Water quality trading : a solution to the eutrophication of waterbodies?

Abstract

Eutrophication is serious threat for waterbodies it menaces the health of the environment and of human beings. Water quality trading (WQT) has been identified by the U.S. Environmental Protection Agency as a cost-effective solution for this issue. It is a market based approach that involves the exchange of nutrient pollution credits or allocations between sources. The objective of this thesis is to assess WQT, namely its benefits and challenges, through a combination of theoretical and practical analysis. The theoretical analysis highlights the legal aspects and design features that are relevant for the establishment of an efficient water quality trading program. Moreover, if these elements are appropriately addressed WQT can theoretically guarantee environmental, economic and social advantages compared to command and control approaches. The practical analysis comprises the presentation of two case studies and a compared analysis of the two. The case studies are on the Chesapeake Bay and on the Danube River Basin (DRB). Both waterbodies have eutrophication issues and are extremely vast, but the former has introduced a WQT program, at the beginning of the century, whereas no nutrient trading program has ever been established in the DRB. This combined approach of theoretical and practical analysis allows to understand if WQT could be a cost-effective solution for the eutrophication of the north-western Black Sea. The outcome of the thesis is that due to the recent commencement of nutrient trading programs it is not possible to provide quantitative proof that WQT are more cost-efficient than command and control programs. Furthermore, without evidence of the greater efficiency of these tools, it is not likely that they will be introduced in the Danube region given the difficulty in gaining political acceptance; the large investment that the initiation of such program would require; the complexity of the introduction of trading programs in such a wide transnational basin and, finally, because the policies that are already in place already require very stringent regulations on the emissions of sources for the riparian countries.