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

Communications, transparency of the processes, and active involvement of
interested stakeholders, all appear to be critical factors in the success of any trading
program, especially in larger programs. It should be recognized that it generally can take
several years for the trading concept to be accepted and implemented, and that
sometimes, for various reasons (technical, financial, etc) a trading program may not be
implemented despite everyone’s best efforts. Nevertheless, a evaluation process should
be established “up front” during the planning stage and before any trading program is
implemented. This will ensure that all participants know what is expected of them before
the process begins. The process should indicate who will do the evaluation, what criteria
will be used, and how the information will be disseminated to interested parties. In order
to promote credibility, it is also recommended that the evaluators be lead by an
independent third party with involvement by the major stakeholders in the process. The
lead evaluators should have knowledge of the principles of trading, the requirements of
the underlying legal authorities and water quality control programs. The evaluation
criteria should include compliance with the specific conditions of the trading agreement,
review of the financial records, and an analysis stream quality changes that may have
resulted from the trades.
Selection of an Organization to Administer Trading Programs
Having a central organization help establish, manage, and evaluate WQT systems
is essential to their success (see Chapters 1, 2, 3 and 4). Having one lead organization
will help ensure that there is consistency between trades within the basin, that there is a
single contact point for parties interested in initiating a trade, and that financial and
contractual issues are properly handled. A central organization can also provide other
services, such as providing training, tracking the success of various trading efforts
(including trading models used, trading ratios/credits for best management practices, etc),
and maintaining a data base of trades and trading technology used in the area.
The following criteria are proposed for selecting an organization to administer a
trading program in the LDR region.
• Organizational Infrastructure and Interest-- does the organization have a history of
accomplishment, an understanding of the local environmental, economic, and
cultural considerations, demonstrated interest in trading programs, and a culture
of innovativeness and team building? Does the organization have sufficient
interest in administering the trading program? Will it be able to provide the focus
needed?
• Funding -- Does the organization have sufficient funding to administer the
program? Does it have a sufficient infrastructure to handle funding in a
responsible way?
• Staffing and experience--Does the organization have experience in trading and
related areas? Does it have sufficient staff to administer the program? Does it
have sufficient expertise in key areas (e.g. environmental science, environmental
regulations, management, economics, and law)? Does staff have the expertise
needed to oversee contractors that could fill certain needs?
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