Market-based approaches and tools for improving water and air quality

Nitrogen (N) losses from agriculture are negatively impacting groundwater, air, and surface water quality. National, state, and local policies and procedures that can mitigate these problems are needed. Market-based approaches where waste treatment plants (point sources) can purchase nutrient credits from upstream agricultural operations (non-point sources) to meet their National Pollutant Discharge Elimination System permit requirements within the Clean Water Act are being explored. This paper reviews these market-based approaches for enhancing air and water quality at a lower cost than simple command-and-control regulation, and describes new tools that are being developed, such as Nitrogen Trading Tool (NTT), that can be used to assess nitrogen losses to the environment under different management scenarios. The USDA-NRCS, EPA and several other state and local agencies are interested in these new tools. The NTT, though primarily designed for water quality markets, also estimates savings in nitrous oxide (N2O) emissions that can be traded in carbon markets. For example, an analysis using NTT shows that for 100 ha of crop land, a C sequestration equivalent of approximately 25–38 Mg C y−1 for a farm in Ohio, and 13–21 Mg C y−1 for a farm in Virginia could be achieved with better nitrogen management practices. These numbers across a watershed could be much larger with improved N and conservation management practices that contribute to better water quality and lower global warming potential. There is a need to further develop, calibrate, and validate these tools to facilitate nitrogen and carbon trading future markets around the globe to increase environmental conservation across agro-ecosystems worldwide.