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Big Bureau Creek Project (Water Quality Trading)

Using markets to pay for efficient nutrient removal in the Farm Belt

Nutrient pollution is one of the biggest issues in the Mississippi River system, and the Illinois River Watershed is a huge contributor to it. The state of Illinois contributes more nutrients to the Gulf of Mexico’s “dead zone” than any other single state. The largest source of that pollution is agricultural runoff.

Wetlands can remove nutrients from runoff more efficiently than almost any other method. Doing so through a single large wetland—sometimes described as a nutrient farm—has proved impractical. TWI is now pursuing a different approach: many precisely positioned small wetlands located in ditches or small tributaries in an agricultural watershed.

These “in-line wetlands” can remove nutrients before they enter a major stream in the first place, without taking large amounts of prime farmland out of production. We also believe that the treatment services provided by these small precision wetlands can be monetized to help pay for themselves, through nutrient credits purchased by a downstream municipality that would otherwise have to build or upgrade expensive treatment facilities.


 
The Small Poster Child for a Big Problem

The Big Bureau Creek Watershed totals 500 square miles and three-fourths of it is in row crops. It is located within the Lower Illinois–Lake Senachwine Watershed. Out of 818 watersheds in the same class across the entire Mississippi River basin, the Lower Illinois–Lake Senachwine Watershed ranks 23rd for total nitrogen yield.

Part of the problem is that more than 90% of Illinois’ original wetlands are gone (more than two-fifths of the Big Bureau Creek Watershed was once wetlands). Another factor is that a lot of the nutrients from Midwestern farmland runs off not across the ground but underneath it, through underground field tiles. There are millions of miles of tiles crisscrossing farm fields across the Midwest. Filter strips and other “best management practices” that many farmers install can’t capture much of the nitrogen runoff, since most of it leaving a typical field flows through the tiles into ditches and streams.
 
A Practical (and Natural) Solution

In northwestern Iowa, the state’s Department of Agriculture and Land Stewardship has installed 66 in-line wetlands through its Conservation Reserve Enhancement Program and shown that they remove nitrogen and herbicides that flow through drain tiles. These sites are in the 10- to 40-acre range, of which more than half is buffer. The wetlands portion is mostly the bottom and banks of a ditch or stream, so the amount of productive land a farmer loses is minimal; meanwhile, the scattered small wetlands also provide wildlife habitat, some flood storage, and some sediment retention.

TWI applied the design criteria from the Iowa program to the Lime Creek Subwatershed, a 50-square-mile part of the Big Bureau Creek Watershed. The federal target for reducing nitrogen loads in the Mississippi River system so asto reverse the Gulf dead zone is 45%. The Lime Creek Subwatershed has about 13,000 acres of farmland; the watershed model shows that just 1,000 acres of precisely placed in-line wetlands would reduce Lime Creek's nitrogen load by 43%. In short, just 7.7% of this land area could be used to reduce nitrogen pollution by close to half!
 
How to Pay for It

To achieve the target for nutrient reduction, we'll need quite a number of in-line wetlands, even if combined with other conservation practices. How will we pay for them? TWI thinks the answer is to monetize the nutrient-removal service that wetlands perform so well. Policymakers too are advocating this strategy, since they know there will never be enough government dollars to cover the cost of going to scale.

Princeton is the largest municipality, with the largest wastewater treatment plant, in the Big Bureau Creek Watershed. Everybody in the wastewater treatment business knows they’re sitting under a big ticking clock: The federal Clean Water Act requires each state to lower nutrient pollution in rivers and streams. Illinois, like many other states, still hasn't done so, but pressure is building from the USEPA.

Jill Kostel, the Initiative's senior environmental engineer, takes a water sample in the field.

A new or upgraded facility to meet new discharge requirements would cost millions to build and operate, even for a small city like Princeton. But if farmers upstream were removing nutrients, then Princeton’s treatment facility would have a less expensive alternative to meet the new requirements, by buying nutrient credits from the farmers who have installed in-line wetlands.

The basic theory isn’t a new one: The federal government has successfully used a credit-trading market for acid rain emissions under the Clean Air Act. For nutrient pollution of waterways, there are pilot efforts under way in Wisconsin and Ohio, but no one has yet put the idea into action for the services that wetlands can provide. One of the things TWI has accomplished so far during this project is encouraging the local wastewater treatment officials to view the wetlands market approach as viable, and they’re now open to considering it.

Our outreach has revealed that both farmers and wastewater treatment people want to see a couple of in-line wetlands installed in the area, so they can “kick the tires” in their own watershed. Some local landowners have expressed interest in learning more and we're confident we can get a couple signed on to host demonstration sites—if they don’t have to foot all of the installation cost. So we’re now seeking funding to cover some of the installation and then, while documenting the amount of nutrient treatment provided by these demonstration wetlands, we'll be continuing our outreach to get more farmers excited about the concept.

With this TWI project, two different theories that have been much talked about in conservation come together: using more green infrastructure and less gray infrastructure to restore water quality, and monetizing wetland ecosystem services through marketplaces that pay for wetlands restoration. TWI believes that making both these ideas work successfully in the Big Bureau Creek Watershed will inspire the best sort of copycatting across the Upper Mississippi River system.

 

Support for the Big Bureau Creek project's demonstration phase in 2012–2013 has been generously provided by Alliance Pipeline, McKnight Foundation, Siragusa Foundation, the Patagonia Magnificent Mile store, Winnetka Garden Club, Sheffield Foundation, Drive Current, and Northwater Consulting.

 

For further reading:

Measuring a test market for nutrient farming: Finding profits in the Illinois River Watershed (Initiative Fact Sheet PDF)

U.S. EPA Water Quality Trading EPA web site

Water Quality Trading

Improving water quality in an agricultural watershed

Three out of every four acres in the 500 square miles of the Big Bureau Creek watershed are used to grow corn and soybeans. That statistic makes the watershed comparable to much of the upper Midwest, and also makes it the ideal location for a case study for a new voluntary water quality trading market. The Wetlands Initiative is leading an interdisciplinary team to study how farmers could use restored wetlands and grade control practices to remove excess nutrients and sell the nutrient removal “credits” to other dischargers. (Click here for an update on the partners' work with local farmers in this study.)

 

 

Data show that the Big Bureau Creek (BBC) watershed in Bureau, Lee, and LaSalle counties is contributing significant nutrient levels (nitrogen and phosphorus) and sediment loads to the downstream backwater lakes and the Illinois River. Approximately 1,850 tons of nitrogen and 66 tons of phosphorus from surface runoff, agricultural field erosion, and subsurface tile drainage are discharged out of the watershed on an annual basis. These excess nutrients flow to the Mississippi River and into the Gulf of Mexico, where excess nitrogen fuels a low-oxygen “dead zone” destructive to marine life and coastal economies. Illinois is the #1 contributor of nutrients to the Gulf. 

The region’s high loss of wetlands only compounds the problem of excess nutrients. In Illinois, more than 90 percent of the wetlands that once filled the state are now drained. Without these wetlands, water cannot move slowly through the watershed, and nutrient cycling cannot occur.

Water quality trading study

The Wetlands Initiative is conducting a three-year research study (2009-2012) to assess whether a water quality trading market for nutrient removal is environmentally and economically feasible in the BBC watershed. The study is supported by a U.S. Environmental Protection Agency Targeted Watershed Grant awarded to the Wetlands Initiative in a national competition. 

Jill Kostel, the Initiative's senior environmental engineer, takes a water sample in the field.

Water quality trading is a market-based strategy to improve water quality. In a trading market, farmers would use restored wetlands or other practices to remove excess nutrients or sediments from a watershed, then sell water quality “credits” to municipal or industrial facilities who must meet regulatory obligations to reduce their own nutrient discharges. Most programs center on trades between regulated point-source dischargers, such as wastewater treatment plants, and non-point sources, such as agricultural producers. (Click here for a Q&A by Dr. Jill Kostel, Initiative environmental engineer and project leader, for more on how trading works.)

If a program is properly designed and implemented, it should produce nutrient removal credits aimed at protecting watersheds at lower overall costs than traditional “concrete and steel” treatment methods. For agricultural producers, water quality trading could provide an opportunity to earn money on marginally productive land and help finance their conservation efforts.

In a water quality trading program, landowners could restore and manage wetland areas to optimize the natural processes that remove nutrients. Nutrient-laden waters would be diverted to the wetland, then returned to the channel or stream after a portion of the nutrients was removed. Once the removed nutrient load is measured and verified, these credits could be sold to local dischargers.

Setting up a market framework

An interdisciplinary team of environmental economists, market and legal experts, soil and water scientists, and local stakeholders are conducting the research  to set up the technical, legal, and social framework for a water quality trading market (see table below). The team is examining nitrogen and phosphorus loadings throughout the watershed, identifying key potential restoration areas, determining potential buyers (point-source dischargers), estimating buyer credit demand, determining NPDES permit language, identifing willing sellers, determining buyer and seller willingness to participate in a market, creating suitable monitoring methods, and developing a market trading structure suitable for the watershed based on the input of stakeholders.

 Team Members

 

 

NAME

 INSTITUTION

EXPERTISE

Jill Kostel (project manager)

The Wetlands Initiative

Water quality trading; wetland restoration for nutrient and sediment removal

Amy Ando

University of Illinois at Urbana-Champaign

Environmental economics

George Covington

Attorney

Water quality districts

Pamela Horwitz

American Corn Growers Foundation

Landowner liaison

Jim Monchak

The Wetlands Initiative

GIS mapping

Tony Prato

University of Missouri at Columbia

Environmental economics

John Raffensperger

University of Canterbury

Trading modeling

Mark Tomer and Ron Binger

USDA Agricultural Research Service

Watershed modeling

Edward Zajac

Northwestern University, Kellogg School of Management 

Conflict resolution

While a number of conservation practices can be implemented to avoid, control, or trap nutrient and sediment runoff, this study focuses on in-stream grade control and wetland restoration. Grade control structures are low weirs that can reduce the streamflow’s speed and power, which reduces erosion of streambed and banks, and can develop wetlands upstream in the channels and streams. Both practices provide multiple environmental benefits, such as improved wildlife habitat and floodwater storage, and allow water quality changes to be measured and monitored easily.

About 44% of the BBC watershed was formerly wetlands (indicated by the presence of hydric soils), creating significant potential for wetland restoration projects, particularly in the headwaters. A key component of the study will be determining the best location for restored wetlands—locations that will capture the nutrient- and sediment-rich streamflow, while not adversely impacting nearby cropland drainage.

Conclusions drawn from this research could enable landowners and producers to help improve their area's water quality by voluntarily implementing conservation practice options. The restored wetlands would yield many other critical benefits to the community. The market framework this study will develop could serve as a model for water quality trading throughout the state.

Match funding for the Initiative's Targeted Watershed Grant has been generously provided by Siragusa Foundation, American Corn Growers Foundation, Northwestern University, Patagonia, Winnetka Garden Club, Drive Current Inc., and Sheffield Foundation.

 

For further reading:

Growing wetlands for clean water: Using markets to pay for efficient nutrient removal in the Farm Belt (Initiative Fact Sheet PDF)

Measuring a test market for nutrient farming: Finding profits in the Illinois River Watershed (Initiative Fact Sheet PDF)

U.S. EPA Water Quality Trading EPA web site

If we could harness the demand for wildlife habitat with the demand for water quality, we could get a lot done. Water quality trading can do that."

— Amy Ando, Ph.D., Environmental Economist,
University of Illinois at Urbana-Champaign

Mission Statement

The Wetlands Initiative is dedicated to restoring the wetland resources of the Midwest to improve water quality, increase wildlife habitat and biodiversity, and reduce flood damage.