New CPR Paper Examines Potential for Nutrient Trading in the Chesapeake Bay to Disproportionately Impact Poor and Minority Communities

Around the country, a disproportionate number of facilities and operations that discharge sewage, process hazardous waste, and emit toxic air pollution are located in areas with high poverty rates or large minority populations.  Environmental regulation that has reduced overall pollution has often failed to do so equitably, leaving (or in some cases even increasing) environmental risks in certain neighborhoods.  These communities suffer from environmental harms in far greater numbers than the general population as dirty air, polluted water, and contaminated soils have been relocated to their neighborhoods, or left in operation as facilities in other areas are cleaned up or closed.  Sadly, for a long time, environmental justice for the marginalized members of our society has been a low priority for many activists and regulators alike.

Environmental injustices can also be the result of market-based environmental protection schemes that prioritize economic incentives while ignoring hard-to-quantify externalities.  Allowing the market to dictate how and where pollution is abated – pollution credit and trading systems – can save compliance costs and speed up overall environmental improvement.  But without proper protections in place, that approach can also delay pollution reduction progress in poor and minority communities, or even increase environmental harms to those same communities by redistributing them there. 

In the Chesapeake Bay, state and federal regulators are embracing one such scheme—nutrient or water quality trading—to address the decades long failure to protect the waters of the Bay from a calamitous decline.  After the 2010 Total Maximum Daily Load (TMDL) set strict limits on nutrient and sediment pollution in the Bay and its tributaries, Bay states began exploring nutrient trading in earnest.  In theory, trading allows regulated sources of water pollution to meet strict effluent standards not by reducing their own discharges but by paying other sources—in this case, under-regulated agricultural operations, mostly—to reduce their pollution at a lower cost. 

On paper, trading sounds like a win-win solution:  regulated point sources achieve pollutant reductions, unregulated nonpoint sources participate because of economic incentives, and total pollution in the Bay is reduced efficiently and cost-effectively.  In practice, however, trading programs have experienced very little success.  (A CPR white paper issued in May, Accountability: Water Quality Trading in the Chesapeake Bay, explored these issues).  Worse, trading essentially moves pollution around, reducing it in some areas while concentrating it in others.  Certain segments of the Chesapeake Bay watershed could come to suffer localized concentrations of nutrients, sediments, pathogens, and co-pollutants, in what are known as “hotspots.”

A new CPR briefing paper today, Fairness in the Bay: Environmental Justice and Nutrient Trading, looks at trading through an environmental justice framework, outlining potential environmental injustices that can arise within trading schemes, with a focus on Maryland and the Chesapeake Bay.  The paper provides recommendations for avoiding disproportionate environmental impacts, ensuring all people in the Bay enjoy the benefits of water quality improvements, and giving poor and minority communities the opportunity for full and fair participation in discussions surrounding the design and implementation of trading programs. The paper was written by CPR President Rena Steinzor, CPR Member Scholar Rob Verchick, Policy Analyst Yee Huang, and me.

Forty years after the passage of the Clean Water Act, many lakes and rivers across the country are tremendously cleaner – yet other waters remain overloaded with excess nutrients and other contaminants.  We still have a long way to go.  Nutrient trading has the potential to facilitate the needed cleanup of the Chesapeake Bay by reducing costs and encouraging innovative solutions to water pollution.  Our paper lays out the dangers of how trading could be harmful, and suggests how those harms might be avoided.  It is vital that efforts to protect the Chesapeake do not come at the expense of the most marginalized sectors of our population.