Organizational Structure Options for Water Quality Trading

1
Organizational Structure Options for Water
Quality Trading

• The following slides present various schematic
  options for organizing a water quality trading
  program in WV. They can be used alone or in
  combination with one another. Non-exhaustive
  descriptions of related pricing issues are in the
  comment buttons on the last slide (orange N1,
  N2). Feel free to add to that commentary by
  choosing insert - comment.
• Please use these as a starting point for your
  discussion. At this point almost any part of the
  schematics can be altered. We are looking for
  your feedback and commentary here.
• MIDDLE PARTY there will likely be one that is
  sanctioned to facilitate trading. This does not
  preclude other private parties from serving as
  aggregators or brokers and working through the
  middle party or directly with DEP. That is up to
  the private sector interest and the design of the
  program organization. If there is an Anointed
  Middle Party, it could be within the CD(s), a
  Watershed Improvement District, the RCD, a
  trust, a Regional Economic Development and
  Planning office, etc. etc. etc.

2
OPTION A Point to Point Credit Trading,
Certified by WVDEP
NPDES Permitee X discharging above allowable
limits cannot/prefers not to meet limits with
technology or reduced production.
Op A. NPDES Permittee Y has credits to sell
because of discharging under permit limits by
operating under design flow or installing
technology above that required.
OPTION A buy credits from another pt
source. Approved, registered, monitored by WVDEP.

WVDEP agent certifies credits for permit
compliance
3
OPTION B Buy offsets from offset producer
directly/indirectly.

Brilliant new solution yet to be inspired in
mind of entrepreneur or design genius.
AG BMPs Plant cover crops, fence, manure shed,
etc.
Urban BMPs buffers, pervious pavers, green
development, etc.
Nutrient sinks wetlands, algae fields, oysters,
innovations??
4
OPTION B Buy offsets from offset producer
directly/indirectly. B1. Bi-lateral offset
contract with offset producer(s) or their
representatives.
Offset proposals to WVDEP for permit compliance
reqs.
Option B1
?

WVDEP agent certifies qualified offsets as
credits for permit compliance
5
OPTION B Buy offsets from offset producer
directly/indirectly. B2. Fee per Credit paid to
WVDEP to ensure permit compliance, DEP pays
Anointed Middle Party (AMP) a broker/aggregator
- to develop a credit bank of contracts with
offset producer(s) /or their representatives.
NPDES Permitee X discharging above allowable
limits cannot/prefers not to meet limits with
technology or reduced production.
B2. Anointed Middle Party (AMP) Facilitates
links btwn offset demand supply and recommends
to DEP that offsets become credits. Could be
broker, could dev/bank credits and then sell.
Option B2

B2. DEP pays AMP for all offset development,
aggregation, verification monitoring services.

Fees per credit paid to WVDEP for permit
compliance (quasi in lieu)
WVDEP agent certifies qualified offsets as
credits for permit compliance

6
OPTION B Buy offsets from offset producer
directly/indirectly. B3. Pay Anointed Middle
Party (AMP) a broker/aggregator - to provide
guaranteed offsets that will be certified by
WVDEP as credits.
NPDES Permitee X discharging above allowable
limits cannot/prefers not to meet limits with
technology or reduced production.
B3. Anointed Middle Party (AMP) Facilitates
links btwn offset demand supply and recommends
to DEP that offsets become credits. Could be
broker, could dev/bank credits and then sell.
Option B3

Offset proposals to WVDEP for permit compliance
reqs.
WVDEP agent certifies qualified offsets as credits

7
Op A. NPDES Permittee Y has credits to sell
because of discharging under permit limits by
operating under design flow or installing
technology above the required.
OPTION A buy credits from another pt
source. Approved, registered, monitored by WVDEP.

OPTION B buy offsets from offset producer
directly/indirectly.
Option B3

Option B1
Option B2
B2/3. Anointed Middle Party (AMP) Facilitates
links between offset demand and supply and
recommends to DEP that offsets become credits.
Could be broker, could dev/bank credits and then
sell.

B2. DEP pays AMP for all offset development,
aggregation, verification and monitoring services.
Offset proposals to WVDEP for permit compliance
reqs.

?
WVDEP agent certifies qualified offsets as
credits for permit compliance