Applying  Water  Quality  Trading    in  the  Lower  Fox  River  Watershed  

Fox  P  Trade  •   3.5  year  project  •   Water  Quality  Trading  • Nutrient  Trading  •  Phosphorus  Trading  

•   Leverage  and  build  on  other  work  to  date  • Wisc.  P  Rule  (NR  102,  NR  217,  NR  151)  • State  WQT  Guidance  • LFRW  TMDL  • Various  studies  (e.g.,  FWWA,  Sea  Grant,  UWGB,  etc.)  

• Design  a  P  trading  program  specifically  for  the  LFRW  

Great  Lakes  Commission  

 •  8  states;  2  provinces  •  To  promote  the  orderly,  integrated,  and  comprehensive  development,  use,  and  conservation  of  the  water  resources  of  the  Great  Lakes  Basin  

•  Great  Lakes  Basin  Compact  (1955)  

Wisconsin  Delega9on  to  the  GLC  

Ken  Johnson,  Administrator,  Water  Division  

Steve  Galarneau,  Director,  Office  of  the  Great  Lakes  

Dean  Haen,  Director,  Water  Division,  Brown  County  Port  and  

Solid  Waste    Department  

Program  Areas  

+  

Core  Services    

Communications  

Analysis  &Reporting  

Facilitation/  Consensus  Building  

Policy  Coordination/  Advocacy  

Clean  Energy  and  Climate  

Habitat  and  Coastal  Management  

Water-­‐Dependent  Economy    and  Infrastructure  

Water    Resource  Management  

Invasive  Species  

 

Water  Quality  and  Ecosystem  Health  

Great  Lakes  Commission  

Steps  to  Develop  A  WQT  Program    

1.   Set  Goals  2.   Convene  Stakeholders  3.   Assess  Feasibility  4.   Hyp0thetical  Scenarios  5.   Design  Program  

a)  Goal    b)  Quantification  methods  c)  Risk  Management  d)  Administration  e)  Guidance  Document  

6.   Pilot  Design  7.   Adapt—apply  lessons  learned    

Fox  P  Trade  Task  Timeline  Fox  P  Trade  -­‐-­‐  Total  Project:    42  months  -­‐-­‐  3/1/13  -­‐  9/30/16  

Task     Title   Year  1  (2013)   Year  2  (2014)   Year  3  (2015)   Year  4  (2015)  

1  Develop  Workplan  and  Project  WQ  Goal                                                              

2   Convene  Stakeholders                                                              

3   Feasibility:  Supply                                                              

    Feasibility:  Demand                                                                

    Feasibility:  Market  Survey                                                              

4   HypotheKcal  Trade  Scenarios                                                              

5   Design:  ArKculate  Goal                                                              

    Design:  QuanKficaKon  Methods                                                              

    Design:  Manage  Risk                                                                

    Design:  Program  AdministraKon                                                              

    Design:  Guidance  Document                                                              

6   Pilot  Design  (as  resources  allow)                                                              

7   Lessons  Learned                                                              

Goal  

�  to  establish  a  phosphorus  trading  program  where  trades  are  enabled  by  a  combination  of  cost  effective  approaches  that  contribute  to  improved  instream  water  quality  in  the  Lower  Fox  River  Watershed  

   �  Set  in  part  by  NRCS  Grant  Terms  �  Influenced  by  WI  DNR  policy  

�  P  limits  set  by  state  regulations  �  TMDL  load  allocations  �  WQT  guidance  

Convene  Stakeholders  � Collaborative  process  that  runs  throughout  project  � Objectives:  

�  Build  direct  relationships  between  buyers  and  sellers  �  Enable  the  regulated  community,  farmers,  other  businesses,  ENGOs,  and  others  to  have  candid  conversations  about  their  goals  for  the  watershed  and  their  individual  drivers  (e.g.,  cost  of  permit  compliance)  

�  Safeguard  interest  of  those  not  directly  involved  in  the  process,  but  who  are  interested  and  stand  to  benefit  or  lose  from  a  successful/failed  program  

Advisory  Group  

Technical  Resource  Team(s)  

Project  Management  Team    

   

Working  Group  �  Great  Lakes  Commission  (GLC)    �  U.S.  Department  of  Agriculture  

Natural  Resources  Conservation  Service  (USDA-­‐NRCS)  

�  Wisconsin  Department  of  Natural  Resources  (WDNR)  

�  Brown  County  Land  and  Water  Conservation  Department    

�  EPA  Region  5,  Water  Division  �  Fox-­‐Wolf  Watershed  Alliance  �  Northeast  Wisconsin  

Stormwater  Consortium  (NEWSC)  

�  Green  Bay  Metropolitan  Sewerage  District  ("NEW  Water")  

 

�  Lower  Fox  Dischargers  Association  

�  Northeast  Wisconsin  Stormwater  Consortium    

�  Oneida  Nation  of  Wisconsin  �  Outagamie  County  Land  

Conservation  Department  �  University  of  Wisconsin  

Extension  �  Wisconsin  Association  of  

Professional  Agricultural  Consultants  

�  Clean  Wisconsin  

Advisory  Group  �  Alliance  for  the  Great  Lakes  �  Applied  Ecological  Services,  Inc.    �  ARS  �  Baird  Creek  Preservation  

Foundation  �  Bay-­‐Lake  Regional  Planning  

Commission  �  Brickstead  Dairy  �  Brown  County  Land  and  Water  

Conservation  Department  �  Bureau  of  Indian  Affairs  �  Calumet  County  Land  &  Water  

Conservation  Department  �  City  of  Appleton  �  City  of  Green  Bay  �  Clean  Wisconsin    �  Conestoga-­‐Rovers  and  Associates    �  Dairy  Business  Administration    �  DATCP    �  DNR    �  Earth  Tech  AECOM  �  East  Central  Wisconsin  Regional  

Planning  Commission  �  EPA  GLNPO,  Region  5  �  Fox-­‐Wolf  Watershed  Alliance    �  Georgia  Pacific  �  Glacierland  RC&D  

�  Green  Bay  Metropolitan  Sewerage  District  ("NEW  Water“)  

�  Greenleaf  Advisors,  LLC    �  Marek  Landscaping,  LLC  �  Michael  Fields  Agricultural  Institute    �  Michigan  Farm  Bureau  �  Midwest  Environmental  Advocates    �  Northeast  Wisconsin  Technical  

College  �  NRCS  �  Oneida  Tribe    �  Outagamie  County  Land  

Conservation  Department    �  Polenske  Agronomic  Consulting  Inc  �  Professional  Dairy  Producers  Of  

Wisconsin    �  Professional  Nutrient  Applicators  

Assoc  of  Wisconsin  �  River  Alliance  of  Wisconsin    �  Sand  County  Foundation    �  Sierra  Club  �  The  Nature  Conservancy    �  Tidy  View  Dairy    �  USACE      �  USDA-­‐FS  

�  USFWS    �  USGS    �  UW  Discovery  Farms  �  UW  Extension    �  UW-­‐Green  Bay  �  UW-­‐Milwaukee  �  UW-­‐Oshkosh  �  UW  Sea  Grant  Institute    �  Village  of  Allouez  �  Village  of  Ashwaubenon  �  Village  of  Bellevue  �  Winnebago  County  Land  &  Water  

Conservation  Department    �  Wisconsin  Academy  of  Sciences,  

Arts  and  Letters  �  Wisconsin  Agri-­‐Business  Association    �  Wisconsin  Association  of  

Professional  Agricultural  Consultants  

�  Wisconsin  Corn  Growers  Association    

�  Wisconsin  Farm  Bureau  Federation    �  Wisconsin  Farmers  Union  �  Wisconsin  Land  &  Water  

Conservation  Association    �  Wisconsin  Paper  Council  �  Wisconsin  Soybean  Association    �  Wisconsin  Water  Association  �  Wisconsin  Wetlands  Association    

 

Economic  Demand  Feasibility  � Determine  whether  there  will  be  enough  demand  (who  will  “buy”  the  credits)  �  Characterize  potential  demand/pollution  reduction  needs  �  X  lbs  of  P/year    �  Cost  Per  lb  reduction  

� Determine  cost  differential/willingness  to  pay  -­‐  difference  between  cost  of  trading  and  next  cheapest  option  

Economic  Supply  Feasibility  � Determine  whether  there  will  be  enough  supply  (who  will  sell  the  credits  and  how  much  can  they  generate)  

� Assess  total  watershed  load  reduction  potential  from  unregulated  and  nonpoint  source  areas.    �  Calculate  what  portion  of  the  total  load  reduction  potential  is  needed  to  meet    TMDL  load  allocations  (i.e.,  to  achieve  the  credit  threshold).  

�  Calculate  total  amount  of  creditable  load  reductions  (e.g.,  load  reductions  beyond  the  credit  threshold).    

Total  load  reduction  potential  

Load  reduction  needed  to  meet  TMDL/credit  threshold  

Load  reduction  that    can  generate  P  credits  

Compare  Demand  and  Supply  to  Assess  Overall  Economic  Feasibility  �  Determine  whether  P  load  reductions  from  unregulated  and  nonpoint  sources  are  adequate  to  offset  the  need  for  reductions  from  point  source  discharges.      �  Can  the  watershed  generate  enough  P  credits  to  meet  the  needs  of  the  credit  buyers  (demand)?  

�  Target  Promising  Credit  Generating  Areas  �  Of  the  which  sub-­‐watersheds  have  the  greatest  credit  generation  potential?  

�  Which  individual  farms/municipalities  within  those  sub-­‐areas  have  the  greatest  potential  to  generate  credits  for  sale/trade?  

Hypothe9cal  Scenarios  �  2-­‐4  promising  sellers  and  buyers  �  real  farm/facility  data  will  be  used  to  determine:  

�  BMPs  installed/credit  generation  (apply  trade  ratios)  �  purchase  potential  (amount  buyer  willing  to  spend  on  credits)  

�  credit  value  �  cost  of  sale  

� Expose  the  greatest  areas  of  risk  and  uncertainty  from  both  the  seller  and  buyer  perspective  

� Prepare  documentation  to  address  all  risk  and  liability  assurances  to  support  the  trade  

Trading  Infrastructure  �  Eligibility—determine  who  is  eligible  to  trade  

�  Calculate  credit  generation  potential  �  Validate  proof  of  tile,  rights  to  credits,  plans  for  restoration/conservation/credit  

generation  (e.g.,  nutrient  management  plan  implementation)  Ø  Seller’s  Project  validation  checklist    

�  Verification  and  Certification  —independent  process  to  verify  that:  �  Conservation  actions  are  additional  (beyond  credit  threshold)  �  Planned  management  actions  can  achieve  stated  load  reductions  (independent  

calculation  of  load  reductions)  �  A  long-­‐term  stewardship  plan  is  in  place  to  implement  and  maintain  the  practices    

Ø  Credit  Calculator:    A  Simple  Tool  to  Calculate  Credit  Generation  �  Build  on  existing  models  (e.g.,  SNAP-­‐plus)management  actions  can  achieve  stated  load  

reductions  (independent  calculation  of  load  reductions)  �  Use  WI  DNR  Trade  Ratios—account  for  uncertainty  

More  Trading  Program  Elements  � Reporting  and  Tracking—housing  information  about  individual    trades;  tracking  trades  over  time  

�  Liability,  Enforcement,  and  Other  Risk  Management  �  Assurances  for  credit  buyers—reflecting  trades  in  permits  

�  Addressing  “what  ifs”  �  Long  Term  Program  Administration  

�  Verification  and  certification  �  Tracking  and  reporting  �  Brokering  

 

Calculate  Credit  Generation  Potential  

Identify  and  Design  BMPs  

Identify  Buyers  

Implement  BMPs  

Quantify  Credits  and  Apply  Trading  Credit  Ratios  

Verify  Credits  

Register  Credits  

Sell  Credits  

Ongoing  maintenance  and  verification    

Eligibility  requirements  •   Is  the  project  additional?  •   Are  plans  in  place?  

Trade  Ratios  •  To  Account  for  uncertainty    

Verification  and  Certification  Are  credit  calculations  correct?  Is  all  documentation  in  place?  

Registration  •  To  track  credits  over  time  

Ongoing  Verification  • Are  BMPs  meeting  performance  standards?  

Assurances  Actions  

Pilot  Design  (tbd)  � Use  guidance  document  and  supporting  information  to:  �  identify  one  or  more  prospective  buyers  and  one  or  more  prospective  sellers    

�  facilitate  a  trading  agreement  (possibly  those  buyers  and  sellers  selected  for  hypothetical  scenario)  

�  craft  a  trading  agreement  and  all  supporting  documentation      

Ø Trading  would  commence,  but  Fox  P  Trade  project  will  not  oversee  implementation  of  the  trade  

Deliverables  

� P  trading  guidance  document  for  the  LFRW  � Eligibility  checklist  � Credit  calculator  that  quantifies  environmental  improvements  associated  with  various  BMPs  and  other  activities  and  converts  them  into  credits  that  can  be  traded    

� Contract  templates,  verification  and  other  forms  � Program  administration  qualifications  and  desired  services  

Next  Steps  (6  months)  

� Continue  to  Engage  Working  Group  and  Stakeholder  Advisory  Group  

�  Issue  RFP;  Begin  Feasibility  Study  �  Scope  Hypothetical  Trading  Partners    

Thank  you!  

Victoria  Pebbles,  Program  Director  Great  Lakes  Commission  

(734)  971-­‐9135  vpebbles@glc.org  

   

http://www.glc.org/foxptrade