A Case Study: Temperature Credits

Let’s say you live in a city with a wastewater treatment facility that discharges clean, but overly warm water into the river that is not compliant to Environmental Protection Agency standards. In the past, to address temperature impacts, regulated facilities would build cooling towers that costs millions of dollars in construction and many more dollars in operation and upkeep with massive energy requirements.

With water quality trading in place, your wastewater treatment facility now has another option that is cheaper, environmentally-beneficial and creates local jobs. Here’s how.

Re-planting trees along rivers and streams has long been an important part restoration effort. Streamside trees provide shade that reduces a river’s water temperature, critical for wild fish. The amount by which a tree reduces water temperature – an ecosystem service – can now be measured and quantified into a credit. In Oregon, the protocols for valuing these credits have been approved by the Department of Environmental Quality as a way to meet regulatory compliance.

How the system works

1. Non-profits like The Freshwater Trust use private dollars to pay for the upfront costs to recruit local restoration professionals to implement tree-planting projects upstream, generally on private agricultural land.
2. The eventual cooling benefits of the planted trees are calculated using rigorous standards approved by the Oregon Department of Environmental Quality and then translated into credits.
3. A third-party verifies the validity of the credits that are then certified and registered on an official registry.
4. Your wastewater treatment facility (and other regulated entities) purchase the credits to offset their environmental impacts and meet their compliance obligations – and generally do so at a two-to-one ratio, assuring overall environmental benefit. The landowners who planted trees on their land are paid for converting land to conservation use, and the non-profit’s initial investment in the project is returned.
5. Projects are maintained and monitored annually to ensure the sites are performing as intended.

For the first time, your wastewater treatment facility can use dollars that would otherwise be spent on concrete and steel (e.g., a cooling tower) and convert them into miles and miles of restored stream banks by planting trees. This system costs significantly less – saving money for you as a ratepayer – and provides other secondary benefits like providing habitat  for birds and other species, reducing carbon in the atmosphere, stabilizing banks to control sediment and reducing runoff from agriculture and roads.

Temperature reduction is the first ecosystem service as it relates to water that can generate credits through this system. But nature provides a host of other ecosystem services – nutrient reduction, salmon habitat, sediment control – that will soon be able to function in this same way opening up opportunities for robust water quality trading for freshwater restoration.