Transcript Slide 1

Christopher Obropta, Ph.D., P.E., and Josef Kardos, Department of Environmental Sciences, Rutgers University
www.water.rutgers.edu/Projects/trading/Passaic
Water quality trading is a market-based mechanism to increase the costeffectiveness of TMDL implementation. A multi-disciplinary team of Rutgers
University and Cornell University faculty, with expertise in water quality
modeling, wastewater treatment, environmental policy and environmental
economics, are working together with USEPA, NJDEP, local municipalities and
WWTPs, and environmental non-governmental organizations (NGOs) to design,
implement, and evaluate a phosphorus trading program for the Non-Tidal Passaic
River Basin. Results from the project design phase are presented.
The
development of a trading framework that addresses trading ratios, trading
boundaries, and the avoidance of pollution “hot spots” are discussed. The results
from economic modeling of simulated trades are also reviewed.
Trades that create “hot spots” – localized areas of unacceptably high pollutant levels – must be avoided.
In trading, because the buyer is exceeding its allocation, pollutant levels will increase downstream of the
buyer.
How does the project ensure that hot spots will not develop downstream of buyers?
1.
Trading ratios are applied to each transaction to account for fate and transport effects. Ratios are
calculated by comparing TP attenuation from each point source relative to downstream locations. In
Figure 1, TP summer attenuation coefficients at Dundee Lake (PA-11) are 60% and 50% from Upper
Passaic Zone 1 and Troy Hill Zone, respectively. Therefore, the trading ratio is 0.5/0.6 = 0.83 (if seller is
upstream). If the buyer needs 500 kg of credits, the seller must generate 600 kg of credits to satisfy the
ratio. A table of trading ratios has been calculated for all WWTPs in the watershed.
Annual Attenuation
Zone Attenuation Coefficient - Passaic Zone 1
1.00
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Introduction
The non-tidal portion of the Passaic River Basin encompasses 2080 km2, with
1733 km2 of the watershed in New Jersey (NJ) and the remainder in New York.
23 reservoirs, which provide potable water to 25% of NJ residents (i.e., 2 million
people), are located within the Non-Tidal Passaic River Basin.
Includes the Wanaque Reservoir, the largest potable water source in NJ
(capacity: 138.5 billion liters)
Surface water quality standards for nutrients, dissolved oxygen, pH, temperature,
pathogens, metals and pesticides are often exceeded in the watershed.
Over 320 stream km are impaired due to total phosphorus (TP) concentrations
in exceedance of 0.1 mg/l (NJDEP, 2005a).
There are 19 wastewater treatment plants within the watershed that are each
permitted to discharge more than 3.8 million liters per day of treated effluent.
These treatment plants contribute the majority of the phosphorus load to the
watershed (NJDEP, 2005b).
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Phosphorus loading from point and nonpoint sources within the Non-Tidal
Passaic River Basin must be addressed to restore its water quality. Excess
phosphorus in freshwater bodies can cause eutrophic conditions, e.g. algal
blooms, depleted oxygen levels, and even fish kills.
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Water quality trading is based on the premise that sources in a watershed can
face very different costs to control the same pollutant. A trading program allots a
certain number of pollution credits to each source in the watershed. The sources
can either discharge under their limit and sell their credits, or discharge over
their limit and purchase credits. The net effect will be to improve water quality
in the watershed at a lower cost than making each individual pollutant source
upgrade effluent treatment to meet its discharge limit.
The Passaic situation is ideal for a water quality trading program:
Presence of a market driver - stringent TP criteria
Presence of a TMDL - TMDL allocations provide a cap, and can be used to
identify potential trading opportunities within the watershed
High quantity of point sources and potential program participants: 24
WWTPs and 89 municipal separate storm sewer systems (MS4s).
Approximately 2
million people
Predominantly
forest (42%),
urban (40%) and
wetlands (12%)
land use / land
cover
A7
38P
12-
tl e
/Lit
WC
V
10P
15-
8G
17-
tF a
r ea
lls
23 reservoirs
including NJ’s
largest –
Wanaque
Reservoir
1
A1
29P
17-
Reference Location
Reference Location
Figure 1: Phosphorus attenuation from two point source zones in the watershed
2.
Trades are restricted and conducted within a framework that prevents the creation of trading hot spots.
Trading Framework Option 1: No trading across tributaries
Aims to protect all reaches; assumes excessive TP anywhere is a water quality concern
Trading boundaries: Seller must be upstream of buyer
Simple to implement; less opportunities to trade; most conservative water quality protection
strategy
Trading Framework Option 2: Management Area approach
Aims to protect TMDL endpoints; assumes excessive TP is only a water quality concern at the endpoints
(Dundee Lake and Wanaque Reservoir)
Trading boundaries: Group WWTPs into “management areas”. See Figure 2.
More opportunities to trade; slightly more complex to implement; sampling and modeling studies
indicate this approach correctly identifies potential hot spots and would protect water quality.
Management
Area boundary
River / tributary
Pompton M.A.:
3 WWTPs
Upper Passaic M.A.:
16 WWTPs
Lower Passaic
M.A.: 3 WWTPs
Wanaque South
intake endpoint
Dundee
Lake
endpoint
Dundee
Lake
Figure 2: Schematic of management areas
Each management area (M.A.) is bounded by a TMDL endpoint. The endpoint is the only potential hot
spot in the management area.
Within each management area, bidirectional trading is allowed; sellers can be downstream of buyers and
vice versa.
Inter-management area trading:
Upper Passaic M.A. can sell to Lower Passaic M.A.
Pompton M.A. can sell to Upper and Lower Passaic M.A.’s
Cornell University team developed economic model to identify trading scheme that can best
minimize treatment costs (Sado, 2006).
Model uniquely includes marginal abatement costs and incremental capital costs
Considered multiple scenarios based on potential TMDL allocations and trading zones
Key Findings:
Sufficient incentives for limited but important multi-year bilateral or trilateral deals
A phased in TMDL cap will reduce costs of TMDL implementation because it allows
flexibility in the timing of capital investments
Conclusions
Wanaque
Reservoir
Endpoint
Economic Modeling
Holmdel Park, 2003
Legend
A TMDL for phosphorus is being developed for the non-tidal Passaic River
Basin due to exceedances of NJ’s water quality criteria for TP (0.1 mg/l in
freshwater streams; 0.05 mg/l in lakes).
The TMDL will establish waste load allocations for phosphorus in the
watershed. It is likely that all point sources will be required to reduce
phosphorus loading to the Passaic River. Upgrading each WWTP to meet its
TMDL allocation will be very costly.
1733 km2 area
Summer Attenuation
Trading Framework Option 2: Schematic
Need for Water Quality Trading
Watershed figures:
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
0.90
0.80
Figure 3:
Wastewater
treatment plants
in the
Non-Tidal
Passaic River
Basin
Annual Attenuation
Zone Attenuation Coefficient - TroyHill Zone
Summer Attenuation
Attenuation %
The New Jersey Department of Environmental Protection (NJDEP) is developing
a Total Maximum Daily Load (TMDL) which will set phosphorus load allocations
for point and nonpoint sources in the Non-Tidal Passaic River Basin (area: 1733
km2). The most immediate impacts will fall on 24 of the largest wastewater
treatment plants (WWTPs) in the basin. Most WWTPs will likely have to
significantly reduce phosphorus effluent concentrations at great expense to meet
anticipated TMDL waste load allocations.
Trading and Water Quality “Hot Spots”:
Concerns and Solutions
Attenuation %
Abstract
Water quality trading has potential to reduce aggregate discharge of total phosphorus from
wastewater treatment plants in the Non-Tidal Passaic River Basin, in turn decreasing the
frequency and severity of algal blooms in the watershed.
Hot spot issues will be avoided through application of trading ratios; careful selection of a
trading framework will ensure that trades protect and improve water quality
Economic modeling indicates that although market size is limited, important multi-year
bilateral or trilateral deals can be achieved which will reduce costs of TMDL
implementation for parties involved. A phased in TMDL cap will enhance trading through
increased flexibility in timing of capital investments.
Upon release of official TMDL allocations, various trading scenarios will be simulated and
evaluated from a water quality and economic standpoint.
A monitoring strategy is in development to study the effects of actual trades and facilitate
adaptive management.
Acknowledgments
The authors wish to acknowledge Dr. Richard
Boisvert, Dr. William Goldfarb, Dr. Greg Poe, Dr.
Peter Strom, Dr. Christopher Uchrin, Mehran Niazi,
Yukako Sado, USEPA, NJDEP, the Passaic River
Basin Alliance, and TRC Omni Environmental Corp.
for their involvement in this multidisciplinary
research effort. The research was supported by a
USEPA Targeted Watershed Grant.
Ramanessin Brook, 2003
References
New Jersey Department of Environmental Protection (NJDEP)
2005a. New Jersey 2004 Integrated Water Quality Monitoring
and Assessment Report (305(b) and 303(d)). Water Assessment
Team, Trenton, New Jersey.
New Jersey Department of Environmental Protection (NJDEP)
2005b. Amendment to the Northeast, Upper Raritan, Sussex
County and Upper Delaware Water Quality Management Plans:
Phase I Passaic River Study, Total Maximum Daily Load for
Phosphorus in Wanaque Reservoir, Northeast Water Region.
Division of Watershed Management, Trenton, New Jersey.
Sado, Y., 2006. Potential Cost Savings from Discharge Permit
Trading to Meet TMDLs for Phosphorus in the Passaic River
Watershed. Master’s Thesis, Cornell University, Ithaca, New
York.