Could Cap-And-Trade Work For Water?

by | Aug 27, 2007

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John Regan, founder of Environmental Credit Corp., a carbon-credit supplier on the Chicago Climate Exchange, thinks a model similar to CCX could work for companies that need to deal with water pollution and water shortages, Sustainable Industries reports.

Under a cap-and-trade system, water polluters would have the option to reduce pollution in their own operations, or to purchase pollution-control credits from another source at a lower cost than undertaking the pollution control themselves. Industries, farmers or cities could also conceivably buy and sell credits for water use.

The main problem is in creating a market for water credits without regulations driving the need. Currently, the EPA has set total maximum daily load requirements for certain pollutants in water, but there is no broad, national cap-and-trade program for either water pollution or water use, although some small-scale water-quality credit trading programs – mainly to meet EPA water quality requirements for phosphorus, nitrogen and heavy metals – already exist in at least 17 states and are being considered in four more, according to the article.

Environmental Credit Corp. is the company working with American Electric Power to put plastic tarps over 200 lagoons holding livestock waste on farms to block methane from reaching the atmosphere and turn cow dung into carbon credits.

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