71st SWCS International Annual Conference July 24-27, 2016 Louisville, KY

1. A Brief History of
Water Quality Trading
(from a CIG
perspective)
Kari Cohen
USDA Natural Resources
Conservation Service
National Leader,
Environmental Markets &
Conservation Finance

2. cssd
Water Quality
Trading Markets
Mitigation Banking
Greenhouse Gas
Markets
Wildlife Habitat Markets
Conservation Finance
Environmental Markets &
Conservation Finance
Consumer-driven
Supply Chain Approaches
“Organic”
“Sustainable”
“Seafood Watch”

3. Water Quality Trading

4. NRCS’s Interest in WQT
• Improving water quality in agricultural setttings
• Attracting non-Federal investment into working
lands conservation
• Ensuring that water quality trading programs work
for agricultural producers
• Valuing ecosystem services generated by
agricultural producers

5. NRCS’s Role in WQT
• Support development of WQT programs.
– Financial assistance
– Technical assistance
• Develop technical tools to facilitate WQT
**NRCS does not develop nor administer
WQT programs, and does not have authority
to purchase water quality credits

6. **From Breetz et. al. (2004), “Water Quality Trading and Offset Initiatives
in the U.S.: A Comprehensive Survey”

7. Conservation Innovation Grants
• Originally authorized in the 2002 Farm Bill
• Reauthorized in 2008 and 2014
• Purpose—to stimulate the adoption of
innovative conservation approaches and
technologies in agricultural production

8. Fiscal
Year
National Competition State Competitions Total
Projects
Awarded
Funds
Approved
($ M)
Projects
Awarded
Funds
Approved
($ M)
Projects
Awarded
Funds
Approved
($ M)
2004 40 14.2 40 14.2
2005 54 19.1 32 1.8 86 20.9
2006 63 19.3 63 4.0 126 23.3
2007 50 19.0 72 3.7 122 22.7
2008 56 18.9 55 2.6 111 21.5
2009 52 18.1 91 5.0 143 23.1
2010 58 17.7 81 5.2 139 22.9
2011 61 29.9 60 3.0 121 32.9
2012 59 26.1 52 2.9 111 29.0
2013 46 18.4 68 3.7 114 22.1
2014 47 15.8 na* na 47 15.8
Total 586 $216.5 574 $31.9 1,160 $248.4

10. Project Types
• Program development—e.g., Freshwater
Trust (2011), Maryland Dept of Ag (2009)
• Tool development—e.g., World Resources
Institute (2010)
• Outreach/Training—e.g., National
Association of Conservation Districts (2015)
• Pilot projects—e.g., Colonial SWCD (2004)
• Credit Stacking—e.g., Ohio River Basin
(2015)

11. Pennsylvania Environmental
Council (2004)
Piloted a reverse auction
credit trading approach
in the Conestoga Watershed

12. Other Planted Seeds
• Colonial Soil and Water Conservation
District (2004)
• Environmental Resources Coalition
(Missouri) (2009)

13. Great Miami River Watershed
(2005)
• As of May 2014, 397
agricultural projects
• $1.6 million to
ag producers
• 572 tons of nitrogen
runoff reduced

14. The Freshwater Trust (2011)

17. Chesapeake Bay Watershed
• Adoption of the 2010 Bay-wide TMDL
spurred region-wide interest in WQT
• Half of funding offered in 2012 special CIG
solicitation went to CB Watershed projects
• NRCS established and administered the
CB CIG Water Quality Trading Network

19. Challenges
• WQT is generally permit- and TMDL-
driven
• Limited technical contact with projects by
NRCS in initial years
• Growth in number of WQT transactions
has been slower than anticipated

20. National Network on Water Quality Trading
The purpose of the Network is to establish a national dialogue on how water
quality trading can best contribute to achieving clean water goals. That includes
providing options and recommendations to improve consistency, innovation,
and integrity in water quality trading
Funding support provided by USDA and Electric Power Research Institute
Technical advisor
Coordinators

21. The Future of WQT and CIG
• 2015 CIG projects
• National Network for Water Quality Trading
• New administration and leadership in
November

22. www.nrcs.usda.gov
/emkts