ABSTRACT
This chapter shows that water quality trading, as usually practiced, is simply an extension of Clean Water Act (CWA) command and control regulation. Understanding this argument requires an explanation of National Pollutant Discharge Elimination System (NPDES) permits and permitting process. It shows that it is misleading to call the outcome of these programs "trading" because there is no intent to allow increases in discharges from one source to be offset by equivalent reductions from other sources. The chapter describes basic characteristics of market-like program design. It refers to allowance-focused system as a Cap and Allowance Market and describes advantages of such a system as compared to the NPDES-focused water quality management program. The chapter describes some of practical implementation challenges and also suggests opportunities to facilitate implementation of market-like programs for water quality management. It concludes with suggestions for ways to add market-like properties to water quality management within existing statutory and regulatory confines of the CWA.
