Imagine you love cherry cheesecake, and you’re happy to find out that your local bakery makes the delicious, decadent dessert every Saturday. But they only make a certain amount per week; after that, there’s no more.
Your neighbors also love cherry cheesecake. So, in order to get more for yourself from the limited supply, you pay them not to order a cake on Saturday, giving their share to you instead.
Balancing the amount of cheesecake consumption using this kind of trade works in a similar way to water quality trading, which looks to reduce pollution in the environment— in theory. It gets a lot more complicated than cheesecake.
“One entity removes certain pollutants from the environment, and then a company that discharges that pollutant could buy those credits to offset their pollution,” said Matt Rota, senior policy director for environmental group Healthy Gulf.
The Louisiana Department of Environmental Quality (LDEQ) hopes to improve water quality throughout the state with a new water quality trading program, using a market-based strategy to encourage less nitrogen and phosphorus pollution in waterways.
It’s a type of plan that environmentalists, scientists and the U.S. Environmental Protection Agency (EPA) says can be a useful tool. But whether the program is fully set up for success isn’t yet certain.
Nutrient pollution
Nitrogen and phosphorus are nutrients often found in things like fertilizer for agriculture or a product of wastewater treatment. Farmers, wastewater treatment companies and other types of facilities produce nitrogen and phosphorus as a byproduct; that byproduct often gets washed or dumped into nearby waterways.
Too much nitrogen and phosphorus in the water can cause toxic algae blooms, areas of low oxygen also known as dead-zone and acidification of coastal estuaries and wetlands, among other problems
The dead zone in the upper Gulf of Mexico, now renamed the Gulf of America by the Trump administration, is the “poster child” for the issue, said Rota. The area of low oxygen that appears every summer in the Gulf from nutrient pollution in the Mississippi River covers an area usually about the size of Delaware.
“It’s a really important issue, the zone of hypoxia,” said John Sabo, professor at Tulane’s Department of River-Coastal Science and Engineering, and director of the Tulane ByWater Institute. Low oxygen in the water can kill fish, shrimp and other sea life, affecting Louisiana’s seafood industry and the ecology of the Gulf.
Previous efforts to reduce it haven’t made much progress. Vast amounts of nitrogen and phosphorus wash into the Mississippi River from further North in the Mississippi River Basin. All of that runs down to Louisiana, making it hard to control that much pollution within a single state.
The Hypoxia Task Force, a group of federal agencies, states and tribes throughout the Basin, represents one of the larger groups trying to address the dead zone by forecasting and mapping the annual size of the zone. It also works with farmers to adopt new strategies to reduce the amount of nutrient runoff from agricultural fields and works with universities and businesses to advance technology to contain nutrient runoff.
The goal of the Task Force is to reduce the dead zone’s size by 20 percent of what it was in 2015 by this year, and no larger than about 1,900 square miles by 2035. Forecasts for this year predict the zone to be about 4,800 square miles.
Problems with fully funding the annual cruise to gather data on the true size of the zone could also make it harder to tell whether reduction strategies are working.
Problems in the program
The idea behind LDEQ’s market strategy is that Louisiana can use financial incentives to reduce nutrient pollution and help alleviate problems like the dead zone.
“The goal is to reduce pollutants across the state,” said Rachel Mathews, LDEQ environmental scientist manager and the program lead for the water quality trading initiative.
But environmental advocates noted some gaps that could hinder the program’s success.
Louisiana doesn’t currently have numeric limits for nutrient pollution in waterways. Having a specific, measurable number is important for keeping a market working correctly, according to Rota and Sabo.
Certain individual permits from “point source” polluters, or places like wastewater treatment plants and manufacturing facilities, might have a measurable maximum they are allowed to dump, but Louisiana has no broad, standard requirement for these facilities to limit nutrient pollution.
Other sources of pollution, called “nonpoint source” pollution, like that from farming fertilizer runoff, do not have any requirement to limit nutrient pollution in Louisiana.
“If their permits aren’t requiring them to ramp down their nitrogen or phosphorus discharge, there’s no market,” said Rota.“Louisiana hasn’t put together a good regulatory regime to ensure that these credits would need to be purchased.”
It’s like the local bakery making cheesecake all week in unlimited amounts; there’s no incentive to pay your neighbor not to get a cake if you can eat as much as you want.
Louisiana started the process of developing numeric maximums for the amount of nitrogen and phosphorus allowed in bodies of water in 2003, mutually agreeing with the U.S. Environmental Protection Agency to finish a draft of nutrient criteria for all waterways except the Mississippi and Atchafalaya rivers by 2013. Rota said that goal still hasn’t been met.
“Louisiana has theoretically been working on those for 20 years. And, you know, we have seen very little progress,” said Rota.
Mathews said Louisiana does follow a “general narrative criteria,” or more qualitative descriptions like good, bad, moderate or severe, for maintaining the amount of nutrient pollution in the state’s waters.
“It’s a good start, the narrative approach, but it should be evolved towards quantitative and measurement,” said Sabo.
LDEQ also does a water quality assessment every two years to see if bodies of water are “supporting” or “not supporting” the narrative requirements. Mathews said that can help LDEQ decide if certain, more heavily polluted areas need to be a higher priority for cleanup.
“It was just the most efficient tool that we had available at the time,” said Mathews.
But relying on numbers is central to making a program like this successful. A report from the U.S. Government Accountability Office looking at water quality trading programs found that without limits on the amount of nutrients allowed into waterways, there’s no demand for point source polluters to buy credits.
Getting nonpoint source polluters involved was another issue the report cited, because it’s so difficult to tell how much nutrient pollution they actually produce, creating “uncertainties about the value of credits.”
Can it be fixed?
Even with the problems in Louisiana’s program, environmental advocates and scientists alike agree that trying a market strategy to control nutrient pollution isn’t a baseless idea.
“I love working with the market rather than against it,” said Cassie Glaspie, assistant professor in Louisiana State University’s Department of Oceanography & Coastal Sciences.
Still, she said there’s a need for regulation to play a role.
“I usually get excited about these types of things, but I also know from experience that regulation has to be part of the talk,” she said. “Having some sort of nutrient pollution credit, I think, would be an important tool to help that, but it’s not going to solve the issue on its own.”
Sabo said that expanding from a program solely in Louisiana to one encompassing more states in the Mississippi River Basin could be a good way to start making actual, substantial impacts in reducing problems like the dead zone.
“Starting at home makes a lot of sense, because you can’t incentivize market participation between Iowa and Louisiana very easily, but if you have your own market set up, that’s a good pilot for something larger,” said Sabo.
While Mathews didn’t expand on specific plans for future expansion into the Basin, she emphasised the importance of Louisiana trying new and varied ways to tackle the overwhelming problem of nutrient pollution.
“Who knows where we’re gonna go from here? We just have to get one thing done before we can move to anything else,” said Mathews.