The U.S. Department of Agriculture’s (USDA) Natural Resources Conservation Service (NRCS) and the U.S. Environmental Protection Agency (EPA) signed a partnership agreement to establish and promote water-quality credit trading markets through cooperative conservation. The agreement features a pilot project within the Chesapeake Bay basin that the agencies say will showcase the effectiveness of environmental markets.

&quotWater-quality credit trading is a flexible, cost-effective approach for implementing conservation practices that reduce runoff, help producers meet water quality standards, and pursue water quality improvement goals in watersheds,&quot said USDA Natural Resources and Environment Under Secretary Mark Rey. &quotWe believe that voluntary, incentive-based approaches are the most effective way to achieve sound resource management and conservation on private lands.&quot

&quotTrading for upgrading water quality is the wave of the future,&quot said Benjamin Grumbles, assistant administrator of the EPA’s Office of Water. &quotWe are committed to giving good stewards credit and partnering with agriculture to accelerate restoration and protection. This agreement is a big step forward.&quot

Water-quality credit trading uses a market-based approach that offers incentives to farmers and ranchers who implement conservation practices that improve water quality. While reducing pollution, they can earn credits they can trade with industrial or municipal facilities that are required by the Clean Water Act and other laws to reduce the amounts of pollution in wastewater.

According to the EPA and USDA, allowing the market to determine the price per credit by using the principle of supply and demand offers incentives that generate interests among a greater number of participants, which will expand conservation practices to more acres of agricultural lands. Private-sector water-quality markets complement existing federally supported conservation efforts by creating additional revenue streams for water-quality improvement.

More information on the market-based approach and the NRCS strategic plan is available at . Information about water-quality credit trading is available at .