New Resource to Help Water Quality Trading Partners
Updated: Jan 6
Maryland’s Water Quality Trading Program (WQT), launched in January 2019, creates a public market for nitrogen, phosphorus and sediment reductions. The WQT is a voluntary, collaborative effort between the Maryland Department of the Environment (MDE) and the Maryland Department of Agriculture (MDA) to enhance the restoration and protection of the Chesapeake Bay and local waters by accelerating the pace and reducing the cost of implementation efforts.
Farmers are one of the groups that can generate credits for WQT trading. To be eligible to trade, farmers need to make sure their operation reaches a baseline compliance level. After being deemed eligible, farmers can trade credits generated through the implementation of Best Management Practices (BMPs). BMPs can improve water quality by removing nutrients (nitrogen and phosphorus) and sediment that would otherwise end up in local water bodies. The credits can be traded to entities that are required to reduce pollution; credits may also be purchased by corporations, not-for-profit organizations, or even individuals to be retired to help meet overall Chesapeake Bay environmental goals.
A farmer who is interested in learning more about WQT can start at their local Soil Conservation District (SCD) Office. SCD staff can help an interested farmer determine if he/she has met their baseline compliance for trading using the Maryland Nutrient Trading/Tracking Tool. If the baseline is met, the farmer can either find out how many credits he/she is currently generating or discuss with SCD staff what BMPs can be implemented in order to generate more credits (Note: BMPs funded with cost-share typically don’t qualify for trading).
After the MDA approves the credits for trading, the credits will be assigned a unique registration number that will be entered into the online trading registry. Farmers can find a trading partner through the trading register, via the local SCD office and/or through aggregators or brokers. Farmers can sell credits directly to a trading partner or to an aggregator who functions as a distributor of credits to multiple trading partners.
Once trading partners have been identified the parties will need to develop a trade agreement. This summer, with the assistance from the 2020 Brinsfield Interns, the Agriculture Law Education Initiative (ALEI) and the Hughes Center for Agro-Ecology, Inc. created a model WQT agreement for a trade between a farmer and a jurisdiction, such as County subject to a National Pollutant Discharge Elimination System (NPDES) MS4 permit the MDE. To create the model agreement ALEI Senior Legal Specialist Sarah Everhart and the 2020 Brinsfield Interns met with experts from the MDE, the MDA, and out-of-state experts to learn about what trading partners need to include in an effective trading agreement (the model WQT agreement is not endorsed by the MDA). The model agreement was created with the intent for it to be a helpful example that trading partners can review and modify in consultation with their individual attorneys.
After the sale of the credits, independent verification of the credits by certified third parties is mandatory, and depending on the practice, maybe conducted annually or biannually.
Farmers with questions about how trading may benefit their operation can contact, Susan Payne, MDA’s Coordinator of the Ecosystem Markets and Certainty Programs at email@example.com.