WERF—ESTABLISHING A STATEWIDE FRAMEWORK FOR NUTRIENT TRADING IN MARYLAND: A MARKET ANALYSIS AND IMPLICATIONS FOR TRADING GUIDELINES

The objective of WERF 97-IRM-5E is to model the trading market in Maryland—demand and supply—under various assumptions and use the results to inform design and implementation of a statewide trading program. The state has indicated it will allow publicly-owned treatment plants in Maryland that have installed Biological Nitrogen Removal (BNR) technology to purchase nitrogen reduction credits to offset exceedances above an individual and/or group loading cap. The state has considered that credits could be created and sold by publicly owned treatment works (POTWs), as well as nonpoint sources such as urban, agricultural, and undeveloped land.This paper presents preliminary results from the first round of several trading scenarios that: (1) estimate the demand for credits by BNR POTWs under certain baseline assumptions; (2) estimate the pool of potentially tradable credits from point and nonpoint sources under certain baseline assumptions; and (3) examine the relative demand and supply in each of Maryland's 10 tributaries under baseline assumptions about growth rates, treatment efficiencies, cap rules, trading ratios, voluntary nonpoint source reduction commitments, and opportunities for cross-tributary trading. The results provide the basis for an initial evaluation of whether the market analysis suggests or necessitates changes to the Chesapeake Bay Program trading guidelines and an initial assessment of what the results imply for how Maryland should interpret these guidelines in designing its program.