Assessing the Nutrient Trading Ratio and Influencing Factors from the TMDL Allocation Process

An innovative approach for TMDL allocation and implementation is watershed-based pollutant trading. As one of the most important technical challenges in establishing pollutant trading program, setting of ratios can be a contentious issue and was already listed as an obstacle by several pollutant trading programs. In general, industries would like to see the ratios set as low as possible to lower the cost of complying with environmental regulation, while environmental groups would like to see the ratios set as high as possible to ensure that trading programs will result in improvements to water quality. However, most of these available studies did not provide an approach to explicitly address the determination of trading ratio. The objectives of this paper are to introduce a practical methodology in determining trading ratio from TMDL allocation matrix of feasible scenarios. By examining different “equivalent trading ratios (ETRs)”, which generally correlate non-linearly with selected pairs of allocation scenarios, the discussion focuses on primary factors influencing the estimation of trading ratio and their potential impacts on TMDL implementation. Case study is based on EPA-approved Nitrate TMDL Development for Muddy Creek, Virginia. The results show that with the increase of relative percentage of nonpoint source load reduction in the total load reduction, the ETR also increases. By further incorporating economic consideration (e.g. marginal treatment cost), this practical methodology will help enhance scientific basis of trading ratio estimation and thus public perception in TMDL-based pollutant trading program.