States slowly move ahead with water pollutant trading programs Water pollutant trading is off to a slow start with only one trade implemented in the two years since EPA released its guidance document to promote trading. Numerous regulatory and financial barriers are keeping trading programs from blossoming, and EPA is doing little to support the handful of states that are moving ahead with what they say is a promising approach, according to senior state environmental officials speaking at EPA's All States meeting earlier this year In early 1996, EPA came out in favor of effluent trading when it published the Draft Framework for Watershed-Based Pollutant Trading (ES&T, ,eptember r196, p. 386A). It was seen by many as a way to control unregulated nonpoint sources, and as a tool to reduce polluted runoff from agriculture and urban areas. Trading occurs when a permitted effluent source is allowed to discharge more than its legal limit, as long as a second polluter agrees to reduce its discharge below a specified baseline. The overcontrol at the second source is counted as a credit and is applied to the first source A handful of trades took place prior to the release of EPA's guidance But the level of trading is not an indication of activity generated by these programs, or their promise, said Paul Faeth, director of the economics program at the World Resources Institute (WRI), and the author of a report on pollution trading slated for release this fall. Faeth said that in Minnesota, Wisconsin, and Michigan, trading is far cheaper than subsidizing agricultural controls or regulating point sources to reduce pollution. Trading is favored in these states Faeth said because there aire numerous small point plants that cannot afford upgrades and many agricultural sources Indeed, state-level interest in trading is intense, and several pilot projects are underway in Michigan, Colorado, and Connecticut, funded by the Water Environment Research Foundation, said WERF Director of Technical
Programs, Ray Grant. State programs and pilots are being initiated in Maryland, Illinois, New York, and North Carolina. "Every single trading program in the states has something innovative in it," said Len Shabman, professor of environmental economics at Virginia Tech. While none of the state programs meet the conceptual ideal of trading,
The lack of trading is not an indication of activity generated by these programs, or their promise. Shabman said, taken together they show how to get around the barriers to trading. But "trading will not happen just because nonpoint source pollution is cheaper to reduce," Shabman warned. Environmentalists and point source polluters are leery of trading with unregulated nonpoint source partners which have no legal obligation to make reductions, he said. There are significant regulatory barriers to trading, added Shabman. EPA
guidelines specify that trades can occur only on impaired water bodies. This means, said Faeth, that trades cannot be used to maintain water quality where standards are already being attained. Shabman added that in cases where effluent permits prescribe best available technology to control pollutants, trading between point sources would violate the Clean Water Act. This is because the plant seeking to buy credits from a better-performing partner would be required to adopt that partner's technology. An important step to encourage trading, he said, is to allow point source dischargers more flexibility in achieving standards. Several state commissioners indicated that EPA is not fully supporting states' efforts to implement effluent trading programs. Mahesh Podar, director of policy and budget at EPA, said the agency would like to work with the states to do more, but contended that the states are moving very slowly. EPA needs more information from state-run pilot projects to support issues surrounding point-nonpoint source trades Podar said. —JANET PELLEY
State commissioners band together to reduce greenhouse gases State environmental commissioners are expected to agree this month to work together to reduce greenhouse gas emissions on a regional basis. The possibility of establishing state-by-state programs that would work together regionally was discussed at an August workshop held by the Environmental Council of States (ECOS), comprising U.S. state environmental commissioners. The talks were prompted by a policy statement on climate change recentiy issued by the National Governor's Association (NGA), which encourages states to remove barriers and create incentives for companies to voluntarily reduce greenhouse
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gas emissions. New Jersey is the first state in the nation to receive an EPA grant to design a trading bank for greenhouse gases, said Mary Jo Kopecky, deputy administrator for the air and waste division of the Wisconsin Department of Natural Resources. A report on the program's conceptual design is due at the end of next year. And at least 25 states already have emissions trading programs in place for other pollutants, such as volatile organic compounds. But neither the states nor the governors are announcing their support for the Kyoto Protocol on Climate Change reached last December. "Where the governors
