Nutrient Trading Nutrient Assimilation Credits Kurt Stephenson Department

Nutrient Trading & Nutrient Assimilation Credits Kurt Stephenson Department of Ag & Applied Economics August 25, 2011 1

Motivation: Can we expand nutrient credit creation beyond source reductions? In order to provide: Ø localities and private buyers more (& low cost) compliance options Ø the public equal or greater assurance that claimed nutrient removal occurs Ø incentives to develop other nutrient removal options 2

What are Nutrient Assimilation Services? Ø Removal of nutrients from ambient waters through a variety of processes Ø biomass harvest Ø chemical transformations (e. g. denitrification) Ø nutrient sequestration/storage. 3

Ways to Enhance Nutrient Assimilation Services Ø Managed Wetlands: Wetland restoration to “nutrient farms” Ø Aquatic Biomass Harvest ØAlgal harvest ØAquatic plant cultivation & harvest ØShellfish aquaculture harvest Ø Stream Restoration 4

Public recognition and certification of active enhancement of these services are nutrient assimilation credits (NAC) 5

Evaluating Nutrient Assimilation Credits: Comparing Credit Quality with Nonpoint Credit Alternatives Certainty of removal outcomes as indicated by: 1. Ability to measure 2. Verification of outcomes 3. Provide new reductions (baseline/additionality) 4. Not inducing new loads elsewhere (avoiding “leakage”) 6

1. Measurement of Outcomes Quantifying Changes in Nonpoint Source Loads Change in nutrient control process/ BMP Modeled Change in field/site nutrient load Modeled Change in Modeled loads in the steam Modeled Change in nutrient load delivered to the Bay Quantifying Changes in Nutrient Loads From Aquatic Biomass Harvest Change aquatic biomass cultivation & harvest Measured Change in nutrient load Measured Modeled Change in nutrient load delivered to the Bay 7

2. Verification of Change Quantifying Changes in Nonpoint Source Loads Change in nutrient control process/ BMP Modeled Change in field/site nutrient load Modeled Change in Modeled loads in the steam Modeled Change in nutrient load delivered to the Bay Quantifying Changes in Nutrient Loads From Aquatic Biomass Harvest Change biomass aquatic biomass cultivation Measured Change in nutrient load Measured Modeled Change in nutrient load delivered to the Bay 8

3. Baseline & Additionality Nonpoint Source Credits: • Baseline requirements • Maybe time benchmarks Nutrient Assimilation Credits: • Maybe time benchmarks • Maybe no need for baselines 9

4. Leakage Nonpoint Source Credits: • Some leakage potential Nutrient Assimilation Credits: • Some leakage potential for some alternatives • Minimal for others 10

Nutrient Credit Quality Evaluation Measurement Verification Baseline/Additionality Leakage Ag BMPs Land Conversion N. A. Wetlands Shellfish Aquacult. Algal Harvest Aquatic Plant Harvest Stream Restoration 11

Other Policy Issues… Ø Is it sound policy to allow sources to put nutrients in the water and have someone else take them out? Ø Legal issue of “instream treatment” 12

Policy Issues continued… New Discharge PS or NPS Offset NAC 13

Policy Issues: Instream Treatment Concern that nutrient assimilation will be used rather than source reduction Trading in VA, however, requires on-site source reduction before trading can be pursued. 14

Questions Are NACs acceptable for use in Virginia’s nutrient trading programs? (& if so, under what conditions) What clarification, if any, is needed for nonconventional (not preapproved) credit approval? (for example, explicit nutrient credit evaluative criteria/guidelines) ? 15