Nature of Activity: The State of Connecticut is developing a watershed-based effluent trading program for the Long Island Sound that will be implemented in conjunction with a TMDL. The program’s primary structure will be a trading association and a credit bank to buy and sell reductions.

Environmental Problem: Hypoxia in the Long Island Sound.

Pollutant(s) / Pollution Type(s): Nitrogen.

Trade Types: Point/point and potentially also point/nonpoint.

Stage of Implementation: A TMDL and the trading program have been in development since 1996-1997. The trading program will be formally established upon completion of the TMDL. The trades will ultimately reduce the costs of meeting a 15-year goal for reducing nitrogen.

Relation to TMDL: The trading program is being developed in conjunction with a TMDL for the entire Long Island Sound and is considered a fundamental part of TMDL implementation.

Number of Potential Participants: 84 point source dischargers (mostly POTWs) in the Connecticut portion of the Sound, and potentially more in New York, as well as various nonpoint sources.

Trading Ratios: Trading ratios will vary, based on the differential impact that a pound of nitrogen abated by different projects will have on the Sound’s water quality. The differential impact will be determined by modeling.

Estimated Cost Savings: The State of Connecticut estimated that reaching the 15 year nitrogen reduction goal without trading would cost $960 million, while costs with trading would decline to $760 million. Thus trading is expected to save nearly $200 million over 15 years.

Available Written Information: A full report is forthcoming from the Water Environment Research Foundation. An earlier study is described in the proceedings of the Watersheds ‘96 conference.

Innovative Aspects: The Clean Water Fund -- a credit bank managed by the trading association -- will buy credits from those who create them and sell them to those needing them. The program may mandate that sources not in compliance must buy credits from the Fund. Sources that generate credits will sell them to the Fund, which will make the credits available for purchase in following periods.

Obstacles: The trading association must find ways to encourage trading. Writing enforceable and sound permits will be a challenge. Whether trading will be allowed only for the ultimate 15-year nitrogen reduction target, or for annual targets as well, is a major factor in the success of the project.

Web Sites: Saugatuck: http://www.epa.gov/surf2/hucs/01100006/

Bronx: http://www.epa.gov/surf2/hucs/02030102/

Northern Long Island: http://www.epa.gov/surf2/hucs/02030201/

Contact: Mark Tedesco, EPA Long Island Sound Office. (203) 977-1541, tedesco.mark@epamail.epa.gov

Connecticut Dept. of Environmental Protection Bureau of Water Management
Long Island Sound Coordinator
79 Elm Street
Hartford, CT 06106-5127

or Call: (860) 424-3728