Indiana Signs on to Water Quality Trading Program

August 9, 2012

News Release

CINCINNATI, Ohio - Today Indiana Agriculture Director, Joe Kelsay of the Indiana State Department of Agriculture (ISDA) and Commissioner Tom Easterly of the Indiana Department of Environmental Management (IDEM) will join representatives from Kentucky and Ohio to participate in the signing of the Ohio River Basin Water Quality Trading Project: Pilot Trading Plan by the states of Indiana, Kentucky and Ohio. The ceremony will take place at 10 a.m. in Montgomery Inn at the Boathouse located at 925 Riverside Drive in Cincinnati, Ohio.

The Electric Power Research Institute conceived of the pilot project which was developed in conjunction with the states of Indiana, Ohio, Kentucky, the U.S. Department of Agriculture Natural Resources Conservation Service, American Farmland Trust, the Ohio Farm Bureau, and ORSANCO. This project intends to develop and implement a completely voluntary, private-sector, interstate pilot trading program to provide a viable option for complying with future nutrient regulations. The pilot tests the specific protocols for the creation and purchase of credits for total nitrogen (TN) and total phosphorus (TP) in the Ohio River Basin beginning in 2012 and continuing through 2015. The goal is to establish a private sector trading market that is self sustaining and does not involve government subsidy. Indiana counties participating will include Wayne, Dearborn, Ripley Ohio, and Switzerland. This pilot trading project is unique in that it has involved three trading states and has been vetted by farmers, agricultural trade associations, and environmental organizations.

"ISDA is proud to serve Indiana agriculture by enhancing the stewardship of natural resources on agricultural land in a manner that creates value-added opportunity for producers and assists agriculture stakeholders with current and future regulatory challenges," said Joe Kelsay, Indiana Agriculture Director. "This trading program can provide farms with a creative option for funding conservation practices. I want to thank our partners for their vision, monetary contributions and partnerships that continue to serve our state and Indiana agriculture."

Water quality trading is a market-based approach that enables facilities facing high pollution control cost to buy reduction credits from entities with lower costs. The goal is to achieve water quality improvements more efficiently.

While some states have adopted trading policies or rules to govern trading within their jurisdictions, this is the first interstate trading program where several states will operate under the same rules and a water quality credit generated in one state can be applied in another. The plan signed today puts into place a groundbreaking framework that will allow Indiana, Kentucky and Ohio to accomplish this.

"The more tools we give people to address and reduce environmental impacts, the more likely it is that we will succeed in improving water quality," said Thomas Easterly, IDEM commissioner. "Industry, agriculture, communities, and regulators make the most progress when we work together. There are a number of good environmental programs already in place, and it is exciting to be part of a new project that will help us be even more successful in improving water quality."

EPRI launched its Ohio River Basin water quality trading project in 2009 as a first-of-its-kind interstate multi-credit trading program. It represents a comprehensive, scientifically-based approach to designing and developing markets for nitrogen, phosphorus and potentially greenhouse gas reduction credits.

The project supports the adoption of agricultural best management practices such as no-till, filter strips, cover crops, tree plantings, exclusion of livestock out of the water and nutrition management plans to reduce nutrient loads in Ohio River Basin waters and improve local and regional water quality.

Pilot trades are expected to include at least three power plants or other participants and up to 30 farms implementing agricultural conservation best management practices on up to 20,000 acres. Nutrient reductions are expected to range approximately 45,000 pounds of nitrogen 15,000 pounds of phosphorus annually.

The pilot project is already the world’s largest water quality trading program operating under a common trading plan. At full-scale, the project could include up to eight states in the Ohio River Basin and would potentially create credit markets for 46 power plants, thousands of wastewater facilities and other industries, and approximately 230,000 farmers.
Additional program information can be found at www.epri.com/ohiorivertrading.
About ISDA

ISDA promotes and supports growth in Indiana agriculture by serving as an advocate at the local, state and federal levels by defining and nurturing economic opportunity in the food, fuel and fiber industries. Learn more at www.in.gov/isda.
About IDEM

Established in 1986, IDEM (www.idem.IN.gov) implements federal and state regulations regarding the environment. Through compliance assistance, incentive programs and educational outreach, the agency encourages and aids businesses and citizens in protecting Hoosiers and our environment.

About EPRI

The Electric Power Research Institute, Inc. (EPRI, www.epri.com) conducts research and development relating to the generation, delivery and use of electricity for the benefit of the public. An independent, nonprofit organization, EPRI brings together its scientists and engineers as well as experts from academia and industry to help address challenges in electricity, including reliability, efficiency, health, safety and the environment. EPRI’s members represent more than 90 percent of the electricity generated and delivered in the United States, and international participation extends to 40 countries. EPRI’s principal offices and laboratories are located in Palo Alto, Calif.; Charlotte, N.C.; Knoxville, Tenn.; and Lenox, Mass.

Source: Indiana Department of Environmental Management