Ohio River Basin part of pilot water quality trading market program

WASHINGTON — American Farmland Trust has received a $1 million Conservation Innovation Grant (CIG) from the USDA to develop the first U.S. interstate water quality trading market for agriculture.

In this second phase of the project, the collaborators will launch pilot water quality trades between farmers and public utilities in the Ohio River Basin.

Utilities or manufacturers that face high pollution control costs can buy nutrient reduction credits from farms with lower costs. Farms will be able to sell nitrogen and phosphorus, potentially generating greenhouse gas reduction credits from on-farm conservation practices that result in new income for their operations.

The Ohio River Basin is an area that spans 14 states, with phase-two of this project focusing on Ohio, Kentucky, Indiana, West Virginia, Pennsylvania, Tennessee, and Illinois. The overall goal of the collaborators is to improve water quality in the Ohio River Basin and reduce hypoxia in the Gulf of Mexico.

Farm Bureau partner

American Farmland Trust is also working with the Ohio Farm Bureau on the project.

Larry Antosch, senior director for program innovation and environmental policy for Ohio Farm Bureau Federation, said the project should move the EPRI-led Ohio River Basin nutrient trading project from concept to reality.

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 that 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.

Pilot trades

In this phase of the project, American Farmland Trust will be to reaching out to local soil and water conservation district offices and other local contacts in pilot trade areas to locate and work with farmers willing to install conservation practices and sell the resulting credits to the participating utility companies.

The trust and Ohio Farm Bureau are also chairing the agricultural stakeholder committee that will provide feedback on the market structure.

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

Hypoxia in the Gulf

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, with the Ohio River a significant contributor of agricultural sediments into the Mississippi River basin.

Gulf 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.

Other players

American Farmland Trust (AFT) is collaborating with the project lead, Electric Power Research Institute (EPRI), along with Hunton & Williams LLP, the University of California at Santa Barbara, and Kieser and Associates, LLC.

American Electric Power and Duke Energy are contributing an additional $400,000 for a phase-two total of $1.4 million.

The project also receives regional support from the Ohio Farm Bureau Federation, Miami Conservancy District in Ohio, and the Ohio River Valley Sanitation Commission.