Economic total maximum daily load for watershed-based pollutant trading

Water quality trading (WQT) is supported by the US Environmental Protection Agency (USEPA) under the framework of its total maximum daily load (TMDL) program. An innovative approach is presented in this paper that proposes post-TMDL trade by calculating pollutant rights for each pollutant source within a watershed. Several water quality trading programs are currently operating in the USA with an objective to achieve overall pollutant reduction impacts that are equivalent or better than TMDL scenarios. These programs use trading ratios for establishing water quality equivalence among pollutant reductions. The inbuilt uncertainty in modeling the effects of pollutants in a watershed from both the point and nonpoint sources on receiving waterbodies makes WQT very difficult. A higher trading ratio carries with it increased mitigation costs, but cannot ensure the attainment of the required water quality with certainty. The selection of an applicable trading ratio, therefore, is not a simple process. The proposed approach uses an Economic TMDL optimization model that determines an economic pollutant reduction scenario that can be compared with actual TMDL allocations to calculate selling/purchasing rights for each contributing source. The methodology is presented using the established TMDLs for the bacteria (fecal coliform) impaired Muddy Creek subwatershed WAR1 in Rockingham County, Virginia, USA. Case study results show that an environmentally and economically superior trading scenario can be realized by using Economic TMDL model or any similar model that considers the cost of TMDL allocations.