Over time, DoD is likely to be one of the largest buyers and sellers in a water quality trading market. The Department of Defense (DoD) operates military bases that resemble small cities in infrastructure. As units redeploy, bases are likely to find themselves well within their environmental limits at the originating base and potentially bumping against limits such as nitrate and phosphate loading at the destination base. Stricter rules and heavier loadings in growing watersheds also present challenges to local bases and municipalities as regulators clamp down on loadings from existing Waste Water Treatment Plants (WWTPs) to meet water quality standards. For example, removal of a pound of phosphate in a WWTP using an engineered tertiary treatment can cost over $300 per pound while reduction of a pound of phosphate loading from a farm field in the same watershed can often be achieved for $4-$6 per pound. In addition, many of the externalities for engineered treatment (e.g., capital costs, greenhouse gas footprint) are negative while externalities for improved agricultural practices like grassed buffer strips (e.g., wildlife habitat, carbon sequestration) are positive. When conservation trading and nutrient trading becomes routine, large cost savings with concurrent preservation of high quality watershed ecosystems are possible.
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