Crunch Time for Water Quality Trading

The United States Environmental Protection Agency has invested in dozens of water quality trading pilot programs to establish trading rules and governing bodies to assist industrial and municipal waste water dischargers in meeting ever more expensive pollutant reduction goals. In this article Dennis King outlines why a lack of supply and demand is at the core of the anemic water quality trading markets in the United States and how policy makers model the markets on assumptions that do not match the micro-economic reality of market participants. He also articulates what must be done if water quality trading is to succeed before policy makers loose their enthusiasm for this potentially viable pollution control tool.