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A Feasibility Analysis of Applying Water Quality Trading

June 1, 2005

Water quality trading is a policy tool that could improve the cost-effectiveness of achieving environmental goals, but it is not currently used in the state of Georgia. This paper evaluates the feasibility of applying water quality trading in Georgia watersheds. The criteria used for this evaluation include environmental suitability, regulatory incentive, economic incentive, availability of participants, and stakeholder response. The evaluation concludes that the Georgia watersheds where WQT appears to be most feasible include the Chattahoochee, Coosa, Savannah, and Ocmulgee basins. Feasibility is also likely to be high in the Flint and Oconee basins. However, it is important to note that WQT could develop in any watershed where a pollution source has an economic interest in trading. The evaluation concludes that the opportunity for WQT in Georgia is somewhat limited by present regulatory conditions, but offers alterative WQT models that should be considered. Working Paper Number 2005-0020

Water Quality Trading: Legal Analysis for Georgia Watersheds

June 1, 2005

Water quality trading is a policy tool that could improve the cost effectiveness of achieving environmental goals, but it is not currently used in the state of Georgia. This paper seeks to evaluate the applicability of water quality trading in Georgia watersheds with a specific focus on legal issues. This paper reviews Georgia law and regulations to evaluate barriers to and support for water quality trading. It also reviews water quality trading policies from other states and explores the value of adopting a state water quality trading policy in Georgia. The paper concludes that while existing law provides implicit authority to implement water quality trading in Georgia, inadequate regulatory pressure in most Georgia watersheds and possible legal challenges could be significant impediments to implementing water quality trading in the state at this time. The paper also suggests that successful pilot trades should precede the development of statewide water quality trading policy. Working Paper Number 2005-0021

Estimation of Costs of Phosphorus Removal In Wastewater Treatment Facilities: Adaptation of Existing Facilities

February 1, 2005

As part of a wider enquiry into the feasibility of offset banking schemes as a means to implement pollutant trading within Georgia watersheds, this is the second of two reports addressing the issue of estimating costs for upgrades in the performance of phosphorus removal in point-source wastewater treatment facilities. Earlier, preliminary results are presented in Jiang et al (2004) (Working Paper # 2004-010 of the Georgia Water Planning and Policy Center). The present study is much more detailed and employs an advanced software package (WEST®, Hemmis nv, Kortrijk, Belgium) for simulating a variety of treatment plant designs operating under typical Georgia conditions. Specifically, upgrades in performance, in a single step, from a plant working at an effluent limit of less than 2.0 mg/l phosphorus to one working with limits variously ranging between less than 1.0 mg/l to less than 0.05 mg/l phosphorus are simulated and the resulting costs of the upgrade estimated.Five capacities of plant are considered, from 1 MGD to 100 MGD. Three strategic, alternative designs for the facility are considered: the basic activated sludge (AS) process with chemical addition, the Anoxic/Oxic (A/O) arrangement of the AS process, and the Anaerobic/Aerobic/Oxic (A/A/O) arrangement of the AS process. Upgrades in performance are consistent with the logical alternatives for adapting these options. Cost comparisons are made primarily on the basis of the incremental cost of the upgrade, i.e., from the base-case, reference plant to that performing at the higher level, as expressed through the incremental Total Annual Economic Cost (TAEC; in $) and the marginal unit cost of phosphorus removal, expressed in ($/kg).For the most stringent upgrade, for example, to a plant generating an effluent with less than 0.05 mg/l phosphorus, these marginal costs -- the cost of the additional phosphorus removed as a result of the upgrade -- amount to something of the order of 150-425 $/kg, with the upper bound being associated with the smallest plant configuration (1 MGD). Working Paper Number 2005-0011

An Evaluation of Water Quality Trading for Georgia Watersheds

January 1, 2005

Water quality trading is a policy tool that could improve the cost effectiveness of achieving environmental goals, but it is not currently used in the state of Georgia. This research seeks to evaluate the applicability of water quality trading in Georgia watersheds. This report provides an update on the status of current research on water quality trading conducted through a collaboration of the Georgia Water Policy and Planning Center, the Georgia State University Andrew Young School of Public Policy, and the University of Georgia Warnell School of Forest Resources. Working Paper Number 2005-003