Water:

U.S. Water Alliance's Grumbles discusses cap-and-trade proposal for watershed protection

What are the politics and economics of water quality trading programs? During today's OnPoint, Ben Grumbles, former assistant administrator for water at U.S. EPA and now the president of the U.S. Water Alliance, explains why he believes water quality trading could be a productive solution to watershed protection. He discusses the key sticking points behind these proposals and previews an upcoming dialogue between policymakers, industry and regulators on the issue.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Ben Grumbles, former assistant administrator for water at the U.S. EPA, and now the president of the U.S. Water Alliance. Ben, it's always good to have you here.

Ben Grumbles: Thank you so much.

Monica Trauzzi: Ben, water quality trading is an issue that you were trying to shed some light on as a potential solution to watershed protection. We hear about trading a lot when it comes to carbon; how does this apply to water?

Ben Grumbles: Well, a lot of people, smart people have been answering that question and probing it over the years. The way it applies is that, if you take, rather than carbon, if you're focused on nitrogen or phosphorus nutrients or sometimes other substances, you can use a market based approach to bring unrelated entities into the picture, and those unregulated entities can literally create good things in the environment to reduce that pollution. They create credit, and they sell it to the regulated waste water treatment plant or factory who can then find a more cost effective way to meet important water quality goals.

Monica Trauzzi: All right, so carbon trading is controversial. Do we see some of the same debates arising in the water quality?

Ben Grumbles: There are some similar debates. I would say there's even a more thorough discussion and actual pilot projects that are being carried out, 40 to 50 of them around the United States on water quality trading. It's similar in that it brings out some of the arguments for and against, and a great example of arguments against it are often from certain national groups that are philosophically opposed to alternatives to command and control. They're concerned about the ability to verify credits and they're concerned about a wheeling and dealing trading scheme that might justify new growth or new development and not hold the polluters accountable.

Monica Trauzzi: A national water quality trading policy was issued over a decade ago, what's happened since then?

Ben Grumbles: Right, and that was, I would say, a watershed event in terms of national policy on water quality trading. The U.S. EPA issued a policy in 2003 that laid out a basic seal of approval to trading with some very important safeguards and sideboards to finding the scope of what trading could be under the Federal Clean Water Act. Since then, the agency has partnered with USDA and with state and local organizations and with some environmental groups to actually carry out various trading pilots and also issue a pretty detailed tool kit for permit writers to make sure it could be done lawfully and lead to effective and efficient and equitable results.

Monica Trauzzi: So there's been some progress, but why is this important right now?

Ben Grumbles: Well, I can't think of a more important time than right now on how to develop new tools to deal with growing problems in water quality. Around the country, you look at the Chesapeake Bay, you look at the Gulf of Mexico, you look at rivers and streams and the Mississippi River basin or the Ohio River and the Northwest where water quality, particularly temperature problems, are arising. There's a need for new tools, and water quality trading, it's never been portrayed as a silver bullet solution. It's viewed as a supplement towards more cost effective ways to reduce some of those hard, challenging pollutants that often come off the land from agriculture or from power plants, like nitrogen.

Monica Trauzzi: So does it need to happen on a national scale, or can there be sort of a region to region approach?

Ben Grumbles: Well, [Sighs] you know, so everybody would agree that all water is local, but I would say it's local and beyond and there is a need for national policy, statements of support, research support and pilot programs. That's where USDA and EPA have really agreed that, you know, this is worth pursuing with agriculture and energy and environmental groups. But I think they're very leery of a federal top down solution or prescriptive Clean Water Act type of legislative fix.

Monica Trauzzi: So then what can Congress do? What are they doing on the issue right now?

Ben Grumbles: They're listening. They're really interested. I mean, it really is becoming a do or die situation for some communities around the country and for watershed organizations. They're not seeing the type of progress they want. Their cherished water bodies are literally suffocating to death in some cases because of too much of a good thing, too much nitrogen, too much phosphorus. So they're looking for some way to accelerate the progress from the command and control proven approaches of the clean water act, and what you're seeing is that, on the Ohio River basin, for instance, the Electrical Power Research Institute with Kentucky and Ohio and Indiana has launched the world's largest water quality training program that'll have pilot projects. You're seeing in the Chesapeake Bay, so contentious over the years that the frustration over the lack of progress on nitrogen and phosphorus and sediment and, under a pollution budget issued by the federal EPA, the need for cost effective progress in reducing those loadings. So trading is increasingly coming under attack by a few groups, but also as a potential solution that you save significant money and bring unregulated entities into the room for collaborative and cooperative solutions.

Monica Trauzzi: So, in an effort to continue the discussion, you are going to be taking part in a meeting this coming July, you'll be convening policy makers, industry, and regulators on this issue. What do you hope to accomplish at the meeting?

Ben Grumbles: Well, like the Senate Environment and Public Works Committee, which just recently held a Congressional hearing on the promise and pitfalls, the issues and opportunities of water quality trading, the U.S. Water Alliance, we want to be a convener for these important and rich discussions and collaborations. We will be convening along the Ohio River in Cincinnati in July. Federal leaders, state and local leaders and, very significantly, the environmental community and the energy sector to, and with the agriculture, to identify how can you make further progress? How can you accelerate environmental protection and also create real and meaningful incentives for agriculture and for power plants without taking anybody off the hook, but creating mechanisms to do more superior environmental performance, get it done faster and more effectively. That's been the real promise of water quality trading, and that's why there are great opportunities, like our discussion. It's just that there continue to be real and meaningful questions where agriculture, they don't enter into this voluntarily. It could be profitable for them, but they also want to make sure that Big Brother or the federal monitoring doesn't invade their privacy or drag them into a potential regulatory arena that they did not want to be and don't, at this point, have to be in, so it's ...

Monica Trauzzi: All right, Ben. We're going to end it right there on that note. Thank you for coming on the show. Good to see you, as always.

Ben Grumbles: Thank you so much.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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