MARKET BASED SOLUTIONS TO NONPOINT SOURCE PROBLEMS

Market based approaches are an innovative way to stretch resources, to take conservation beyond the boundaries of the farm, ranch and forest, while preserving productivity, maintaining and enhancing landowner livelihoods and producing environmental benefits. Market based solutions to nonpoint source problems provide flexibility to undertake actions that have the lowest cost and result in more cost-effective achievement of natural resource conservation and environmental goals compared to traditional command and control approaches.

The efficient operation of a market is based on an understanding of credits, trading, and banking as well as the interaction of society and our natural resources. And combining these market mechanisms with the watershed approach will allow consideration of land use, land use change, and other geographic variations as we design market based solutions to nonpoint source concerns.

Market based approaches work by placing a price on conservation efforts. By establishing a price for these efforts market based approaches harness the power of markets in the service of conservation. They can do this directly through taxes or subsidies or indirectly through creation of trading programs or product labeling.

The USDA Natural Resources Conservation Service (NRCS) is embarking on a new initiative that involves looking at markets and the philosophy behind their success. It will use the principles of the marketplace to leverage Federal funds and services with private funds to address nonpoint source problems and achieve enhanced environmental outcomes.

This presentation will describe the process of an organized environmental credit trading market and provide a basis for implementing frequent and continued trading to address nonpoint source pollution. This process will be facilitated by encouraging strategic planning for landowners, developing educational programs, fostering landowner cooperatives, promoting insurance and risk reduction mechanisms, and by evaluating the existing science available for measurement, monitoring, verification, and accounting. In this presentation I will illustrate how markets work and I will lay out the necessary components for the development and efficient operation of a market for environmental improvement.