nutrient-related water quality challenges relate to farming practices. Agricultural producers have worked diligently to implement conservation practices but financial incentives at the federal, state and local levels don’t match the demand.

Collaborative Solution
So a partnership among MCD and federal, state and local partners began in 2004 to find a better way to improve water quality at a lower cost. The result was a market-based Trading Program that reduces nutrients in streams and rivers as an alternative to traditional regulatory strategies. Farmers are paid to plant cover crops, install streamside buffer zones, and manage fertilizer application and manure storage to keep nitrogen and phosphorus from running off land into rivers and streams.

partners listMore than $3 million in funding for this pilot program came from wastewater treatment plants, the Ohio Department of Natural Resources, the U.S. Department of Agriculture, and the U.S. Environmental Protection Agency. The Miami Conservancy District manages the Trading Program, conducts extensive monitoring and publishes reports on levels of nutrients in the Great Miami River to track program results over time.

The success of the program has drawn international attention.

photo of buffer strips

Cover crops help reduce nutrient runoff.

 Economic benefits
An extensive economic and market analysis was completed before the pilot began to understand the costs and benefits. The analysis estimated that wastewater treatment plant upgrades could cost $422.5 million for the communities in our region – costs that could be passed on to customers.

The costs for agricultural conservation practices to achieve a similar level of nutrient reduction were projected at only $37.8 million, a potential $384.7 million savings compared to wastewater treatment plant upgrades.

It was estimated that on average, wastewater plants would pay $23.37 to reduce one pound of phosphorus using technology upgrades at the plant compared to $1.08 using agriculture conservation practices. For nitrogen, wastewater costs were $4.72/pound compared to $0.45/pound for agriculture.

The analysis concluded that water quality trading in the Great Miami River Watershed has the potential to provide significant cost savings with increased environmental benefit when compared to traditional regulatory approaches.

Current Status
As of March 2015, 467 agricultural projects have been installed, with farmers receiving $1.76 million to implement them. These projects are expected to reduce 626 tons of nutrient discharges to rivers and streams and achieve other benefits, including more sustainable farming operations and additional environmental improvement.

Originally expected in 2005, the additional regulations on wastewater treatment plants are not yet in place but are anticipated. As the Trading Program moves from pilot to implementation, a group of 14 soil and water conservation districts in southwest Ohio recently formed a joint board and are taking steps to assume management of the program.

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