Water Quality Trading in the Lower Delaware River Basin: A ...

Site Location Ratio – The ratio that considers the effect of transformation,
decay, and advective removal of a pollutant during overland flow and
identifies the equivalency of discharges at prospective locations on land in
a watershed relative to a baseline location on the waterway. The site
location ratio identifies the equivalency of a PS with a NPS or two NPS
during flow overland.
Uncertainty Ratio – The ratio that considers the uncertainty of the
effectiveness of BMP implementation, the uncertainty of the measurement
of flow from NPS, and the uncertainty of decay, transformation and
removal during transport of the pollutant. This ratio provides the margin
of safety.
Figure 2-2: Trading Ratios for Point Source to Non Point Source Trades
Flow
Non Point
Source A
Point Source B
Impaired Segment
Trading ratios also need to be calculated for discharges from NPS (Figure 2-2). If
a one-unit reduction at B has the same impact on water quality in the impaired segment as
a one and one-half unit reduction in the un-impaired segment near A, the waterway
location ratio for this trade would be 1.5. If a one-unit reduction at location A has the
same environmental effect as a two unit onsite reduction of the NPS at A the site location
ratio is 2.0. Finally, if regulators decide that they need a margin of safety of 20%, the
uncertainty ratio would be 1.2. Therefore, the trading ratio between PS B and NPS A
would be 3.6, or the product of its three ratios (1.5 x 2.0 x 1.2 = 3.6). Therefore, PS B
must purchase a 3.6 unit reduction from NPS A to have the same effect on the waterway
as a one-unit reduction at location B.
While most trading ratios are greater than 1, they need not be. For example,
consider the reverse of the previous example in which NPS A wants to purchase a
reduction from PS B. In this case the waterway location ratio and site location ratios
would be the inverse of the previous values, or 0.66 and 0.5 respectively. The
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