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Water Quality Trading Glossary

Best Management Practices (BMP): Practices are designed to conserve soil and water resources used in farming and to lessen environmental damage from pollution sources, like runoff or erosion management systems at a construction site or timber stand, animal waste storage systems at a farm, or buffer strips along riparian zones.

“Cap and Trade” Approach: Cap and trade programs set a limit on pollutants from all point source polluters, distribute credits to these polluters and allow the polluters to meet their limit however they see fit (“capping the system”). This capping creates markets for trading the excess credits of those who excel at cutting pollution. Under such a system, for example, rather than install expensive equipment to meet its water pollution limit, a factory or treatment facility may find it cheaper to buy excess credits from producers who have cut more than their allotted share of pollution through improved land best management practices (BMPs).

Clean Water Act (CWA): The CWA establishes a regulatory framework to protect water quality throughout the United States. The goal is to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters (U.S.C. 1251-1387).”

“Command and Control”: This statement refers to how regulation historically treats point sources – “commanding” them to “control” pollution in a specific way. Under the command and control style of regulation, the U.S. EPA requires every point source to use the same control equipment and the same methods for reducing pollution, no matter how much they pollute or how much installation costs.

Current Load (CL): Pollutant discharge from any source under current management practices.

Delivery ratio: The ratio of contaminant yield from a watershed to the portion that reaches the receptor point (i.e., 1 kg of phosphorus from one location is not equal to 1 kg of phosphorus from another).

Discharge: Discharge is defined by the Clean Water Act as the addition of any pollutant (including animal manure or contaminated waters) to navigable waters. Navigable waters are broadly defined as any surface water source, whether in man-made ditches or natural streams, that leave an operator's property.

Hot spots: Highly degraded localized areas in a watershed.

Impaired Water Body: An impaired water body is one that is polluted. A state’s TMDL “Impaired Waters List” is a list of the state’s waters that fail or are threatened to fail the state’s water quality standards, even after the installation of pollutant controls. These lists are also referred to as “TMDL Lists.”

Load Allocation (LA): The LA is the portion of the allowable pollutant discharge attributed to existing and future nonpoint sources.

Margin of Safety (MOS): Arequired component of TMDL development designed to account for uncertainty in load and waste load allocation calculations.

National Pollution Discharge Elimination System (NPDES) Permit: A NPDES permit is a pollution discharge permit issued, pursuant to the Clean Water Act, by a state agency or by the U.S. EPA to a “point source” discharger. The permit specifies how much of a given pollutant can be present in a discharge and establishes monitoring and reporting requirements for that point source.

Nonpoint source pollution (NPS): Pollution that is diffuse, entering a waterway from a wide geographic area rather than a single pipe. Examples include polluted runoff from urban streets, agricultural fields, timber harvesting areas, airborne pollution, and contaminated sediment.

Point source pollution (PS): Pollution caused by a discharge of waste via a pipe. Examples include discharge from municipal wastewater treatment facilities and industries. Most sources are required to have permits with conditions designed to control discharges.

Receptor point: The location point for measuring the pollutant load or concentration in a water body.

Total Maximum Daily Load (TMDL): A watershed cleanup program, required by the Clean Water Act under Section 303(d), designed to deal with problem pollutants from all sources, including point and nonpoint sources. This program is important for nonpoint source controls in particular because of the absence of other mandatory control mechanisms under federal law. Under this provision, states are required to identify waters that are polluted even after all mandated controls have been applied. States must then develop watershed cleanup plans called “TMDLs.” In order for the U.S. EPA to approve a proposed TMDL, the state must demonstrate that there is a “reasonable assurance” that the controls-on nonpoint and point sources alike-can be achieved.

Target load (TL): Pollutant concentration or load allowed determined by regulation.

Total Phosphorous (TP): Total phosphorus is all of the phosphorus found in a water sample. Phosphorus exists in water in either a particulate phase or a dissolved phase. Phosphorus in natural waters is usually found in the form of phosphates (PO 4 -3). Phosphates can be in inorganic form or organic form. The U.S. EPA recommendations total phosphate should not exceed 0.05 mg/L (as phosphorus) in a stream at a point where it enters a lake or reservoir.

Total Suspended Solids (TSS): Total Suspended Solids (TSS) are solids suspended or dissolved in water that can be trapped by a filter. TSS can include a wide variety of material, such as silt, decaying plant and animal matter, industrial wastes, and sewage. High concentrations of suspended solids can cause many problems for stream health and aquatic life.

Trading ratio: This ratio is used to account for the uncertainty regarding the effectiveness of nonpoint source controls. It is applied in trades among point and nonpoint sources. A trading ratio of 3:1 means that for every one unit increase of pollutant from a point source, there must be a corresponding three unit decrease of that pollutant form a nonpoint source.

Waste Load Allocation (WLA): The portion of the allowable pollutant discharge assigned to each existing and future point sources.

Watershed: The geographic region from which water drains into a particular water body, like a bay, river, or lake. The watershed includes the land resources as well as the water body. Also called a drainage basin.

Water Quality Trading (WQT): Pollution sources in a watershed can face different costs to control the same pollutant. Water quality trading is an approach to achieve water quality goals more efficiently by allowing facilities to meet regulatory obligations by purchasing environmentally equivalent (or superior) pollution reductions from another source at a lower cost. The result is achieving the same water quality improvement at a lower overall cost.