Nutrient trading
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Nutrient trading is a proposed pollution reduction method that would see a system of credits that can be bought and sold. The credits would be based on how much pollution is dumped into the environment.
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[edit] Background
A major pollution problem is nutrient fertilizers such as Nitrogen fertilizers making their way into the major waterways and causing marine dead zones in large bodies of water (usually found near large rivers) were nothing can live due to low oxygen levels. Low oxygen aquatic and marine dead zones can be caused by the process of eutrophication, triggered by an excess of plant nutrients (nitrogen and phosphorus) from fertilizers, sewage, combustion emissions from vehicles, power generators, and factories.
Nutrient trading allows sources with high cost solutions to obtain credits from sources that can reduce their contribution of pollutants to waterways via low cost solutions . Trading focuses on reducing the cause of the environmental concern at hand rather than promoting a specific practice or set of practices. Industrial pollution or point sources (pipes that directly discharge into the waters) only accounts for a small amount of problem. Most of the plant nutrients (nitrogen and phosphorus) come from nonpoint sources like runoff from farmers fields. It is cheaper to fix the farmering issue than it is other polluters.
[edit] For Example
For illustration purposes lets imagine this scenario.
[edit] Acme Factory
Acme Factory is pumping 10 pounds of nitrogen per day into the waterways. To continue operation the factory needs to
- Develop a system to eliminate its nitrogen discharge or
- Buy 10 credits that would allow the factory to pump 10 pounds of nitrogen per day. (1 lb of pollution = 1 credit)
Now to eliminate its nitrogen discharge would cost the factory $500,000.
[edit] Ten farmers
Ten farmers are each via run-off from their fields allowing 50 pounds of nitrogen into the waterways. Farmers only need 1 credit for 10 lbs of pollution and so get 5 pollution credits but they could spend $20,000 and each eliminate 10 pounds of nitrogen per day by installing new technologies thus allowing them to sell some of their credits.
If all ten farmers install the technology that reduces their nitrogen run-off then they could each sell unused credits to the factory for $21,000 .
[edit] Conclusion
Thus instead of paying $500,000 to eliminate its nitrogen discharge the factory can buy 10 credits from local farmers for $210,000. The factory saves $290,000 and because the 10 farmers eliminated their nitrogen run-off by 10 lbs each 100 lbs of nitrogen is stopped from entering the waterways.
This is 90 pounds more per day than would have occurred without the trading, if the plant had to pay $500,000 to eliminate its 10 pounds of waste from the plant. And, the transaction would cost $290,000 less. This approach provides greater flexibility for local policymakers and farmers to identify and implement the most appropriate solutions in their region.
