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Water Quality Trading Comes To Ohio River Basin

Water Quality Trading Comes To Ohio River Basin

$1 million grant to initiate pilot trading; Phase two to include Pa., W. Va.

USDA recently approved a $1 million Conservation Innovation Grant to the American Farmland Trust and their project collaborators to help develop the first interstate water quality trading market for agriculture in the nation. The collaborators will launch pilot water quality trades between farmers and public utilities in the Ohio River Basin. That includes farmers in Pennsylvania and West Virginia.

AFT is already developing these credits in key watersheds, including the Chesapeake Bay, the Puget Sound, and the Sauk River watershed in Minnesota. "We're thrilled to continue our leadership of this cutting-edge project in the agriculture and conservation sector," says Dr. Ann Sorensen, AFT's director of research.

"Thanks to this grant, we'll be able to move this regional market into its active trading phase," she adds. In years to come, Sorensen believes such environmental trading markets will become a favorite tool in a farmer's toolbox of ways to improve water quality. 

Here's how it works

Facilities facing high pollution control costs, such as public utilities or manufacturers, will buy nutrient reduction credits from farms with lower costs. The goal is to improve water quality more efficiently and inexpensively.

Farms will be able to sell nitrogen and phosphorus credits and greenhouse gas reduction credits from on-farm conservation practices, resulting in new income for their operations.

At this stage, the Ohio Farm Bureau Federation is a key collaborator. "Participation in pilot trades provides farmers with the unique opportunity to help shape the multi-state nutrient trading program," adds Larry Antosch, senior policy director for Ohio Farm Bureau 

The project lead is Electric Power Research Institute. Other collaborators include Hunton & Williams LLP, the University of California at Santa Barbara, and Kieser and Associates, LLC. American Electric Power and Duke Energy are contributing an additional $400,000 for a phase-two total of $1.4 million.

AFT will be to reaching out to local Soil and Water Conservation District offices and other local contacts in pilot trade areas to locate and work with farmers willing to install conservation practices and sell the resulting credits to the participating utility companies. This project will address point-source emissions and non-point-source emissions, including agricultural runoff.

The Ohio River Basin spans 14 states, including Ohio, Kentucky, Indiana, West Virginia, Pennsylvania, Tennessee, and Illinois. It contributes about 35% of the water flowing down the Mississippi River into the Gulf of Mexico. Agriculture is estimated to contribute up to 65% of the nitrogen, phosphorus and sediments that cause hypoxia in the Gulf of Mexico.

Gulf hypoxia is a process in which an area of ocean loses oxygen and subsequently the ability to support life. These areas, known as dead zones, are attributed to man-made pollution, particularly fertilizer runoff from households, manufacturing, industrial and other processing, and agriculture.

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