Effluent trading for water quality management: concept and application to the Chesapeake Bay watershed

This paper examines the present and potential role of effluent trading in water quality management. In particular, it focuses upon the case of the Chesapeake Bay on the east coast of the US, where the implementation of a trading system has been discussed and undertaken. Potential benefits of effluent trading include advantages such as the following: (1) With appropriate monitoring and enforcement, the total pollutant loadings can be kept at or below the prespecified level. (2) New and expanding dischargers can be accommodated, as long as they purchase credits. (3) Abatement costs of pollutants can be reduced. (4) Flexible regulations incorporating trading can reduce the incentive for industries to relocate to areas with less stringent water quality regulation. (5) Broader environmental goals can be addressed, such as wildlife habitat provision and endangered species protection. (6) Preliminary studies with a view to trading-system implementation encourage discussion and dialogue among stakeholders, and positively foster concerted, holistic solutions for maintenance of water bodies