The University of Tennessee
Natural Resource Policy Center
About the Center
Scientific Analysis
Policy Process
Capacity Building
Center Personnel
Paper and Presentations

The Use of Market-Based Instruments to Cost-Effectively Improve Water Quality in Tennessee

NRPC Leads: Christopher Clark and William Park

Funding Source: U.S. Environmental Protection Agency

Project Description
The principal objective of this research is to evaluate the potential of water quality trading to achieve water quality standards for nitrates, siltation, nutrients and/or organic enrichment/low dissolved oxygen for impaired waters in the State of Tennessee. This evaluation will focus on the availability and spatial location of potential market participants, both point and non-point.

Information on impaired waters will be obtained from 303(d) and 305(b) reports. Information on point sources will be obtained from NPDES permits and Discharge Monitoring Reports accessed via EPA’s Permit Compliance System. Information on non-point sources will be derived from geo-spatial databases (including digitized soil, land use, and property tax parcel maps) and agricultural census data. Watershed-specific inventories of potential participants will be formulated to identify those watersheds which appear to have sufficient point and non-point sources discharging for a trading program to allow impaired waters to meet existing water quality standards. For the watersheds meeting this criterion, the project will assess the actual or estimated marginal abatement costs to determine whether there are differences that can be exploited by a trading program.

The project will allow policymakers to evaluate whether water quality trading is a cost-effective means of addressing water quality impairments in Tennessee. More particularly, the project will identify: (i) those impairments that are most and least suitable to water quality trading; (ii) the potential cost savings associated with a trading program both for one or more individual watersheds and for the State as a whole; and (iii) elements of the design and implementation of a water trading program that are likely to have a significant effect on the effectiveness of such a program.

Project Links

Christopher Clark
University of Tennessee
Agricultural Economics

William Park
University of Tennessee
Agricultural Economics

U.S. Environmental
Protection Agency

Copyright © 2007
~To enhance policy making relative to the sustainable management
of natural resources in Tennessee and the Southeastern Region~
The University of Tennessee