Opportunities for Reducing Total Maximum Daily Load (TMDL) compliance costs: lessons from the Chesapeake Bay

The Chesapeake Bay Total Maximum Daily Load (TMDL) program is an unprecedented opportunity to restore the Chesapeake Bay, yet program costs threaten to undermine its complete implementation. Analyses of Bay TMDL program design and implementation were used to relate program cost-effectiveness to choices in (1) compliance definitions, (2) geographic load allocations, and (3) approaches to engaging unregulated sources. A key finding was that many design choices require choosing an acceptable level of risk of achieving water quality outcomes, and a lack of data can lead to precautionary choices, which increase compliance costs. Furthermore, although some choices managed costs, others decisions may have reduced the potential for cost savings from water quality trading and payment programs. In particular, the choice by some states to distribute the portion of load reductions that improve water quality in the Bay mainstem to many small basins is likely to diminish the potential for market development or reduce funding for the most cost-effective nutrient and sediment reduction practices. Strategies for reducing costs of future TMDLs include considering diminishing marginal returns early in the TMDL design to balance costs and risks in regulatory goal setting and to design rules and incentives that promote innovation and cost-effective compliance strategies.