A Conceptual Framework for Assessing the Success of Water Quality Trading Programs

The paper discusses a comprehensive list of factors that affect water quality trading programs. The most basic elements which must be in place for a successful trading program is a firm legal backing and a commitment to making equitable decisions about all aspects of a program's design. Once these are established, the heart of a successful water quality trading program is its economic viability, which is made up by supply, demand, market size, market scale and marginal cost differences. All of the other factors both obviously economic and otherwise will somehow tie into the economic viability of the program. Even these lesser factors were found to have some hierarchies, with cost savings, risk, incentives and environmental barriers forming the second tier. Water quality trading is a tool that emerged from the movement away from command and control regulations to economic incentives.