Victor Flatt in the Houston Chronicle: Pollution trading could allow more efficient water cleanup

Recent stories about "dead zones" in the Gulf of Mexico and the Chesapeake Bay are a reminder that despite progress on some water pollution fronts, we still have a serious problem to address. One politically popular approach to addressing the problem is a market-based solution, in which hard-to-regulate "non-point" pollution sources (farming, run-off, other sources without a "pollution pipe") and point sources engage in pollution-credit trades. So, for example, an industrial polluter might pay farmers to control run-off of fertilizer, thus reducing the flow of nutrients that cause dead zones. The interesting idea has been tried in some places, but has faltered because very few trades have actually been made, presumably because farmers lack incentive to overcome the challenges of striking deals and then implementing the pollution-control measures. It's just not their area of expertise.

In an op-ed published today in the Houston Chronicle, CPR Member Scholar and University of North Carolina law professor Victor Flatt proposes a novel solution: Independent third-party aggregators who would serve as "market makers." In Flatt's proposal, they would assume the risk of the transaction, making it easier for farmers to simply sign on the dotted line, follow a pollution-control plan, then cash a check. He recently published research on the failings of trading systems in the Houston Law Review, along with his proposal for aggregators.

According to the piece:

In today's political environment, and with issues of agriculture and local control to contend with, no one expects Congress to act, and so the EPA and the states are left to use the legal tools they have under the Clean Water Act to address this problem. To their credit, the EPA and many states have promoted pollution "trades," wherein expensive point-source controls can be replaced with cheaper non-point-source controls.

Paying farmers and other landowners to control runoff is a much cheaper way to reduce pollution than squeezing ever smaller improvements from industrial facilities. This means that more pollution can be controlled at lower overall cost.

To read the entire piece click here.