Could Cap-And-Trade Work For Water?

August 27, 2007

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John Regan, founder of Environmental Credit Corp., a carbon-credit supplier on the Chicago Climate Exchange, thinks a model similar to CCX could work for companies that need to deal with water pollution and water shortages, Sustainable Industries reports.

Under a cap-and-trade system, water polluters would have the option to reduce pollution in their own operations, or to purchase pollution-control credits from another source at a lower cost than undertaking the pollution control themselves. Industries, farmers or cities could also conceivably buy and sell credits for water use.

The main problem is in creating a market for water credits without regulations driving the need. Currently, the EPA has set total maximum daily load requirements for certain pollutants in water, but there is no broad, national cap-and-trade program for either water pollution or water use, although some small-scale water-quality credit trading programs - mainly to meet EPA water quality requirements for phosphorus, nitrogen and heavy metals – already exist in at least 17 states and are being considered in four more, according to the article.

Environmental Credit Corp. is the company working with American Electric Power to put plastic tarps over 200 lagoons holding livestock waste on farms to block methane from reaching the atmosphere and turn cow dung into carbon credits.

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Reader Comments

You need a cap first.
There should be no trading without a cap.
The cap is what drives the market. This voluntary market stuff will not get us where we need to go.

Water pollution can easily lead to toxic hot spots, and they will likely be in areas where regulatory enforcement is weak. So, we will be exporting our pollution, rather than reducing it.

I believe in the power of markets, but only under certain circumstances. It is important to drop the ideology around markets, look at them critically, and learn from past mistakes.

Another important point is who owns the Commons. If you answer this question, then you will create markets that protect the Commons, and distribute the revenues to the people, equally, rather than creating markets to benefit the Enrons of the world.

-Mike Sandler
http://www.carbonshare.org

Mike Sandler | August 27th, 2007

Volumetric offset credit for water is currently being delivered on an industrial scale, see http://www.waterlossinitiative.org for an example of a not-for-profit credit generating mechanism.

Regulation and verification are essential to the value and can be assured through support of appropriate delivery mechanisms such as this one where accurate quantification of the volume of water recovered for credit is a required function of their core deliverable.

Evan Pilkington | December 8th, 2008

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