Multi-state water quality trading effort launched in Ohio River Basin


WASHINGTON — American Farmland Trust is teaming up with Electric Power Research Institute, the Ohio River Valley Sanitation Commission, Duke Energy, American Electric Power, Kieser and Associates, Hunton and Williams, The Miami Conservancy District, University of California at Santa Barbara, Ohio Farm Bureau, Hoosier Rural Electric Cooperative and Tennessee Valley Authority to establish a water quality trading market across the Ohio River Basin, an area that spans 14 states.


The project will focus on Ohio and seven nearby states, with the goal of improving water quality in the Ohio River Basin and reducing hypoxia in the Gulf of Mexico.

The collaborators learned that they would receive a $1 million targeted watershed grant from the U.S. Environmental Protection Agency to augment their work and financial match of $.3 million over the next three years.

“This project will be the first interstate water quality trading program in the U.S.,” said Jimmy Daukas, American Farmland Trust’s managing director, Agriculture & Environment Initiative.

“State and local watershed level water quality trading programs exist today but they can be limited by high costs, expensive program development and not enough suppliers, or purchasers of the credits, or both.”

Creates a market

Water quality trading creates a market that pays participants for reducing the pollution they emit into watersheds. It creates a market that allows pollution sources who reduce their nutrient emissions or releases below an agreed upon baseline, to generate credits to sell to point sources required to reduce their nutrient releases.

Such point sources include public utilities or manufacturing operations. Subsequently, participants are given a financial incentive to reduce their own pollution.


American Farmland Trust’s role in the project will be to address agricultural runoff, helping farmers with different and cost-effective production practices that improve water quality while also helping the farms become more economically viable by adding a new source of income to their operations — the sale of water quality credits to utility companies, waste water treatment plants and other regulated point sources.

Most people think of farms as producing food, fiber and renewable energy,” said Daukas. “Consumers don’t always think about the environmental benefits that farms also grow, such as cleaner water, increased wildlife habitat and reduced greenhouse gas emissions. And now we have a way to improve water quality and the farm’s income by introducing a market for these environmental products.”

This project will address point-source emissions, and non-point-source emissions, including agricultural runoff.

Ohio River Basin

The Ohio River Basin contributes about 35 percent of the water flowing down the Mississippi River into the Gulf of Mexico.

While agriculture is not the sole water pollution contributor in the Mississippi River Basin, it is thought to contribute up to 65 percent of the nitrogen and phosphorous sediments that cause hypoxia in the Gulf of Mexico.

Best location

The Ohio River Basin was chosen from four proposed sites as the best location to institute a water quality-trading scheme that included agriculture.

The Ohio River is a significant contributor to the nitrogen and phosphorous runoff and sediment that cause Gulf Hypoxia. 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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