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

conservation districts, agricultural extensions at universities, and watershed organizations
are some of the existing and effective channels of communications with farmers.
Sources of Funding
Funding for existing trading programs has come from a variety of sources
including state grants, Clean Water Act section 319 funds, private grants/funds, and inkind
services. For example, Cherry Creek (CO), Piasa Creek (IL) and Kalamazoo (MI)
all use unspecified state and federal grants to finance trading activities. Chatfield (CO)
has received a Clean Lakes grant, and Long Island Sound (CT) and Great Miami River
(OH) depend on capital improvement money from the State Revolving Loan fund.
Grants from the Environmental Protection Agency (EPA) have funded watershed studies,
modeling and other research in Charles River in Massachusetts and Red Cedar River in
Wisconsin.
Private sources of funding should also be explored. Point sources seeking
adjusted effluent limitations contribute significant amounts, ranging from thousands to
millions of dollars. These funds are usually for offset projects. Illinois-American Water
Company, in Piasa Creek, will contribute millions of dollars over the 10-year program.
American National Power (ANP) in Charles River (MA) contributed $1.3 million to fund
water-flow projects.(Breetz et al 2004). The Kalamazoo Demonstration Project (MI)
received $25,000 from a paper company. Rahr Malting (MN) and Southern Minnesota
Beet Sugar Cooperative established $275,000 and $300,000 funds respectively to pay for
phosphorus offsets. Finally, the Tar-Pamlico Discharge Association paid a total of
$700,000 for a trading ‘trial run’. Some of this money was also used to pay for a fulltime
employee to facilitate trading.
Many program stakeholders tap the “in-kind” expertise and resources of other
agencies and organizations to defray expensive research and administrative duties or help
with pollution reduction. Volunteers are also used in some cases. Chatfield Reservoir
(CO) uses in-kind services from agencies such as the Army Corps of Engineers and the
local botanical garden. The Nitrogen Credit Advisory Board (NCAB), composed of
representatives for the buyers and sellers, helps to track credit exchange for the Long
Island Sound program, free of charge. The United State Geological Survey (USGS)
assists on the flow modeling for Charles River (MA) and the NRCS ‘partnered with the
Kalamazoo project’ to perform field work. The Barron County Land Conservation
Department took on a bulk of the administrative work to make trading more costeffective
in the Red Cedar River (WI).
Some programs raise funds through application fees, dues and/or through credit
sales. The Chatfield Reservoir program charges a $100 ‘Application’ fee to PS applying
for a higher effluent limitation, and administrative costs are also built in credit prices.
User fees and credit sales pay for a portion of Cherry Creek’s $1.4 million budget (2003),
while ten percent of the trading costs in the Tar-Pamlico go towards administrative
expenses. Cherry Creek and Chatfield Reservoir in Colorado also augment revenues
through property taxes and fundraisers.
In the LDR Basin and the Christina River Basin all the above types of funding
should be considered. The diversity of funding approaches that have been used suggests
that there may be different funding approaches that could be used within the LDR Basin
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