During a ceremony on August 9 in Cincinnati, representatives from Ohio, Kentucky, and Indiana announced that they had signed-on to an innovative interstate water quality pollutant trading program designed to try to reduce levels of nutrients in the Ohio River Basin through the buying and selling of pollutant credits. The pilot scale program, known as the "Ohio River Basin Water Quality Trading Project," was designed by the Electric Power Research Institute (EPRI) with support from the State of Ohio, the Commonwealth of Kentucky, the State of Indiana, the U.S. Department of Agriculture Natural Resources Conservation Service, the U.S. Environmental Protection Agency, American Farmland Trust, and ORSANCO. According to the program sponsors, the program is designed to promote a purely voluntary market-based mechanism for private parties to achieve compliance with existing and future nutrient regulations through the trading of nutrient credits that will be recognized and honored by all participating states.
According to a press release from the Indiana Department of Environmental Management (IDEM): "The pilot tests the specific protocols for the creation and purchase of credits for total nitrogen (TN) and total phosphorous (TP) in the Ohio River Basin beginning in 2012 and continuing through 2015. The goal is to establish a private sector trading market that is self sustaining and does not involve government subsidy. ... Water quality trading is a market-based approach that enables facilities facing high pollution control cost to buy reduction credits from entities with lower costs. The goal is to achieve water quality improvements more efficiently."
The program sponsors anticipate that initial trades under the pilot program could include at least three power plants or other entities and dozens of farms involving up to 20,000 acres, yielding potential nutrient reductions of approximately 45,000 pounds of nitrogen and approximately 15,000 pounds of phosphorous each year. According to IDEM, "[a]t full scale, the project could include up to eight states in the Ohio River Basin and would potentially create credit markets for 46 power plants, thousands of wastewater facilities and other industries, and approximately 230,000 farmers."
Additional information about the pilot program, including a detailed description of the various components of the program, can be found on EPRI's website.