Removing Muck with Markets: A Case Study on Pollutant Trading for Cleaner Water

Publication Date: August 2003

Publisher: Reason Foundation

Author(s): Michael De Alessi

Research Area: Environment

Type: Brief

Coverage: Wisconsin

Abstract:

Regulatory restrictions on nutrient and suspended solid pollution have improved water quality in most U.S. watersheds. But many watersheds still suffer from poor water quality. A good example is Wisconsin's Fox- Wolf River Basin where poor water quality remains a problem, especially due to phosphorus loading. Most of the gains in water quality have come from point-source reductions, which have now reached the stage of diminished returns and increased costs. Nevertheless, reducing point-source loads continues to be the target for stricter regulation. Market mechanisms to allow trading underneath a cap for both point and nonpoint sources offer a promising avenue to further and more practical improvements in water quality in the nation's watersheds. The Fox-Wolf River Basin provides a good case study.