Summary of Water Quality Trading Project in Falls Lake

The benefits of improving water quality can come at a price.  North Carolina is developing a strategy for reducing nitrogen and phosphorus pollution into Falls Lake.  The lake acts as a drinking water reservoir for thousands but suffers from degraded water quality due to excess nutrients.  The estimated cost for cleaning the lake runs at a conservative $1.5 billion.  As a way to lower costs, the proposed rules allow for a compliance method called “water quality trading”.

Water quality trading is an innovative and cost effective strategy for reducing water pollutants.  There are 26 active water quality trading programs throughout the world.  However, it is unclear how such a unique strategy will work in the Falls watershed and how it will save taxpayer money.  The Nicholas Institute is conducting research on the watershed, stakeholders, and similar programs to inform this policy tool.  Conclusions from this study will hopefully be used to assess other small-scale water quality trading programs currently in development.