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Verification in Markets for Water Quality and Habitat

October 1, 2014

Put simply, verification is the practice of confirming whether an assertion is true, in that it conforms to set expectations under an agreed level of scrutiny. Verification plays a central role in substantiating the validity of credits in environmental markets. Verification of credit-generating projects includes administrative and technical review, as well as confirmation that the project has been implemented as promised. Verification systems are used to support programs in the regulatory and voluntary crediting context, and to support robust internal tracking systems. Verification systems should seek to provide trusted confirmation that credits represent real environmental benefit. Those designing a verification system will need to make decisions about who conducts verification review and what qualifications they need, what information is reviewed, and the frequency with which verification should occur. Options and examples are used to explore tradeoffs inherent in making these decisions such that the resulting system supports transparency and accountability, ensures costs do not detract from the ability to provide greater environmental benefits, and builds opportunities to learn and improve programs quickly.

Addressing Risk and Uncertainty in Water Quality Trading Markets

January 1, 2014

Across the United States, water quality trading is being explored as a mechanism for reducing the costs of cleaning up impaired waterbodies. Trading between point sources, such as wastewater treatment plants, and nonpoint sources, such as agriculture, can cut costs for regulated entities needing to reduce pollutants, and generate revenue for agricultural producers who generate credits. However, water quality trading, particularly between point and nonpoint sources, can face inherent uncertainties around quantification of nonpoint source reductions, participant behavior, regulations, and market supply and demand. Effectively addressing uncertainties is crucial to ensuring the success of these markets and improving water quality. This paper establishes a framework from which to engage federal and state agencies, program developers, and stakeholders in a dialogue about these uncertainties and appropriate mechanisms for addressing them.