Green Infrastructure for Water Quality Trading Programs

A study by Colorado State University, published in Nature Communications Earth & Environment, explores the role of carbon markets in promoting and accelerating the implementation of green infrastructure for water quality trading programs.

According to the study, half of America’s rivers are impaired and do not meet Clean Water Act standards today. Contamination of these rivers comes mainly from point-source river charges such as Wastewater treatment facilities and non-point sources from agricultural and forestry practices, land use change, urbanisation, and soil erosion.

Point source discharges are regulated by the United States Environmental Protection Agency (EPA) and state agencies under the Clean Water Act, while non-point sources are largely unregulated. Fertiliser application from agriculture is a dominant form of water quality impairment, causing harmful algae blooms and subsequent anoxic zones in lakes or near-coastal environments.

Improving water quality in the US is often delayed due to cost, complexity, and litigation. While there are similar financing markets for water, the problem is initially more localised than for air quality and carbon. That dynamic has limited the value of water market trades in the past. The paper suggests that these existing markets could be improved and that the carbon markets could also be leveraged to change some of the financial incentives farmers have around water treatment and impacts from their activity.

Researchers demonstrated that carbon financing can provide an incentive for water quality trading. By combining data on impaired waters, treatment technologies, and life cycle greenhouse gas emissions in the Contiguous United States and comparing it with traditional treatment technologies to alternative green infrastructure, they find that green infrastructure could save 15.6 billion dollars, 21.2 terawatt-hours of electricity, and 29.8 million tonnes of carbon dioxide equivalent emissions per year. This is while sequestering over 4.2 million tonnes of CO2 annually over 40 years.

They suggest that green infrastructure solutions may have the potential to generate $679 million annually in carbon credit revenue (at $20 per credit), which represents a unique opportunity to help accelerate water quality trading.

The study notes, “Combining this challenge and opportunity, there is a window of opportunity to accelerate the improvement of America’s rivers using these market mechanisms as we transition to a renewable energy and restored watershed future.”