Water Quality Trading

Water quality trading (WQT) is an innovative, market-based, cost-effective mechanism to help achieve local water quality improvements (EPA, 2003). In WQT, sources with high costs of reducing pollution can purchase equal or greater pollution reductions from sources with lower costs. This cost difference provides an incentive for trading to occur.

LDEQ developed a WQT program, supported by state legislation and consistent with the Clean Water Act, and state and federal law, to facilitate trading among watershed stakeholders interested and eligible in participating in trading opportunities. This WQT program will allow participation by both point sources and nonpoint sources to help achieve water quality goals. Guidance for WQT in Louisiana can be found in EDMS with Document ID 15111811 and WQT program documents can be found under AI #210087.

According to the EPA Trading Policy (2003) and the EPA Water Quality Trading Assessment Handbook (2004), a buyer (e.g. a pollution source such as an industrial facility) purchases water quality improvements, or credits, from a seller (e.g. a farmer installing a buffer along a stream to capture sediment runoff or a facility installing technology that achieves reductions greater than established WQBEL requirements) that reduces pollutants. Both buyers and sellers will need to meet a minimum level, or baseline, before generating credits. The baseline for generating pollution reduction credits must be consistent with applicable water quality standards. In general, a credit is a reduction in pollutant loads beyond baseline conditions. More specifically, it is a measured or estimated unit of pollutant reduction per unit of time adjusted to account for applicable trading ratios. A seller generates excess load reductions by controlling its discharge beyond what is needed to meet its baseline through controlling its flow and/or its discharge concentrations. A buyer can then use the credits to meet a regulatory obligation.

 EPA lists trading objectives for economic, social, and environmental benefits. These benefits include:

Economic
  • Reduces the total cost of achieving water quality goals.
  • Provides a cost-effective method for achieving compliance with water quality standards.
  • Provides incentives for innovations in pollution-reduction technology.
Environmental
  • Achieves equal or greater reduction of pollution at equal or lower cost.
  • Creates an economic incentive for dischargers to go beyond minimum pollution reduction.
  • Offsets new or increased discharges resulting from urban growth.
  • Reduces cumulative pollutant loading, improves water quality and prevents future environmental degradation.
  • Provides ancillary environmental benefits such as carbon sinks, flood retention, riparian improvement, and habitat.
Social
  • Encourages dialogue among stakeholders and fosters concerted and holistic solutions for watersheds with multiple sources of water quality impairment.

All forms and supporting documentation are to be submitted to wq.trading@la.gov.

Credit Generator

LAC 33:IX. Chapter 26 requires that a credit-generating project/activity go through project review, be in place, and be producing water quality benefits prior to participating in WQT. 

Credit Buyer

LAC 33:IX. Chapter 26 requires that any entity wishing to purchase credits must submit a WQT Plan.

Credit Renewal/Monitoring

LAC 33:IX. Chapter 26 requires periodic monitoring and reporting on a credit-generating project/activity.

Association of Clean Water Administrators (ACWA) Water Quality Trading Toolkit. 2016. https://www.acwa-us.org/toolkits/water-quality-trading-toolkit/. Case Studies available at: https://www.acwa-us.org/water-quality-trading-case-studies/.

EPA. 2013. A Long-Term Vision for Assessment, Restoration, and Protection under the Clean Water Act Section 303(d) Program, available at https://www.epa.gov/sites/production/files/2015-07/documents/vision_303d_program_dec_2013.pdf.

EPA. 2013. Nonpoint Source Program and Grants Guidelines for States and Territories, p. 7, note 2, available at https://www.epa.gov/sites/production/files/2015-10/documents/319-guidelines-fy14.pdf.

EPA. 2010. Office of Water, NPDES Permit Writer’s Manual, Ch.9, pp.1, available  at https://www.epa.gov/sites/production/files/2015-09/documents/pwm_chapt_09.pdf.

EPA. 2005. Office of Wetlands, Oceans and Watersheds, Guidance for 2006 Assessment, Listing and Reporting Requirements Pursuant to Sections 303(d), 305(b) and 314 of the Clean Water Act, Section 5, available at https://archive.epa.gov/water/archive/web/pdf/2005_08_11_tmdl_2006irg_report_2006irg-sec5.pdf.

EPA. 2019. Updating EPA’s Water Quality Trading Policy to Promote Market-based Mechanisms for Improving Water Quality, available at: https://www.epa.gov/sites/production/files/2019-02/documents/trading-policy-memo-2019.pdf.

EPA. 2003. Water Quality Trading Policy, 68 Fed. Reg. 1608, p. 1609, available at http://www.gpo.gov/fdsys/pkg/FR-2003-01-13/pdf/03-620.pdf.

LDEQ Water Quality Management Plan is available at: http://deq.louisiana.gov/page/water-quality-management.

Louisiana Coastal Master Plan can be found at http://coastal.la.gov/our-plan/.

National Network on Water Quality Trading publication Building a Water Quality Trading Program: Options and Considerations, 2015 http://willamettepartnership.org/publications/.

United States Department of Agriculture-Natural Resources Conservation Service (USDA-NRSC) Field Office Technical Guide (FOTG) found at http://efotg.sc.egov.usda.gov.

Registry

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Louisiana Certified Pollutant Reduction Credits

Applicant EDMS/Agency Interest # Project Type Project Location Project Serialization Number Pollutant Reduced Certification Date Credit Expiration/Renewal Date Total Certified Credits* Status
EcoMetrics on behalf of Restore the Earth Foundation 225039 Reforestation Project LA020303_00-Lake Cataouatche 20230726_REF Total Phosphorous (TP) (lb./year) 09/10/2024 09/10/2025 376 TP (lb./year) Retired
09/10/2025 09/10/2026 367 TP (lb./year) Available
Total Nitrogen  (TN) (lb./year) 09/10/2024 09/10/2025 28,267 TN (lb./year) Retired
09/10/2025 09/10/2026 26,288 TN (lb./year) Available

*10% Uncertainty Ratio appied.

LDEQ Secretary Courtney J. Burdette
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