As the Chesapeake Bay Program moves into its third year of trying to avoid the regulatory regime of Total Maximum Daily Loads and to advance its cooperative approach for restoring the Chesapeake Bay, it is rapidly approaching a lot of deadlines.

An important one is the fall 2002 deadline for allocating caps on pollution loads among the Bay’s tributaries. Pollution load caps are meant to set the maximum allowable amount of pollution that each tributary can receive.

From a restoration perspective, a cap on the pollution load is important for at least two reasons. First, it will reflect what each tributary can receive and still provide healthy ecosystems and a safe environment. That is, we worry about each tributary, individually.

But, secondly, the amount of pollution that each tributary receives has implications for what it conveys to the mainstem of the Chesapeake Bay, which is impaired with excess nutrients. This makes pollution load caps for the tributaries very important to the Bay.

These pollution load caps are supposed to be set by science. Physical and biological scientists, working with large data sets and generally accepted mathematical models are figuring out where these caps should be set. The Bay Program’s Water Quality Steering Committee is charged with meeting the deadline.

Imposing the cap, as opposed to determining what it should be, will fall to states and local governments and, through them, to all the enterprises and activities that contribute to pollution loads.

This is where the process gets a little fuzzy. The Chesapeake Bay Program’s web site says this about allocating the caps:

“Each of the six watershed states — New York, Pennsylvania, Maryland, Delaware, Virginia and West Virginia — and the District of Columbia will bear a proportional burden for achieving and maintaining the cap based on their existing pollutant loadings, progress to date, effectiveness and cost efficiency considerations, and their pollutant loading effects on different tidal tributaries and regions of the mainstem Chesapeake Bay.”

Let’s get another cup of coffee and think this through. To say that Pennsylvania, for instance, will bear a proportional burden based on their existing pollutant loadings means that, whatever they are contributing to pollution loads today must be reduced by the same factor that the total load for that tributary needs to be reduced.

But, then we want to take into account progress to date. So, if Pennsylvania did twice as much reduction over the last 10 years as Maryland, then maybe they should get some consideration for this performance.
Next, there are the effectiveness and cost-efficiency considerations. Maybe it is cheaper to reduce pollution loads in Pennsylvania than it is to reduce them in Maryland. In which case, we might want to shift some of the load reduction back to Pennsylvania.

One can see that there is tremendous potential for political squabbling and deal-making. And this is just pollution cap allocations between the states. Once caps are distributed among the states, they must figure out how to allocate portions of these caps among their own contributing polluters.

Fortunately, there is a simple way to cut through all of this worry, although it is not clear that the Bay Program will want to use it because it has a regulatory side to it.

The key is to recognize that, when surface water carries away and dilutes the contaminants generated by our modern lifestyle, it is providing a service that has value. Until now, no one has had to pay for this service — because no one has tried to collect. But tributary load caps could change that.

If portions of the pollution cap are distributed back to polluters as tradable pollution permits (permits to cause a particular amount of a particular pollution), then we will have suddenly linked surface water’s pollution transport and dilution benefit to the marketplace.

If the pollution load cap is permitted to each individual polluter and, if this permit is tradable, then the original distribution of pollution rights would not last long. As in any market for any good, those who hold the good (a permit) might be approached by those who want to buy one and a sale might happen.

The seller would lose his right to pollute by the amount of the permit and the buyer would increase his by that same amount. In this transaction, a price would be established for the benefit of using the transport and dilution benefits of surface water.

Or, perhaps the permits would be rented. Perhaps there would be long-term leases as well as outright sales.
The point is, with tradable pollution permits we are allowing the very real benefit that surface water provides, with respect to pollution, to be valued in the same place where we value so many other goods and services: in the marketplace. Total pollution loads would still need to be reduced, but tradable pollution permits allow people a choice in how to achieve this.

Agency folks are rolling their eyes at this. How would you keep track of it?

If a farmer sells pollution rights to a wastewater treatment facility, then what does this imply for his farming practices? Does he have to put buffers on his fields? Or can he plant tree buffers on a certain number of riparian acres that he farms?

What will be the quid pro quo for selling a pollution permit? And how will everyone be kept honest?

It is myopic and hidebound to believe that these problems are insurmountable. But neither bureaucracies nor politicians are known for their willingness to take the long view or to prefer innovation to the tried and true. Especially when the budget is already being spent on other things. And even more so when there is no clamor from the public to please get it right.

But, given current conditions, it is doubtful that government money is going to be there to make the Chesapeake 2000 agreement work.

And, while Tributary Strategy Teams are a great idea, if anyone thinks that volunteers are going to make it happen, they are very optimistic.

From where I sit, this leaves getting serious about a mechanism that would motivate least-cost pollution reduction and would improve our chances of actually imposing the caps. That is, tradable pollution permits.