Why is there a need for a Nutrient Trading Program?

Over the years, pollution levels in the Chesapeake Bay have been increasing. Chief among these pollutants are nutrients, nitrogen and phosphorus. These substances enter the Bay from direct discharges (or point sources), from diffuse sources (nonpoint sources), such as urban and agricultural runoff, as well as atmospheric deposition.

Much has already been done to reduce these pollutants with the development of Maryland’s Tributary Strategies, but more is still needed. Over the last 15 years, federal, state, and local programs have been developed to assist in mitigating the impacts of pollutants in the Bay; however, the amount of public sector funding required to achieve the desired reductions has fallen short in meeting the goals of a clean Bay. Additionally, once Maryland and other states achieve the necessary reductions, they must maintain that level in order to sustain improved water quality in the Bay. Population and economic growth in Maryland and other Bay States may, without appropriate policy implementation, lead to increases in nutrient loads because of increases in sewage flows and other nonpoint source flows in urban areas.

Nutrient trading is an innovative approach to help offset new or increased discharges, and offers an interesting alternative for achieving greater environment protection than through existing regulatory programs. The Maryland Department of the Environment (MDE) is a lead agency for the state in the development of a nutrient trading policy. The final policy will address both point source and nonpoint source trades. MDE is also working on an Accounting for Growth process as required by the State’s Watershed Implementation Plan. To restore the Bay, Maryland (and other Bay states) not only needs to reduce its nutrient load, but also hold the line against new pollution. Please click here for more information on Accounting for Growth and MDE’s Guidance on Nutrient Cap Management and Trading in Maryland’s Chesapeake Bay Watershed. MDE’s guidance establishes an approach for trading between point sources and trading involving the removal of onsite sewage disposal systems (OSDSs). It establishes definitions, key principles, and fundamentals that are applicable to trading programs involving both point sources and nonpoint sources.

The Maryland Department of Agriculture (MDA) is a lead agency for the development of policy on generation and trade of agricultural nonpoint source credits. In April 2008, the MDA finalized a draft set of policy documents that represents the next phase of Maryland’s Nutrient Trading Program. This Phase II of the program addresses how diffuse sources (non-point source) can be part of a trading program. Specifically, it provides a mechanism for generating credits for trading from agricultural sources that can be purchased by point sources and other interested buyers and explains how credits will be exchanged between buyers and sellers.