The following case studies are from Wood and Bernknopf’s (2003) USGS Open-File Report 03-079, “Preliminary Preview for a Geographic and Monitoring Program Project: A Review of Point Source–Nonpoint Source Effluent Trading/Offset Systems in Watersheds.”
Lake Dillon, Colo.
Dillon Reservoir, 70 miles west of Denver, Colo., was the first point-source/non-point-source trading program in the Nation. Studies determined in the early 1980s that excessive phosphorus discharge was accelerating algae growth, causing low dissolved-oxygen levels in the reservoir (Stephenson and others, 1998). Data collection and modeling results indicated that about half of the anthropogenic phosphorus loads entering the reservoir were contributed by point-sources, mainly from four wastewater-treatment plants, and half from non-point-sources, primarily individual septic systems and urban runoff.
The State of Colorado estimated that the health of Lake Dillon would require a reduction in the amount of phosphorus coming from the four major wastewater-treatment plants. Rather than having to upgrade their own facilities, the plants were offered the option of implementing controls for existing urban non-point-sources. Cost studies showed that wastewater-treatment plants could achieve the same overall reductions in phosphorus for half the cost if they concentrated on non-point-sources rather than solely on their own emissions (Jarvie and Soloman, 1998). The EPA approved a trade ratio of 2:1 (reducing 2 lb of phosphorus at the non-point-source and receiving 1 lb of credit for doing so) so that there would be enough phosphorus reduction in the basin to allow for growth of the wastewater-treatment plants and new non-point-sources on the basis of estimated population growth.
In 1985, the Frisco Sanitation District (a wastewater-treatment plant) decided to address non-point-source stormwater runoff of phosphorus into the lake. The district built stormwater-control structures to guide the surface runoff back underground. Approximately 50-70 percent of the phosphorus was removed as the water filtered through the pipes (Jarvie and Soloman, 1998). The number of credits gained from this project was set equal to the amount of P removed, determined by monitoring the flow and concentration of incoming and outgoing water--an example of a direct measurement of non-point-source effluent discharge. The District was offered phosphorus credits for its non-point-source reduction by the Colorado Water Control Commission. The District needed only a few phosphorus credits allocated to it annually and donated its surplus credits to offset increased phosphorus discharge associated with the construction of a new town golf course (Jarvie and Soloman, 1998). The credits in this trade were not actually bought or sold, but the process worked to the benefit of both parties. Here, trading allowed further development while still improving lake water quality. The example of Dillon Reservoir demonstrated that the direct measurement of non-point-source load is not impossible and, in addition, that trading does not necessarily need a tangible cash transaction for cost savings to occur.
Clear Creek, Colo.
In the mid-1990s, the National Forum on Nonpoint Source Pollution began an Orphan Sites Feasibility Study to identify and display innovative, nonregulatory approaches to non-point-source pollution (U.S. Water News Online, 1998). An “orphan site” can be defined as a contaminated site that cannot be regulated under current laws, has no locatable, responsible entity, and has no means to address the problem. This offset program would allow any interested discharger to “adopt” and clean up an unregulated orphan source of pollution in exchange for discharge credits. The Clear Creek watershed, nearly 500 mi
2 in the Front Range west of Denver, Colo., served as the model watershed for this study (Holm, 2001). The streams in this area, containing more than 1,300 orphan mine sites, are contaminated by numerous heavy metals through runoff and drainage (Environomics, 1999).
Various barriers prevented this program from moving beyond its conceptual stages. As a result of a “good Samaritan” statute, dischargers were not willing to risk adopting an orphan site because they could be held liable for further contamination. The "good Samaritan" provision of Superfund protects lenders from liability related to actions taken or omitted while providing care, assistance, or advice with respect to the release of a hazardous substance (i.e., conducting a cleanup). Under the current Clean Water Act, however, a “good Samaritan” who wants to clean up a site is not protected from liability if more discharges occur after the cleanup work is completed. Carl Norbeck, from the Colorado Water Quality Control Division, explained that dischargers were shielded from liability lawsuits by Federal and State agencies but not from citizen suits. Barriers included soliciting participants (unsuccessful development of a liability-relief tool), evaluating the merits of the cleanup, evaluating the merits of the desired benefit, and spending far too much time to gain acceptability. In the end, the inability to devise a liability-relief tool and the time delay in evaluating the merits of an offset program prevented this program from becoming successful.
Additional Resources:
Lesson learned from additional projects are posted on the
EPA Water-Quality Trading Web site
