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

The second issue of concern involves multiple impairments. Consider a
watershed with two impairments and two dischargers. The dischargers are not on the
same reach. One of the impairments is influenced by both discharges while the other
impairment is influenced by only one discharger. Figure 2-4 shows this arrangement.
Figure 2-4: Schematic of trading ratios in a system with multiple impairments
Flow
Flow
Point Source A
Point Source B
Impairment A
Impairment B
PSA contributes to Impairment A and impairment B while PSB contributes only to
impairment B. Trades between PSA and PSB are complex. If PSA buys a reduction
from PSB, the reduction will benefit impairment B but not affect the impairment A. This
trade is problematic because it over controls for impairment B and under controls for
impairment A. Regulators intended that some portion of the reduction that they assigned
to PSA would reduce the impairment in the vicinity of PSA. But, this trade fails to
consider the local impairment in the vicinity of PSA. One potential solution to this
problem is to divide the reduction requirement into a component for the local impairment
and the downstream impairment. The system could allow only trades that limit flow into
an impairment that is downstream of both dischargers. There are numerous permutations
like this scenario. Each permutation is case specific and requires a unique solution and in
no case will trades be allow that will causes a local violation of water quality standards.
The third issue involves the uncertainty of the reductions of the vast array of
mechanisms for NPS control. The determination of a trading ratio for every possible
mechanism of NPS reduction is not possible. The number of mechanisms and the unique
effect that location has upon these mechanisms makes this task cumbersome. One
solution to the problem is to produce a list of preapproved mechanisms with predefined
uncertainty. Dischargers who wish to purchase NPS reductions may choose from the list
for which regulators have previously determined the value of uncertainty for each
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