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Water Credit Trading Supporters Look Westward

The Chesapeake Bay watershed amounts to 64,000 square miles, contains some 10,000 tributaries and streams, serves as home to about 17 million people and is the nation’s largest estuary.

It is also one of the most environmentally and politically troubled waterways in the country — and something of a testing ground for the idea of water quality trading.

At least in theory.

For a decade or more, the concept has been floated as a solution for the region surrounding the bay. Under such trading, polluters looking to meet certain emissions targets buy credits from other entities that have some leftover credits to spare.

But thanks to legal tangles and a long-delayed implementation of pollution caps known as the total maximum daily load, the idea hasn’t gotten the fully fledged traction in the watershed that some would like.

Part of the issue is that credits in the watershed can’t be traded from state to state, because state regulators don’t agree on what counts as a credit. With six states included in the watershed as well as the District of Columbia, arriving at consensus is no easy task. Meanwhile, farmers, considered the biggest contributors to the bay’s pollution load, await the possibility of a robust trading market.

To solve the gridlock, proponents of water credit trading might look westward.

In 2012, three states in the Ohio River basin — Indiana, Kentucky and Ohio — signed on to a plan that would allow water-quality credits from one state to be applied in another. About $1.3 million in funding from the Department of Agriculture and the Environmental Protection Agency helped get the program going.

The venture now represents the world’s biggest water-trading agreement and it could eventually include eight states in the basin, encompassing 46 power plants and hundreds of waste-water facilities and industries, along with 230,000 farmers.

“This helps get people to the table and come up with a shared solution for our collective challenge,” said Jessica Fox, of the Electric Power Research Institute, a power industry research group overseeing the project. “To get these agencies, the regulators, the companies, together on this — it’s remarkable.”

The first official credit trade will happen at a ceremony next month in Cincinnati.

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