This document discusses regional nitrogen and phosphorus trading programs in the Chesapeake Bay watershed. It notes that high nutrient loads from sources like wastewater treatment plants, urban stormwater, and agriculture are causing water quality problems in the bay like algae blooms and low dissolved oxygen. The Chesapeake Bay Total Maximum Daily Load plan sets goals to reduce nitrogen and phosphorus loads to levels the bay can assimilate. The document discusses the costs of reducing nutrient loads from different sources and how trading programs can provide a cost-effective approach to allowing growth while meeting reduction targets. It analyzes how expanding trading across state boundaries could increase opportunities for lower-cost nutrient reductions compared to the current system of separate state-based

1. Regional Nitrogen and
Phosphorus Trading in the
Chesapeake B W t h d
Ch k Bay Watershed
Cy Jones
World Resources Institute
Building New Clean Water Networks in China
Nanjing University, Nanjing, China
January 14, 2010
1

2. Pennsylvania
Maryland
West Virginia
Delaware
Virginia
New York
Washington, D.C.

4. Water Quality Problems
High
Nitrogen, Phosphorus,
and Sediment Loads
Low Dissolved Oxygen
Water Clarity
Ecological Health
E l i lH lh
Algae
Blooms, Including HAB

5. 2009
Hampton Roads Virginia
Roads,
2007
Potomac River
Harmful Algae Bloom
Fish Kill

6. Sources of
Nitrogen and
Nit d
Phosphorus

7. Wastewater Treatment Plants Urban stormwater
Agriculture Atmospheric Deposition

8. Chesapeake Bay

10. Nitrogen and
Phosphorus
Ph h
Loadings and
Reduction
Goals

11. Nitrogen Loads
Million Pounds per Year
300 283.7
283 7
42.1
250
14.7
200
200 51.8
Goal
Other
150 44.3 SepticSystems
Wastewater
Urban Runoff
100 Agriculture
130.8
50
0
1
2008 Load Goal
2

12. Phosphorus Loads
Million Pounds per Year
18
16.4
16
2.1
15
14
3.4
12
Goal
10
3.1 Other
Wastewater
8
Urban Runoff
Agriculture
6
4 7.8
2
0
20081Load 2
Goal

13. Bay TMDL Development
Process Plans
What total loading What is an How should the state/basin
for
f equitable
it bl load b
l d be sub-allocated to:
b ll t dt
nitrogen, phospho distribution of the individual point sources, non-
rus, and sediment watershed-wide point source sectors, and
can the Bay loadings to the sub-watersheds
sub watersheds or counties?
assimilate? states/basins?
13

15. U. S Government Non-government
g
President of the United States NGOs
U.S. Congress Environmental Advocacy
Federal Agencies Conservation
Environmental Protection Agency Academic Community
Department of Agriculture Businesses
Many Others Citizens
States
Governors
Legislatures
State Agencies
Environmental Protection
Natural Resources
Local Governments
Public Schools

16. Costs

17. Cost of Nitrogen Reduction
Dollars per pound of annual nitrogen reduction
Average dollars per pound of annual nitrogen load
200 - 600
reduction Differential Costs in Per Pound Reductions
Diff i lC i P P dR d i
Create Trading Opportunities
92.40
92 40
Stormwater
WWTP
47.40 Agriculture
New Practices
21.90
15.80
7.00 6.60 4.70 3.30 3.20 3.20 3.10 1.50 1.20
Stormwater Stormwater WWTP Enhanced WWTP Native oyster Algal turf Cover Land Cons. Grassed Forest Restored or Forest
retrofits mgmt for new upgrades NMP upgrades aquaculture scrubbing crops retirement buffers constructed
tillage buffers harvest
development wetlands
-High- -Low-
BMPs
Average Cost of Selected Nitrogen Reduction Measures (D ll per pound of annual nitrogen reduction)
A C t f S l t d Nit R d ti M Dollars d f l it d ti )

19. Nitrogen Control Cost Curve
Nit C t lC tC
Cost of nitrogen
reduction Municipal
($/lb/yr)
Reduction Goal
Incremental
nitrogen
reduced
(lb/year)
Improve fertilizer
p Manure
efficiency Management Urban SW BMPs
NOx Scrubbers
Septic Upgrades
Expand Cover WWTP denitrification WWTP denitrification WWTP denitrification
riparian buffers Crops (8 mg/L) (5 mg/L) (3 mg/L)
by 20%

20. Nutrient Trading
Wastewater treatment plants buy and sell each
p y
other nitrogen and phosphorus credits or
emission allowances.
Wastewater treatment plants buy nitrogen
and phosphorus load reductions from
nonpoint sources, such as farmers.
p ,

21. Nutrient Trading
Lower cost
Accommodate growth
and development

22. Intrastate Trading (Current Situation)
State Trading Programs
St t T di P
11 Separate Trading Areas
Pennsylvania 2
Maryland 3 Patuxent
Virginia 5
West Virginia 1

23. Intrastate Trading (Current Situation)
One Market
•Allow more efficient matching of credit
supply to credit demand;
•Make the cheapest credits in the Bay
p y
watershed available to all buyers, not
just those in a restricted geographical
area;
•Increase competition among credit
sellers, leading to lower credit prices;
•Preclude credit monopolies or
artificially restricted supplies;
artificially-restricted
•Give credit suppliers access to many
more potential buyers, thereby creating
Patuxent
incentives for the creation of credits;
•Create additional opportunities for
generating credits; and
•Produce a more stable and reliable
supply of credits; and

24. Cy Jones
Senior Associate
World Resources Institute
10 G. Street, NE, Suite 800
Washington, DC 20002
(202) 729-7899
cjones@wri.org
www.wri.org
g