Analyzing Cost Implications of Water Quality Trading Provisions: Lessons from the Virginia Nutrient Credit Exchange Act

The purpose of this study was to analyze the cost implications of various provisions of the Virginia Nutrient Credit Exchange Act. The first objective was to estimate the cost implications of point source trading provisions of the Act. An integer programming cost minimization model was constructed to estimate the cost of achieving four point source trading policy scenarios. The model estimated the annual cost of meeting two different nutrient cap levels, each with and without a limits-of-technology concentration standard requirement for new and expanding point sources. The limits-of-technology concentration standard requirement was found to significantly affect cost while providing little apparent benefit to water quality. The second objective was to develop a screening procedure for municipalities to estimate the cost of generating waste load allocation from nonpoint source offsets under their jurisdictional control. A spreadsheet based cost screening procedure was developed for municipalities to estimate the cost of implementing of nitrogen offsets from stormwater practices, septic retirement, and land conversion. One of the important findings from developing the screening procedure is that the cost of generating WLA from non-point sources under the control of local governments was much higher than the cost of removing nitrogen at wastewater treatment plants.