Cy Jones

Regional Nitrogen andRegional Nitrogen and Phosphorus Trading in the

Ch k B W t h dChesapeake Bay Watershed

Cy Jones

World Resources InstituteWorld Resources Institute

Building New Clean Water Networks in China

Nanjing University, Nanjing, China

January 14, 2010January 14, 2010

1

Pennsylvania

Maryland

West Virginia

DelawareDelaware

Virginia

New York

Washington, D.C.

Water Quality Problems

High

Water Quality Problems

High Nitrogen, Phosphorus, and Sediment Loadsand Sediment Loads

Low Dissolved Oxygen

Water Clarity

E l i l H l hEcological Health

AlgaeAlgae Blooms, Including HAB

2009Hampton Roads VirginiaHampton Roads, Virginia

20072007Potomac River

Harmful Algae BloomHarmful Algae BloomFish Kill

Sources of Nit dNitrogen and PhosphorusPhosphorus

Wastewater Treatment Plants Urban stormwater

Agriculture Atmospheric Deposition

Chesapeake Bay

Nitrogen and Ph hPhosphorus

Loadings andLoadings and Reduction

Goals

Nitrogen LoadsNitrogen Loads

Million Pounds per Year283 7

42.1250

300 283.7

51.8

14.7

200200

Goal

44.3150

Goal

Other

SepticSystems

Wastewater

Urban Runoff

130.8

100

Urban Runoff

Agriculture

0

50

1 22008 Load Goal

Phosphorus LoadsPhosphorus Loads

Million Pounds per Year18

2.115

14

16

18 16.4

3.412

14

Goal

3.1

8

10 Goal

Other

Wastewater

Urban Runoff

Agriculture

7.84

6Agriculture

0

2

1 22008 Load Goal

Bay TMDL Development PProcess Plans

What total loading f

What is an it bl

How should the state/basin l d b b ll t d tfor

nitrogen, phosphorus, and sediment

can the Bay

equitable distribution of the watershed-wide loadings to the

load be sub-allocated to: individual point sources, non-

point source sectors, and sub watersheds or counties?can the Bay

assimilate?loadings to the states/basins?

sub-watersheds or counties?

13

U. S Government Non-government

President of the United States

U.S. Congress

g

NGOs

Environmental Advocacy

Federal Agencies

Environmental Protection Agency

Department of Agriculture

Conservation

Academic Community

BusinessesDepartment of Agriculture

Many Others

Businesses

Citizens

States

Governors

Legislatures

State Agencies

Environmental ProtectionEnvironmental Protection

Natural Resources

Local Governments

Public Schools

Costs

Cost of Nitrogen ReductionDollars per pound of annual nitrogen reduction

Average dollars per pound of annual nitrogen load Diff i l C i P P d R d ireduction200 - 600

92 40

Differential Costs in Per Pound Reductions Create Trading Opportunities

Stormwater

92.40

47.40

WWTP

Agriculture

New Practices21.90

6.60 3.30 3.20 3.10 1.50 1.20

New Practices

7.00 4.70 3.20

15.80

Stormwater retrofits

Enhanced NMP

WWTP upgrades

-High-

Cover crops

Land retirement

Cons.

tillage

Grassed buffers

Forest

buffers

Restored or constructed

wetlands

1.50 1.20

Native oyster aquaculture

Algal turf scrubbing

Forest

harvest

BMPs

WWTP upgrades

-Low-

Stormwater mgmt for new development

A C t f S l t d Nit R d ti M (D ll d f l it d ti )Average Cost of Selected Nitrogen Reduction Measures (Dollars per pound of annual nitrogen reduction)

Nit C t l C t CNit C t l C t CNitrogen Control Cost CurveNitrogen Control Cost Curve

Cost of nitrogenCost of nitrogen reduction ($/lb/yr)

Municipal

Reduction Goal

Incremental nitrogen reduced (lb/year)

Improve fertilizer Manure

Cover Crops

pefficiency

Expand riparian buffers

WWTP denitrification (8 mg/L)



Management NOx Scrubbers Urban SW BMPs

Septic Upgrades

by 20%

Nutrient TradingWastewater treatment plants buy and sell each p yother nitrogen and phosphorus credits or emission allowances.

Wastewater treatment plants buy nitrogenWastewater treatment plants buy nitrogen and phosphorus load reductions from nonpoint sources, such as farmers.p ,

Nutrient Trading

Lower cost

Accommodate growth and development

Intrastate Trading (Current Situation)

St t T di PState Trading Programs

11 Separate Trading Areas

Patuxent

Pennsylvania 2Maryland 3Virginia 5West Virginia 1

Intrastate Trading (Current Situation) One Market•Allow more efficient matching of credit supply to credit demand;

•Make the cheapest credits in the Bay p ywatershed 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;

Patuxent

artificially-restricted supplies;•Give credit suppliers access to many more potential buyers, thereby creating incentives for the creation of credits;incentives for the creation of credits;

•Create additional opportunities for generating credits; and

•Produce a more stable and reliable supply of credits; and

Cy JonesCy Jones

Senior Associate

World Resources Institute10 G. Street, NE, Suite 800

Washington, DC 20002(202) [email protected]

www.wri.orgg