1. National Roundtable
on Water Quality Trading
Perspective of Point
Source Credit Buyers
Dave Taylor
Director of Special Projects
Madison Metropolitan Sewerage District
Phone: 608-222-1201, ext. 276
Email: davet@madsewer.org

2. Background
• Traditional regulatory focus is on point
sources
• New and/or increasingly stringent
regulatory requirements
• Potential limitations with “brick and
mortar” approaches
• Limited financial resources
• Holistic, watershed based approaches
needed
• Trading needs to be in the toolbox

3. Phosphorus
 Current MMSD effluent: 0.30 mg/l
 New TP regs in 2010: 0.075 mg/l
 Target design criterion: 0.05 mg/l
 Filtration required: $124 M
Increasing Regulatory Pressure

4. Water Quality Trading
 Potential for lower cost
 Engages multiple sources
 Watershed focus
 Potential for improved
environmental outcomes
 Value added
 Without trading, some WQS may
not be affordable or attainable

5. What Do Point Sources Need?
 Market certainty
 Stable, reliable market-market certainty!
 Long term-we plan in 20+ year
increments
 Verifiable credits
 Broker
 Regulatory certainty
 Includes legal framework
 Regulatory flexibility
 Time needed to see real water quality
improvements can be lengthy and
project/location specific
 Example-longer permit cycles or
compliance schedules
 Watershed based permitting

6. What Do Point Sources Need?
Barriers Minimized
 Trade ratios that don’t remove
economic incentive
 Explicit + “hidden”
 Trade ratios that are based on
sound science and consider
ancillary benefits
 Baselines driven by regulatory
requirements
 Geographic scope that isn’t
artificially constrained
 Credit lifespan not artificially
constrained
PI = 10
PI = 4
Ag Performance
Standard (PI = 6)
Baseline example

7. Some Closing Thoughts
 POTWs will only support WQT markets that are environmentally-
effective
 POTWs need permit assurances-”risky” to rely on a 3rd party
 Watershed-based permitting approaches help achieve goals
 Outcomes matter
 Need for standards, based on science, that can be applied
universally
 Policies need to remain flexible to cater to the unique needs and
characteristics of each market and watershed