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8/2/2019 State-wide Water Quality Trading Framework
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DevelopmentDevelopment
of a Statewideof a StatewideWater Quality TradingWater Quality Trading
FrameworkFramework
Wisconsin Department of Natural Resources
http://dnr.wi.gov/8/2/2019 State-wide Water Quality Trading Framework
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What is Water Quality Trading?
Water quality trading is an exchange ofpollutant reduction credits.
A buyer with a high pollutant control cost canpurchase pollutant reduction or treatment
from a willing seller.
Trading can produce substantial cost savingsbut must result in an improvement in waterquality and a net reduction of the pollutantbeing traded.
Trading also can provide ancillaryenvironmental benefits such as floodretention, riparian improvement and habitat.
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Trading is a Potential Tool
Several options exist to meet WQBELs and TMDL
allocations including:
Modifying wastewater treatment systems Modifying your production process to limit additives or
raw materials
Trading
Options can be used in combination
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TMDL = LA + WLA + MOS
Where:Where:
LA = Load AllocationLA = Load Allocation
(Nonpoint Sources)(Nonpoint Sources)
WLA = Wasteload AllocationWLA = Wasteload Allocation
(Permitted Point Sources)(Permitted Point Sources)
MOS = Margin of SafetyMOS = Margin of Safety
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WLA and LA
Waste Load Allocation
Waste Water Treatment Plants
(WWTPs )/ Publicly Owned
Treatment Works (POTWs)
Municipal Separate Storm Sewer
Systems (MS4s)
Concentrated Animal Feeding
Operations (CAFOs)
General permits
Industries Non-Metallic Mines
Construction Sites
Load Allocation
Background
Agriculture
Non-permitted urban
(no MS4 permit)
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Assemble a stakeholder group of thoseAssemble a stakeholder group of thoseinterested parties in watershed based tradinginterested parties in watershed based trading
issues and develop aissues and develop a trading frameworktrading
framework
including any recommended rules or guidance toincluding
any recommended rules or guidance tofacilitate watershedfacilitate watershed based trading, and reportbased trading, and report
back to the Board no later than July 1, 2011.back to the Board no later than July 1, 2011.
June 2010 NRB ResolutionJune 2010 NRB Resolution
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Specific ObjectivesSpecific Objectives
Develop a water quality trading framework that:Develop a water quality trading framework that:
Encourages water quality tradingEncourages water quality trading
Prevents exceedances of water quality standardsPrevents exceedances of water quality standards
Results in more water quality improvement than in theResults in more water quality improvement than in theabsence of tradingabsence of trading
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Denny CaneffDenny Caneff, River Alliance of Wisconsin, River Alliance of Wisconsin
Paul KentPaul Kent, Municipal Environmental Group, Municipal Environmental Group
Betsy LawtonBetsy Lawton, Midwest Environmental Advocates, Midwest Environmental Advocates
Melissa MalottMelissa Malott, Clean Wisconsin, Clean Wisconsin
Kevin SchaferKevin Schafer, Milwaukee Metropolitan Sewerage District, Milwaukee Metropolitan Sewerage District Tom SigmundTom Sigmund, Green Bay Metropolitan Sewerage District, Green Bay Metropolitan Sewerage District
Pat SutterPat Sutter, Dane County Land & Water Conservation Department, Dane County Land & Water Conservation Department
Dave TaylorDave Taylor, Madison Metropolitan Sewerage District, Madison Metropolitan Sewerage District
John UmhoeferJohn Umhoefer, Wisconsin Cheese Makers Association, Wisconsin Cheese Makers Association
Paul ZimmermanPaul Zimmerman, Wisconsin Farm Bureau, Wisconsin Farm Bureau
Meeting summaries:Meeting summaries: http://http://fyi.uwex.edu/wqtradingfyi.uwex.edu/wqtrading//
External Stakeholder Committee MembersExternal Stakeholder Committee Members
http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/http://fyi.uwex.edu/wqtrading/8/2/2019 State-wide Water Quality Trading Framework
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WQT Framework ReportWQT Framework Report SummarySummary
Introduction and BackgroundIntroduction and Background
Part 1: Summary of Water Quality Trading EffortsPart 1: Summary of Water Quality Trading Efforts
Part 2: Draft FrameworkPart 2: Draft Framework
Part 3: Action/RecommendationsPart 3: Action/Recommendations
AppendicesAppendices
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Wisconsins History with Trading
Fox River BasinFox River Basin Developed guidance,Developed guidance,
element list, issueelement list, issuesummary, and reports.summary, and reports.
Rock River BasinRock River Basin Developed aDeveloped a
framework andframework andpursued some tradespursued some tradesbut lack of sufficientbut lack of sufficient
economic incentiveseconomic incentivesprevent trades.prevent trades.
Red Cedar BasinRed Cedar Basin City of CumberlandCity of Cumberland
TradeTrade
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EPA Trading Program Structure
EPA Guidance for trading and NPDES permit programs:EPA Guidance for trading and NPDES permit programs:
Water quality trading programs must meet requirements of theWater quality trading programs must meet requirements of theClean Water Act.Clean Water Act.
The Clean Water Act provides legal authority for states and tribesThe Clean Water Act provides legal authority for states and tribesto develop and administer trading programs.to develop and administer trading programs.
EPA's 2003EPA's 2003 National Water Quality Trading PolicyNational Water Quality Trading Policy(Trading Policy)(Trading Policy)
recommends basic ground rules for trading.recommends basic ground rules for trading.
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WQT Framework ContentsWQT Framework Contents
Part 2: Draft FrameworkPart 2: Draft Framework
2.1 Pollutant Parameters Acceptable for WQT2.1 Pollutant Parameters Acceptable for WQT
2.2 Appropriate Circumstances for WQT2.2 Appropriate Circumstances for WQT
2.3 Location and Geographic Scope2.3 Location and Geographic Scope
2.4 Credit Threshold2.4 Credit Threshold
2.5 Trade Ratios2.5 Trade Ratios
2.6 Timing of Credit Generation and Use2.6 Timing of Credit Generation and Use
2.7 Trade Duration2.7 Trade Duration
2.8 Quantifying Credits2.8 Quantifying Credits2.9 Compliance and Enforcement2.9 Compliance and Enforcement
2.10 Trade Administration2.10 Trade Administration
2.11 Legal Issues and Statutory Changes2.11 Legal Issues and Statutory Changes
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2.1 Pollutant Parameters Acceptable for WQT2.1 Pollutant Parameters Acceptable for WQT
NutrientsNutrients
PhosphorusPhosphorus
NitrogenNitrogen
SedimentSediment
TemperatureTemperature
Dissolved Oxygen-related ParametersDissolved Oxygen-related Parameters
e.g., Biochemical oxygen demande.g., Biochemical oxygen demand
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2.2 Appropriate Circumstances for WQT2.2 Appropriate Circumstances for WQT
WQT May be UsedWQT May be Used
Demonstrate compliance with WQBELsDemonstrate compliance with WQBELs
Offset pollutant load from new or expanded dischargerOffset pollutant load from new or expanded discharger
WQT not allowed when localizedWQT not allowed when localized
exceedances of water quality standardsexceedances of water quality standards will occurwill occur
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2.3 Location and Geographic Scope2.3 Location and Geographic Scope
Non-TMDL WQBELsNon-TMDL WQBELs Credits must be generated upstreamCredits must be generated upstream
TMDL WQBELsTMDL WQBELs Credits may be generated within the drainageCredits may be generated within the drainage
area for the impaired segment (segmentshed)area for the impaired segment (segmentshed)
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Figure 1: No Impaired WatersFigure 1: No Impaired Waters
Reach A
(100 ug/l)
Reach B
(100 ug/l)
Reach C
(100 ug/l)
Reach D(WQC 100 ug/l)
Reach E
(75 ug/l)
Reach F
(75 ug/l)
PS 1TBEL: 1,000 ug/lNR 217: 900 ug/l
PS 2TBEL: 1,000 ug/lNR 217: 800 ug/l
PS 3TBEL: 1,000 ug/lNR 217: 300 ug/l
Trade should occur
upstream of point
source.
If trading to meet
WQBELs, trade should
occur in same watershedand not create violations
in local water quality
standards.
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Figure 2: Impaired Waters with TMDLFigure 2: Impaired Waters with TMDL
Reach A
(100 ug/l)
Reach B
(100 ug/l)
Reach C
(100 ug/l)
Reach D(WQC100 ug/l)
Reach E
(75 ug/l)
Reach F
(75 ug/l)
PS 1
TBEL: 1,000 ug/l
NR 217: 100 ug/l
TMDL: 650 ug/l
PS 2
TBEL: 1,000 ug/l
NR 217: 800 ug/l
TMDL: 600 ug/l
PS 3
TBEL: 1,000 ug/l
NR 217: 75 ug/l
TMDL: 400 ug/l
Trade location set
based on the
waterbody
responsible for the
WLA.
The trade must occur
in the watershed of
that waterbody
assigning the WLA.
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2.4 Credit Threshold2.4 Credit Threshold
Credits Generated byCredits Generated by Point SourcePoint Source
Lesser of WQBEL or TBELLesser of WQBEL or TBEL
Credits Generated byCredits Generated by Nonpoint SourceNonpoint Source
Lesser of TMDL LA or PerformanceLesser of TMDL LA or Performance
StandardStandard (e.g., ch. NR 151)(e.g., ch. NR 151)
5-yr Interim Credit = Reduction from Existing5-yr Interim Credit = Reduction from ExistingPollutant LoadPollutant Load
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2.5 Trade Ratio2.5 Trade Ratio
Uncertainty - Based on effectiveness and ease of verification of theUncertainty - Based on effectiveness and ease of verification of the
management practices employed. Practices will be classified intomanagement practices employed. Practices will be classified into
different categories and assigned ratios.different categories and assigned ratios.
Lower RatioLower Ratio 2:1 Ratio2:1 Ratio Higher RatioHigher Ratio
Companion CropsCompanion Crops Buffer withBuffer withupland practicesupland practices
Tillage PracticesTillage Practices
Fall cover cropsFall cover crops Buffer withoutBuffer withoutsupportingsupportingpracticespractices
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Management Practices MenuManagement Practices Menu
ManagementManagementPracticePractice
AvailableAvailableCreditsCredits
(Approved(ApprovedMethod)Method)
UncertaintyUncertaintyTrading RatioTrading Ratio
Schedule forSchedule forCredit UseCredit Use
CreditCreditAvailabilityAvailability
DateDate
Credit UseCredit UseRestrictionsRestrictions
Companion CropsCompanion Crops 2.5 lbs P per2.5 lbs P peracrePIacrePI-1-1in.in.
precipitationprecipitation(SWAT)(SWAT)
1.21.2 Credits may beCredits may bebanked andbanked and
used over theused over theentire year.entire year.
First monthFirst monthsecond coversecond cover
crop establishedcrop established
Credits may notCredits may notbe carried overbe carried over
from year to year.from year to year.
ConservationConservationTillageTillage
NutrientNutrientManagementManagement
Buffer StripsBuffer Strips
Vegetative FilterVegetative FilterStripsStrips
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2.5 Trade Ratio2.5 Trade Ratio
Delivery (distance between generator and user)Delivery (distance between generator and user) TMDL Same factors used in TMDLTMDL Same factors used in TMDL Non-TMDL USGS SPARROW model for P, N and sedimentNon-TMDL USGS SPARROW model for P, N and sediment
Equivalency (form of pollutant)Equivalency (form of pollutant) Not necessary with phosphorusNot necessary with phosphorus Not yet specified for N and sedimentNot yet specified for N and sediment
RetirementRetirement Concept addressed with interim creditsConcept addressed with interim credits
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2.6 Timing of Credit Generation and Use2.6 Timing of Credit Generation and Use
Credits must be generated before they areCredits must be generated before they are
usedused Point source pollutant reduction must be measurablePoint source pollutant reduction must be measurable
BMP in-place and effectiveBMP in-place and effective
Credit use timing depends on credit sourceCredit use timing depends on credit source
Point source Averaging period of limitPoint source Averaging period of limit Nonpoint Anytime during calendar yearNonpoint Anytime during calendar year
(highly variable discharge exception)(highly variable discharge exception)
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2.7 Trade Duration2.7 Trade Duration
Water Quality Trade ends:Water Quality Trade ends:
At conclusion of BMP lifespan, orAt conclusion of BMP lifespan, or
When one of the trading partners endsWhen one of the trading partners endstrade agreementtrade agreement
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2.8 Quantifying Credits2.8 Quantifying Credits
Nonpoint Source CreditsNonpoint Source Credits SNAP-Plus and RUSLE2 for agricultural fieldSNAP-Plus and RUSLE2 for agricultural field
practicespractices
SLAMM and P-8 for urban practicesSLAMM and P-8 for urban practices
Point Source CreditsPoint Source Credits Effluent monitoringEffluent monitoring
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2.9 Compliance and Enforcement2.9 Compliance and Enforcement
Credit Users WPDES PermitCredit Users WPDES Permit
WQBELs and Effluent MonitoringWQBELs and Effluent Monitoring
Language Allowing Use of CreditsLanguage Allowing Use of Credits Application Submittal RequirementApplication Submittal Requirement
Effluent Limit when TradingEffluent Limit when Trading (e.g. TBEL)(e.g. TBEL) Reporting Requirements for Credits UsedReporting Requirements for Credits Used
Management Practice CertificationManagement Practice Certification
Annual Inspection of ManagementAnnual Inspection of ManagementPracticePractice
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2.9 Compliance and Enforcement2.9 Compliance and Enforcement
Application for TradingApplication for Trading
Submitted by permittee credit user for DepartmentSubmitted by permittee credit user for Departmentapprovalapproval
Indentifies credit generatorIndentifies credit generator
Identifies credit generation method (e.g.,Identifies credit generation method (e.g.,management practice)management practice)
Provides site location where credits are generatedProvides site location where credits are generated Provides amount of credits that will be generatedProvides amount of credits that will be generated
Provides date when credits become availableProvides date when credits become available
Provides trade ratio for each site and practice.Provides trade ratio for each site and practice.
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2.10 Trade Administration2.10 Trade Administration
DNR intends to:DNR intends to: Develop management practices menuDevelop management practices menu
Issue WPDES with WQT conditionsIssue WPDES with WQT conditions Track tradesTrack trades
DNR will not act as broker or central exchangeDNR will not act as broker or central exchange
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2.11 Legal Issues and Statutory Changes2.11 Legal Issues and Statutory Changes
Modify s. 283.84, Wis. Stats.Modify s. 283.84, Wis. Stats.
Eliminate pilot program referenceEliminate pilot program reference
Eliminate 5-year trade limitEliminate 5-year trade limit
Provide authority for rulemakingProvide authority for rulemaking Provide authority for WQTProvide authority for WQT
permit conditionspermit conditions
No rule changes at this timeNo rule changes at this time
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