You’re probably already reaping the benefits of conservation practices on your operation like better soil, cleaner water, and bigger profits. But what if you could be paid by others for improving water quality? It’s a new idea, but one that may provide options for you.
Water quality trading is a market-based approach to improving water quality. Here’s how it works. In every watershed there are pollutants flowing into waterways. These pollutants could be a result of farming practices, called “non-point sources,” or they might come from “point sources” like industrial plants or city wastewater treatment facilities. Point source facilities face the high cost of removing things like nitrogen and phosphorous from their wastewater. Instead of installing expensive equipment, they may choose to work with farmers or ranchers, compensating them for their conservation practices that reduce “non-point source” pollutants into the system. As a result water quality improves, the facility spends less to make it so, and farmers and ranchers benefit from the trade as well.
If you haven’t heard of this market place before, it’s because it isn’t well formed yet. But by knowing a little bit about it now, you can watch for opportunities in the future. Here are some examples of how this is working for some producers around the country from “Getting Paid for Stewardship: An Agricultural Community Water Quality Trading Guide.”
• In Barron County, Wisconsin, producers receive from the city of Cumberland approximately $18.50 per acre for converting to no-till farming (Barron County 2005). It is less expensive for the city to decrease the amount of phosphorus entering the water by paying producers for this conservation practice than it is to upgrade its wastewater treatment plant and pay the annual operating costs for phosphorus removal. In addition, this conservation practice provides many other benefits to the local environment, such as increased wildlife habitat, that treatment at the city’s facility would not provide (Jeff Streeter, Director of Public Works, city of Cumberland, personal communication, June 1, 2006).
• In Lancaster County, Pennsylvania, producers competed for federal Conservation Innovation Grant funding to implement conservation practices that would reduce the most phosphorus for the least cost per pound. The funds, distributed by the Pennsylvania Environmental Council, focused on improving water quality in the area surrounding the Conestoga River. Producers with winning proposals received funds ranging from $1,500 for implementation of streambank stabilization to $101,990 for installation of a waste storage facility for dairy cattle (PEC and WRI 2006).
• Producers in Washington County, Oregon, work with the Tualatin Soil and Water Conservation District to participate in an enhanced Conservation Reserve Enhancement Program (CREP). Participating producers receive an extra $128 per acre per year above the standard $265 per acre per year for tree plantings to cool the excessively warm Tualatin River (Charles Logue, Clean Water Services, Technical Services Department Director, personal communication, May 23, 2006). The additional funds come from Clean Water Services, a wastewater and stormwater public utility that must reduce the amount of heated water entering the Tualatin River from its facilities.
While all this sounds great, there are costs involved for producers considering becoming involved in water quality trading. There’s the time you’ll spend learning about the market and finding potential trading partners. There could be costs associated with getting technical assistance to estimate the amount of nutrients coming from your property, as well as for completing lengthy technical reports. Trade verification and reporting can delay payments. Some of these problems can be solved in new trading systems where farmers and ranchers participate in development of rules and standards for trading programs.
If you’d like to learn more, check out this great resource. It provides a broad overview with a focus on the national standards for water quality trading. You’ll need to check with your state or county to find out what your local programs might involve.