PALO ALTO, Calif. — In the Ohio River Basin, private dollars have been invested in farm conservation practices to reduce nutrient runoff. The resulting credits will be available for purchase at the Electric Power Research Institute’s (EPRI) first water stewardship credit auction April 16 in New York City.

Water quality trading (WQT) is a system in which a farmer can install a conservation project that has benefits to the watershed, said Jessica Fox, EPRI’s project manager. Typically the benefits are for nutrients but could also be for temperature or sediment.

That benefit is quantified into a credit. A public, private or nonprofit organization, or an EPRI-approved individual, can buy that credit and use it to meet a permit limit, a regulatory requirement or sustainability goal.

Because of that, WQT is an offset program, Fox said. Offsets can be achieved at a lower cost to society and typically can be more effective than other treatment approaches. "Uplift" happens when the installed conservation practices bring on ancillary benefits.

For instance, if a farmer installs a buffer strip to help reduce nutrient loading, that buffer strip would also be habitat for pollinators, she said. In a milk house waste management project, the cows have a cleaner place to live and it is easier and healthier for the farmer to maintain the site. "For every credit that we produce in the program, EPRI retires 10 percent of them off the top to ensure the uplift," she explained. "That is signed into the trading plans. This is a public benefit in this water quality trading."

When a buyer retires the credit, that credit can be used to meet corporate sustainability or stewardship goals, Fox said. Buyers will get consideration for extended compliance schedules. The credits can also be used to meet Supplemental Environmental Project (SEP) obligations in Ohio, Kentucky and Indiana.

In Indiana, Tara Wesseler-Henry, Indiana State Department of Agriculture district support specialist, looks on the WQT program as another tool state and local soil and water conservation districts (SWCDs) can use to help fund conservation practices.

"The state and the local SWCDs share a common goal of wanting to help all landowners install conservation practices that reduce sediment and nutrients into our waters through voluntary efforts," Wesseler-Henry said. "The WQT program is unique in that the funds going to producers are private dollars versus public funds."

In Ohio, Larry Antosch, Ph.D., Ohio Farm Bureau’s senior director of policy development and environmental policy, sees the EPRI WQT project as a win-win-win situation. A farmer participating in the trading program could see additional funds for installing a conservation practice."The environment benefits because downstream from those farms, there is an improvement or enhancement in water quality," he said. "The folks that are buying the credits – in the case with EPRI it would be most likely the power plants – they get a benefit because they can purchase credit and make an environmental improvement." The WQT project is about a partnership among the federal, state and local governments and other entities on a volunteer basis, trying to get everybody working together to leverage not only technical assistance but financial assistance, said Karen Woodrich, Kentucky National Resources Conservation Service, at the time of last year’s WQT transaction.

The Ohio River Basin WQT is the only one in which multiple states have agreed to the same rules, Fox said. In 2012, Indiana, Kentucky and Ohio signed a first-of-its-kind interstate trading plan; these three can operate under the same trading rules so a water quality credit generated in one state can be applied in another.

The U.S. Water Alliance selected EPRI’s Ohio River Basin WQT Project for its 2015 U.S. Water Prize. This prize honors individuals, institutions and organizations that have made an outstanding achievement in the advancement of sustainable solutions to national water challenges. For information, visit www.epri.com – interested buyers can contact Fox at jfox@epri.com