Erie P Market

Excessive runoff of pollution is contributing to the formation of algal blooms and dead zones in the Great Lakes. Water quality trading is an innovative market-based approach that allows industrial facilities and municipal wastewater treatment plants to invest in agricultural conservation as a cost-effective method of reducing the pollution entering a watershed. The Great Lakes Commission’s Erie P Market Project explores the potential market for both water quality trading and stewardship crediting across state and provincial lines within the Western Lake Erie Basin. Representatives from key agencies and organizations in Indiana, Michigan, Ohio, and Ontario have provided guidance to ensure that the Erie P Market structure aligns with the existing rules, regulations, and priorities of participating jurisdictions.

Over the course of this two-year project, the Great Lakes Commission has worked closely with its Trading Advisory Group to develop the Erie P Market Framework. In December 2017, representatives from Michigan, Ohio, and Indiana agreed to use the framework to guide the generation and sale of phosphorus credits with the signing of a Memorandum of Understanding. The framework defines who can generate and purchase credits, as well as where, when, and how this can occur. The framework has been designed to accommodate both compliance trades and the sale of phosphorus credits to any individual or entity interested in advancing stewardship goals. An additional outcome of this project has been the  development of a reliable method to quantify the total phosphorous load reductions yielded by a selection of widely accepted conservation practices. The framework is currently being used to pilot stewardship crediting for conservation practices that will be implemented in the spring of 2018.

Project Narrative

In January 2016, the Great Lakes Commission launched an effort to examine and test water quality trading as a nutrient reduction tool capable of crossing state and provincial boundaries in the Western Lake Erie Basin. The project, known as Erie P Market, will test whether a market exists to drive investments in upstream conservation that would not otherwise occur. Indiana, Michigan, Ohio and Ontario are participating in the project, along with other key partners.

Science tells us that nutrients, particularly phosphorus, leaving agricultural lands are a primary contributor to excessive phosphorus and associated Harmful Algal Blooms in Lake Erie. At present, reducing phosphorus use and associated runoff from agricultural lands is largely a voluntarily action by farmers.

Excessive nutrients, or nutrient pollution, also come from industrial facilities and municipal wastewater treatment plants, most of which have permits that limit how much pollution can be discharged into the water. When these permit holders face high costs to meet their permit limits, water quality trading provides an opportunity for them to invest in upstream conservation instead of expensive end-of-pipe controls. It also offers an incentive for farmers to keep nutrients from entering nearby waterways.

The Erie P Market project will see whether water quality trading may be an additional tool to help address the nutrient pollution problem in the Western Lake Erie Basin. The ability to measure pollution reductions—for example, pounds of phosphorus reduced—is fundamental to water quality trading. As with other trading programs, only a portion of the pounds reduced would be counted as actual credits. This ensures that the “trade” results in meaningful water quality improvements. The two-year project also aims to develop a common approach for who can trade with whom, and how, where and when trading can occur, as well as examine ways to verify that conservation practices are working to improve water quality. The agreed-upon approach will be tested through several pilot trades.

Project Partners

Funding

Erie P Market is funded by a Conservation Innovation Grant from the U.S. Department of Agriculture’s Natural Resources Conservation Service.

For More Information

Nicole Zacharda
Program Manager, Great Lakes Commission
734-971-9135 Ext. 103 [email protected]

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