Nutrient Trading in Missouri

David Carani

REGFORM Missouri Water Seminar

Columbia, MO September 2015

Friend, Foe, or Phantom?

Nutrient Reduction is a

National and State Issue

Chesapeake Bay TMDL

MS River Gulf of Mexico

Nutrient Reduction Task

Force

Legal Challenges

State Criteria

Development Efforts

Nutrient Removal

Technologies are Expensive

TN: No Removal TP: No Removal

TN: 8 mg/L TP: 1 mg/L

TN: 6 mg/L TP: 0.2 mg/L

TN: 3 mg/L TP: <0.1 mg/L

TN: 1 mg/L TP: < 0.02 mg/L

$0

$10,000,000

$20,000,000

$30,000,000

Secondary BNR ENR LOT RO

Present Worth per MGD CapacityAdapted From WERF 2011, "Striking the Balance Between Nutriet Removal in Wastewater Treatment and Sustainability"

What is Water Quality Trading?

Market-Based Compliance System Where One

Discharger Buys or Sells Pollution Credits from

Another

Point-to-Point

Point-to-Nonpoint

$$$

Buyer (Wastewater Treatment Plant)

Water Quality Credits

Point-to-Nonpoint Source Trade

Seller (Farm)

Ancillary Benefits

$$$

Buyer (Wastewater Treatment Plant)

Water Quality Credits

Point-to-PointSource Trade

Seller (Wastewater Treatment Plant)

Not limited to nutrients

Cross-state trading

Gulf of Mexico Nutrient Loss

Reduction Strategies

All 12 states with

completed strategies

are looking into

nutrient trading as a

potential approach

for reductions

Missouri Nutrient Loss

Reduction Strategy

Missouri Nutrient Loss Reduction

Strategy (Dec. 2014)

Agriculture

Municipal and Industrial

Wastewater

Urban Stormwater

Decentralized Wastewater

Build off of previous efforts to

investigated potential for trading over

the next 1 - 5 years

Progress in Missouri

2011 – MDNR develops nutrient tracking tool

2013 – Missouri Innovative Nutrient Trading (MINT) project finalized

2015 – Nutrient Trading Workgroup

Nutrient Trading Workgroup

Goal – Develop a framework for a trading program

that will meet water quality standards and achieve

watershed goals

Monthly meetings to discuss individual framework

issues

Point and non-point source subcommittees

Examples are Limited

Characteristics of a

Successful Public Policy

Goal: Cost-Effective Point Source Offset Program

Efficient Effective

Equitable

Are participation costs minimized?

Does it achieve specified goal?

Is one group favored/penalized more

than another?

Cost Reduction is Key

“Reducing the cost of compliance is the most

compelling reason for pursuing trades.” (WEF 2015)

Nitrogen TMDL driven

79 WWTFs

Credit prices set annually ($1.65 - $4.50)

$45.9 million (2002-2009)

total value of credits bought & sold

CTDEP estimates POTWs have saved

between $300 and $400 million

Long Island Sound

MO Nutrient Trading Workgroup

Program Factors

MINT Simulation Approach

Evaluate PS-NPS and

PS-PS trading feasibility

in 2 Missouri basins

How do program factors

interact to affect

Potential supply

Potential demand

Overall costs

Identify important

principles for a MO

WQT program

MINT Simulation Results

$24

$56

$73$76

24

20

7

4

0

2

4

6

8

10

12

14

16

18

20

22

24

26

$20

$30

$40

$50

$60

$70

$80

NU

MB

ER O

F FAC

ILITIES TRA

DIN

GTO

TAL

AN

NU

AL

WA

TER

SHED

AB

ATE

MEN

T C

OST

, IN

MIL

LIO

NS

-------> TRADING RESTRICTIONS INCREASE ------->

PHOSPHORUS TRADING IN THE SPRING RIVER BASIN

Program Must be Flexible

Program flexibility will be key to developing a successful

trading program

Project report includes proposed framework for Missouri

based on this principle

“A key consideration must be avoiding overly

restrictive requirements that limit the ability

of the trading framework to generate and/or

purchase credits.” (WEF 2015)

Point to Point Source Trading

Opportunities are Important

Approximately 85% of PS

loading from 20% of

POTWs

May be more efficient in

some circumstances

Simplifies program

development and

implementation

Greater potential for trading

additional parameters

Neuse River Compliance

Association

Nitrogen TMDL driven

19 members in bubble permit

Voluntary participation

Individual NPDES limit is waived

Informal trading between partners

Offset payments ($11/lb) ecological

enhancement program

No violations to date/never used

Internal enforcement policy

Fines (80% escrow)

Funds monitoring and capital improvement

grants

Flexibility – free to choose control

strategies

Big River Trading

Big River Trading Drivers May be Different than Small

Streams

Gulf of Mexico May be the Driver

Flexibilities to Address Downstream Impacts

Trading is One Tool

in the Toolbox

Adaptive Management

Longer Implementation

Periods

Flexible Permit Limit or

Criteria Expression

Watershed-Based

Permitting

Integrated Planning

Thank You

David Carani

Geosyntec Consultants

108 E. Green Meadows Rd., Suite 9

Columbia, Missouri 65203

Phone: 573.443.4100

dcarani@geosyntec.com