Chesapeake Bay Nutrient Trading Could Benefit Maryland Farmers up to $10,000 per year

From News Release: “Though Maryland recently launched its own state-level trading program for farmers, a Baywide program could link Maryland farmers with other existing state programs and expand trading to states without current programs,”

June 17, 2010

Photo Credit: USDA/NRCS

Proposed federal legislation to improve the health of the Chesapeake Bay could also help a typical Maryland crop farm earn an additional $10,000 in net profit each year, according to a new analysis by the World Resources Institute (WRI).

The analysis, How Baywide Nutrient Trading Could Benefit Maryland Farms, forecasts the potential profits to farmers who participate in an interstate nutrient trading program, which could be created if Congress passes the Chesapeake Clean Water and Ecosystem Restoration Act of 2010. Under a nutrient trading program, sources of nutrient pollution, such as wastewater treatment plants, would be able to purchase “credits” from farmers who reduce their own nutrient pollution runoff.

“Excess amounts of nutrients, such as nitrogen and phosphorous, are the main cause of the Bay’s poor health,” said John Talberth, a senior economist at WRI and lead author of the analysis. “An interstate water quality trading program would make it possible to achieve restoration goals faster, at lower cost, and create additional profits for farms and others.”

Findings show that a farm with 200 acres of cropland located in the Potomac River basin could earn an overall net profit of more than $10,000 annually through the sale of nitrogen credits. The farm must meet baseline pollution-reduction requirements established by the state before participating in the trading program. Once the requirements are met, farms, depending on their location, could invest in additional pollution reductions through practices such as fencing livestock from creeks or planting upland forest buffers. The additional reductions could be sold as credits.

“Though Maryland recently launched its own state-level trading program for farmers, a Baywide program could link Maryland farmers with other existing state programs and expand trading to states without current programs,” said Cy Jones, manager of WRI’s water quality team and a contributing author. “Since most farms meet some of Maryland’s baseline requirements, investment in additional pollution reducing measures would create a win-win for farmers and the Bay.”

The analysis follows two earlier WRI studies. The first, How Nutrient Trading Could Help Restore the Chesapeake Bay, found that a Baywide nutrient trading program could help wastewater and stormwater utilities achieve clean water goals at lower costs throughout the watershed. In addition, farmer revenues from trading could rival existing public farm conservation payments. The second analysis, How Baywide Nutrient Trading Could Benefit Virginia Farms, found that Virginia crop farms could earn additional profits of more than $8,000 annually through a Baywide nutrient trading program.