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Pennsylvania report confirms competitive nutrient trading bids for farm tech slash Chesapeake Bay compliance costs to taxpayer as much as 80%.

John Vogel, Editor, American Agriculturist

March 8, 2013

3 Min Read

In 2004, Pennsylvania was faced with an estimated $8.2 billion capital cost of meeting U.S. EPA's total maximum daily load mandates for its share of the Chesapeake Bay clean-up. That's not all. Another $665 million in annual costs would have been required for Bay's largest nitrogen contributor.

But based on a ground-breaking nutrient credit trading pilot project results involving three Keystone State farms, taxpayer costs may be reduced as much as 80%. That's the bottom line of a recent report released by Pennsylvania General Assembly's Joint Legislative Budget and Finance Committee.


In a nutshell, the policy initiative enables low-cost verified nitrogen reductions from agriculture, primarily livestock, to replace high cost municipal and storm water reductions to comply with the federal Chesapeake Bay federal mandate.

"Local livestock operations have already been approved to provide verified nitrogen reductions from livestock," confirms former U.S. Ag Secretary Ed Schafer. "They could produce a significant impact on lowering the costs to Pennsylvania tax and rate payers for watershed clean-up efforts."

Nonpoint-source agriculture and urban runoff from impervious surface account for about 80% of Pennsylvania's total required nitrogen reductions. The cost to achieve N reductions called for under the federal Watershed Improvement Plans for agriculture and urban runoff were projected to be 80% to 85% lower under a competitive nutrient trading bidding program than if achieved through best management practices.

Two years ago in January, American Agriculturist's cover story shared a technological ground-breaking project at Kreider Farms of Manheim, Pa. Bion Environmental Technologies overhauled the farm's dairy At Hillandale Farms of Gettysburg, Pa., EnergyWorks BioPower has constructed a gasification energy and nutrient recovery facility capable of processing all the manure produced by 5 million layer hens.

~~~PAGE_BREAK_HERE~~~As a nutrient credit generator certified under Pennsylvania Nutrient Cap and Trade program, the Gettysburg ENRF is the first gasification facility of its kind in the United States

To read the entire report, click on Full PA Legislative and Budget Committee Report.

Nutrient credit trading plans benefit farms
As of November 30, 2012, 38 trades occurred, with the overall quantities traded being 623,703 pounds of nitrogen and 33,203 pounds of phosphorus. Nitrogen and phosphorus credits traded in auction through the PENNVEST clearinghouse ranged from about $1.25 to $4 per pound.

Removing a pound of nitrogen or phosphorus through wastewater treatment is far greater than doing so through agricultural best management practices. So rather than investing in expensive bricks-and-mortar upgrades, some wastewater authorities opt instead to purchase nutrient credits created by less-costly nonpoint source projects, such as no-till, streambank fencing and riparian buffers installed on farms to reduce pollution.  

For example, the Mount Joy Borough Authority investigated costs of upgrading and found that by installing the first level of nitrogen treatment they could reduce nitrogen by about 50% for about $8 per pound. But, to reduce nitrogen to their cap load, another upgrade would have increased their costs to about $12 per pound.

Instead, the borough authority contracted with neighboring Brubaker Farms, investing in more than 900 acres of no-till to meet their permit cap at a cost of only $3.81 for every pound reduced. 

PENNVEST believes trading will continue to increase as nutrient limits become effective on larger numbers of National Pollutant Discharge Elimination System (NPDES)-permitted facilities.

Advanced technologies [such as methane digesters and composting] may also be key to continued financial viability of small farms, suggests the report. By eliminating or reducing the need for land application of manure, technology solutions can decouple the link between land use and the scale of animal operations.

About the Author(s)

John Vogel

Editor, American Agriculturist

For more than 38 years, John Vogel has been a Farm Progress editor writing for farmers from the Dakota prairies to the Eastern shores. Since 1985, he's been the editor of American Agriculturist – successor of three other Northeast magazines.

Raised on a grain and beef farm, he double-majored in Animal Science and Ag Journalism at Iowa State. His passion for helping farmers and farm management skills led to his family farm's first 209-bushel corn yield average in 1989.

John's personal and professional missions are an integral part of American Agriculturist's mission: To anticipate and explore tomorrow's farming needs and encourage positive change to keep family, profit and pride in farming.

John co-founded Pennsylvania Farm Link, a non-profit dedicated to helping young farmers start farming. It was responsible for creating three innovative state-supported low-interest loan programs and two "Farms for the Future" conferences.

His publications have received countless awards, including the 2000 Folio "Gold Award" for editorial excellence, the 2001 and 2008 National Association of Ag Journalists' Mackiewicz Award, several American Agricultural Editors' "Oscars" plus many ag media awards from the New York State Agricultural Society.

Vogel is a three-time winner of the Northeast Farm Communicators' Farm Communicator of the Year award. He's a National 4-H Foundation Distinguished Alumni and an honorary member of Alpha Zeta, and board member of Christian Farmers Outreach.

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