Pennsylvania Group Testifies on State’s Nutrient Credit Trading Program

September 18, 2008

Pennsylvania Fair Share for Clean Water Coalition members explained how a nutrient credit bank option would improve the viability of the nutrient credit trading program

Members of the Pennsylvania Fair Share for Clean Water Coalition testified at a state Senate hearing Sept. 17 that action is needed quickly on legislation to improve the state's Nutrient Credit Trading Program in order to reduce the cost of complying with federal and state clean water mandates, provide farmers with the help they need to install conservation practices and allow for future growth.

The Coalition members presenting testimony included the Pennsylvania Municipal Authorities Association, Pennsylvania Farm Bureau, Pennsylvania Builders Association and the Chesapeake Bay Foundation.

The hearing was held by the Senate Environmental Resources and Energy and Agriculture and Rural Affairs Committees on legislation, introduced by Sen. Pat Vance (R-Cumberland) as Senate Bill 1493 and in the House by Rep. Eugene DePasquale (D-York) as House Bill 2717.

Both bills would create a Nutrient Credit Trading Board that would function as a bank to which farmers who install conservation practices could sell credits certified by the Department of Environmental Protection as valid for projects that reduce nutrient pollution.

Wastewater plants and builders who need to reduce nutrient pollution could then buy these credits from the bank without the risk of the credits disappearing or becoming invalid. Coalition members explained how the addition of a nutrient credit bank option would improve the viability of the trading program.

"Federal and state clean water mandates require a significant reduction in nutrient pollution flowing into Pennsylvania's rivers and streams from wastewater plants and farms," said Matthew Ehrhart, Pennsylvania executive director of the Chesapeake Bay Foundation. "Because installing conservation practices on farms is many times more cost-effective than building whole new treatment systems at wastewater plants, an innovative nutrient credit trading program was developed by the Department of Environmental Protection (DEP) to allow farmers to take credit for nutrient reductions on their farms and sell them to wastewater plants and builders who need to make similar reductions."

"The current nutrient credit trading program, however, has a fundamental problem: farmers don't want to invest in conservation practices if they don't have a buyer, and buyers don't want to use credits if they have to deal with dozens of farmers over 10 or 15 years," said Ehrhart. "A trading bank solves that problem by allowing farmers to sell credits to the bank at any time and buyers can buy credits guaranteed by the bank. It reduces the risk for everyone, reduces costs for ratepayers and farmers and allows for future growth."

It would cost over $1 billion to upgrade wastewater plants to meet the clean water mandates in the Chesapeake Bay watershed without using nutrient credit trading. These kinds of costs will double or triple current sewage rates.

"The cost to ratepayers to comply with nutrient pollution reduction mandates for the 184 wastewater plants in the Chesapeake Bay watershed alone is over $1 billion, and while we are grateful for the infrastructure funding passed as part of the state budget in July, we need to look at all the tools we have available to reduce costs," said John Brosious, deputy director of the Pennsylvania Municipal Authorities Association. "Nutrient credit trading may offer a significant opportunity to reduce those costs by investing in farm conservation practices that may, in many cases, reduce nutrient pollution much less expensively than we can."

"The current credit trading system does not provide the certainty and reliability wastewater plant operators need in specific amounts and at specific times to meet their DEP permit limits," said Brosious. "Having a bank guaranteeing that the credits will be there at the time they are needed would significantly reduce the risk of using the credit option and would be a real benefit to our ratepayers."

The DEP estimates federal and state clean water mandates in the Chesapeake Bay Watershed will cost farmers over $600 million to implement. Unfortunately, no additional funding was provided in the state budget adopted in July to help farmers install those conservation practices or to county conservation districts which help design them.

"We fully support cleaning up the Chesapeake Bay and a key to achieving that goal is a functioning, robust nutrient credit trading program," said Robert J. Fisher, president of R.J. Fisher and Associates, representing the Pennsylvania Builders Association. "The current trading program creates an unacceptable level of risk and uncertainty for both generators of credits and potential users, including builders."

Source:

PR Newswire, Pennsylvania Fair Share for Clean Water Coalition

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