Nutrient Offsets in Virginia:Nutrient Offsets in Virginia:Update and Alternatives AnalysisUpdate and Alternatives Analysis

Kurt StephensonDept Ag & Applied Economics, Virginia Tech

Virginia Rural Water Association ConferenceMarch 18, 2008

Virginia Nutrient Trading Design and Sequencing

In general, the Virginia nutrient trading program establishes a sequencing logic that prioritizes compliance options to achieve stringent mass load caps.

This applies to both existing and new/expanding point sources.

Existing Point Source Compliance

1.Devise plan to meet wasteloadallocation (WLA)

2.If discharge > WLA, purchase credits from another point source

3.If no PS credits available, secure equivalent NPS credit by paying into Virginia Water Quality Program.

New/Expanding Point Source Compliance

1A) Meet limit of technology concentration standard for N and P, and

1B) Acquire WLA to offset new discharge:

• Buy WLA from point source

• Acquire NPS credit from “best management practices” at 2:1 rate

• If none above, “other means”

• If none above, payments into WQIF

Nonpoint Source Credit, Offsets

Nonpoint source credits are reductions in nutrient load beyond a baseline.

Defined in statute as: “achieve reductions beyond those already required by or funded under federal and state law”

§62.1-44.19:15.B.1b

Nonpoint Source Offsets

New/expanding sources must permanently offset new load

Any nonpoint source offsets must be included within the point source’s individual VPDES permit.

Alternatives Analysis

Alternatives Analysis

Ask the Question:

What are the activities and costs of offset alternatives needed to offset total nitrogen load from a 1 mgd WWTP expansion (or about 10,000 lbs/yr)?

(1 mgd operating at 3 to 3.5 mg/l TN)

Alternatives Analysis

Virginia trading program requires 2 pounds of reductions per 1 pound of nonpoint source offset.

Thus, 20,000 pounds of TN reduction needed for 10,000 pound offset

Assume no long term point source WLA (offset) available

Classes of Offset Alternatives

1) Agricultural Offsets (DEQ approved)

2) Urban Offset Options

3) Nutrient Assimilation Offsets

1. Agricultural Offsets

DEQ published BMP offset guidelines January 2008.

Agricultural BMP Baselines

Before any offset is granted, agricultural sources must meet baseline (reductions not available as offsets)

1. Soil Conservation – implement soil conservation plan to achieve specific soil loss tolerance value

2. Nutrient Management – certify & implement nutrient management plan

3.Cover Crops - Cover crops to meet the required standard planting date

4. Riparian Buffer –maintain minimum 35 ft vegetative buffer

5.Livestock Exclusion – fence out, alternative watering, and minimum 35ft buffer

Agricultural BMP Baselines

1. Early Cover Crops – vegetative cover crops by early planting dates.

2. 15% N Reduction on Corn – Nitrogen application rates at 85% of recommended rates in nutrient management plan

3.Continuous No-Till – implement and maintain continuous no till for minimum 5 yrs

4. Land Conversion – converting agricultural and to less nutrient intensive use

Ag BMPs available for Credit

Example: Ag offsets in Shenandoah

15% N Reduction + Continuous No-Till

Total Nitrogen Reduced: 4.01 lbs/ac

Total Number of Acres: 4,988 acres(20,000 lbs / 4.01 lbs/ac)

Example: Ag offsets in Shenandoah

15% N Reduction + Continuous No-Till

Cost to Implement ???

Technical Feasibility:• # producers at baseline thought to be small• Only 77,000 acres of corn grown in the entire S. Valley in 2006 (many counties less than 5,000 acres).

Example: Ag offsets in Shenandoah

Land Conversion: Crop to Forest

Total Nitrogen Reduced: 10.91 lbs/ac

Total Number of Acres: 1,833 acres(20,000 lbs / 10.91 lbs/ac)

Example: Ag offsets in Shenandoah

Land Conversion: Crop to Forest

Cost to Implement: $86/lbs TN annually(land costs $10,000/ac, conversion costs $867/ac, annualized 20 years @ 7%)

Technical Feasibility: Yes, if land available

N Offset Alternatives Summary

Offset Option Action Cost/lbApproved Feasible

15% less N + No-till

Crop to forest conversion

5,000 ac

1,833 ac $86/lb

? ??

2. Urban Offsets

DEQ has discussed offsets from urban nonpoint source reduction.

Options might include:

• Stormwater management practices (wet ponds, bioretention areas, sand filters)

• Septic retirement

2. Example: Wet ponds

Assume wet pond draining 75 acres, residential development, estimated TN load into pond 165 lbs/yr, 30% removal efficiency

# ponds needed: 400Cost per lb approximately $600/lb

Wet pond reduces 50 lbs/yr

2. Example: Other stormwater

Bioretention areas: $75 - $1,300/lb

Sand filters: $3,000/lb

2. Septic Retirement

EPA has allowed nutrient offsets in other areas of country for septic retirement

* Assume connecting 300 home existing development, piping costs only annualized over 20 years at 7%.

At 18/lb household, 1,111 existing individual septic systems would need to be connected to central sewer

Low ball cost: $30/lb*

N Offset Alternatives Summary

Offset Option Action Cost/lbApproved Feasible

15% less N + No-till

Crop to forest conversion

5,000 ac

1,833 ac $86/lb

Wet ponds 400 ponds $600/lb

Septic retirement 1,111 homes

TBDTBD

TBDTBD Min $30/lb

???

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3. Nutrient Assimilation Credits

Enhancing the nutrient assimilative capacity of the ecosystem to remove nutrients from Bay system is another way to remove nutrients beyond source reduction.

3. Examples

• Oyster Aquaculture

• Algal Biomass Harvest

• Wetland Restoration

Illustration: Nutrient Assimilation Offsets from Oyster Aquaculture

“It is the oyster's eating habits that make it so important to its environment: it is a voracious filter feeder that performs several vital functions in the Bay's ecosystem”

Example: Nutrient Assimilation Offsets from Oyster Aquaculture

While wild restoration has been difficult, oyster aquaculture can successfully grow native Chesapeake Bay oysters. Expansion, however, is limited by finances.

N and P removal from:

• Oyster harvest (biomass harvest)

• Nutrient conversion of oyster biodeposits (nitrification & denitrifcation)

Example: Nutrient Assimilation Offsets from Oyster Aquaculture

2006 Chesapeake Bay Targeted Watershed Grant Project: “Nutrient Assimilation Credits: Opportunities for Enhanced Oyster Production”http://oyster.agecon.vt.edu/

Nutrient removal projects from oyster aquaculture in Buzzards Bay MA, and ribbed mussels in NY, NY

Nutrient removal credits from mussel aquaculture in Sweden

Example: Nutrient Assimilation Offsets from Oyster Aquaculture

Previous research estimates between 700 and 5,500 lbs of TN removed annually per 1,000,000 oysters (3” oyster)

3.6 to 28.5 million oysters needed as an offset

At current stocking densities, less than 100 acres leased private bottoms needed.

Cost/lb: ?

Example: Nutrient Assimilation Offsets from Algal Harvest

Algal harvest facilities rapidly grow algae in order to remove nutrients from ambient water or from treated effluent discharge.

Nutrients removed when algae is harvested

Example: Nutrient Assimilation Offsets from Algal Harvest

Algal Turf Scrubber (left)

N and P removal rates can be directly quantified with high levels of certainty

Projects underway in FL & NY

http://www.algalturfscrubber.com/

Example: Nutrient Assimilation Offsets from Algal Harvest

Algal Turf Scrubber

Assume: 12 g dry weight m2/day & 3% TN (but these are based on systems managed for P)

16 acre facility needed to produce 20,000 lbs of TN of reduction

Cost/lb of TN? ($15-$25 per pound of P in FL)

Illustration: Nutrient Assimilation Offsets from Wetland Restoration

“Forested riparian (or streamside) wetlands remove about 80 percent of the phosphorus and 90 percent of the nitrogen from water, which act as water contaminants and may result in unhealthy algae blooms.”

Example: Nutrient Assimilation Offsets from Wetland Restoration

Invested in 1,300 acre wetland restoration project to demonstrate nutrient removal in IL.

WI claims restored wetlands can remove 275 pounds of TN/ac/yr

73 acres wetland restoration needed

http://www.wetlands-initiative.org/NutrientFarming.html

N Offset Alternatives Summary

Offset Option Action Cost/lbApproved Feasible

15% less N + No-till

Crop to forest conversion

5,000 ac

1,833 ac $86/lb

Wet ponds 400 ponds $600/lb

Septic retirement 1,111 homes

TBDTBD

TBDTBD Min $30/lb

Oysters

Algal Harvest

Wetland Restoration

3.5-28.5m oysters(< 100 acres)

TBDTBD

TBDTBD

TBDTBD

< 16 acres

73 acres ?

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???

?? ?

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Comments or Questions?

Kurt StephensonDepartment of Ag & Applied Economics

Virginia TechKurts@vt.edu

(540) 231-5381