Trading in Nutrient MarketsPolicy, Administration, and Market Mechanics

Brent L. Fults – Founder 1999CBNLT (Chesapeake Bay Nutrient Land Trust) & ESS (EarthSource Solutions)

July 2013

POLICY or MARKET ? CLEAN WATER IN THE BAY…

CBNLT entrenched itself as a stakeholder in 2008. Participating in 2009, 2010, 2011 & 2012 Legislation.

CBNLT follows the “First Step” model developed as a Bay Cleanup Strategy

Covering VIRGINIA Bay watersheds: James, York Rappahannock, potomac

Policy created a market, markets created legislation

Chesapeake Bay

Cleanup

NOW

FIRST STEP M ODEL

CBNLT

MARKETS

Nutrient Banking

Market Complexity

Complexity in the navigation and coordination of public programs, agricultural landowners, regulatory agencies, permit process, financial assurance placement, credit generation activities

Timeline expectations of credit providers, landowners and regulatory community

Policy – Education of all sectors has created interest and concerns by the “just say no” groups.

DEQ – Agency support is broad, permit opportunities

Locality opposition to trading: It’s the Law folks.

WHO WILL STEP FORWARD: DEQ or Stakeholders and resolve the stand off.

This is a Big Question

Market Challenges

Efficiency of Credits

Land use variations

Goals of credit program / landowners

Market Demand (nonpoint) VA VSMP

Allowable triggers resolved with pepertual answers

100% privately funded – NO GRANTS

Water quality improvements are REAL

Future of Nutrient Credit Market

Credits used for VA DEQ VSMP: Gas station, parking lot, condos, failing BMP, and compliance actions thru enforcement

Users – Private / VDOT/ Public MS4 programs soon to create a buy down of point and non point credits

Policy / EPA – Federal support in Virginia

Policy/ DEQ- State support incredible

Changing Certification regulations in 2014: Get your bank soon, its real complicated.

Growing demands: VSMP, VDOT, MS4 buydown, failing BMP

Improvements to Bay are working. Trades are occuring. 12 facilities, 4 watershed, and 40 trades in last 9 months.

Nonpoint VSMP is the Market:

9860 +- Active permits.