Nutrient Water Quality Trading: A Market-Based Solution to Water Pollution in the Natural State
Since the passage of the Clean Water Act (CWA), the nation’s waters remain impaired by dangerous levels of nutrients such as phosphorous and nitrogen, which can result in serious impacts on health and the environment. The CWA’s cooperative federalism approach divides sources of nutrient pollution into two categories: (1) point sources, and (2) nonpoint sources. The CWA provides for the intense regulation of point sources, but it largely leaves the regulation of nonpoint sources to the states. States have primarily regulated nonpoint sources by encouraging voluntary participation in federally funded programs. With little success resulting from such practice, Arkansas has decided to take a market approach to the issue by passing Act 335 in 2015. The act provides for the creation of “nutrient water quality trading programs, including the use of credits, offsets, and compliance associations.” This voluntary market-based approach will allow point sources to purchase credits generated by nonpoint sources who voluntarily reduce their nutrient load. This article will provide policy recommendations for developing a comprehensive nutrient water quality trading framework, allowing for a more effective and efficient statewide program.