A Feasibility Analysis of Applying Water Quality Trading

Water quality trading is a policy tool that could improve the cost-effectiveness of achieving environmental goals, but it is not currently used in the state of Georgia. This paper evaluates the feasibility of applying water quality trading in Georgia watersheds. The criteria used for this evaluation include environmental suitability, regulatory incentive, economic incentive, availability of participants, and stakeholder response. The evaluation concludes that the Georgia watersheds where WQT appears to be most feasible include the Chattahoochee, Coosa, Savannah, and Ocmulgee basins. Feasibility is also likely to be high in the Flint and Oconee basins. However, it is important to note that WQT could develop in any watershed where a pollution source has an economic interest in trading. The evaluation concludes that the opportunity for WQT in Georgia is somewhat limited by present regulatory conditions, but offers alterative WQT models that should be considered. Working Paper Number 2005-002