USDA, EPA Agreement To Offer Market-based Incentives To Improve Water Quality

On Oct. 13, U.S. Department of Agriculture (USDA) Natural Resources and Environment Under Secretary Mark Rey and Benjamin Grumbles, EPA assistant administrator of the Office of Water, signed a partnership agreement to establish and promote water quality credit trading markets through cooperative conservation. The agreement features a pilot project within the Chesapeake Bay basin to showcase the effectiveness of environmental markets.

"Water quality credit trading is a flexible, cost-effective approach for implementing conservation practices that reduce runoff, help producers meet water quality standards, and pursue water quality improvement goals in watersheds," Rey said. "We believe that voluntary, incentive based approaches are the most effective way to achieve sound resource management and conservation on private lands."

"Trading for upgrading water quality is the wave of the future," Grumbles said. "We are committed to giving good stewards credit and partnering with agriculture to accelerate restoration and protection. This agreement is a big step forward."

Water quality credit trading uses a market-based approach that offers incentives to farmers and ranchers who implement conservation practices that improve water quality. While reducing pollution, they can earn credits they can trade with industrial or municipal facilities that are required by the Clean Water Act and other laws to reduce the amounts of pollution in wastewater.

Allowing the market to determine the price per credit by using the principle of supply and demand offers incentives that generate interests among a greater number of participants, which will expand conservation practices to more acres of agricultural lands. Private sector water quality markets complement existing federally supported conservation efforts by creating additional revenue streams for water quality improvement.

NRCS and EPA have established the following partnership goals:

  • To express mutual commitment to water quality credit trading.
  • To coordinate related agency programs and activities.
  • To support the establishment of water quality credit trading standards.
  • To explore barriers to water quality credit trading and ways to overcome them.
  • To support a water quality credit trading pilot in a watershed within the Chesapeake Bay basin.

More information on the market based approach and the NRCS strategic plan can be found at

The water quality trading agreement and more information about water quality trading can be found at

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