Nutrient credit trading for the Chesapeake Bay: An economic study


Van Houtven, G., Loomis, R., Baker, J., Beach, R., & Casey, S. (May 2012). Nutrient credit trading for the Chesapeake Bay: An economic study: Prepared for Chesapeake Bay Commission. Research Triangle Park, NC: RTI International.


The Chesapeake Bay ecosystem is under stress. Among an onslaught of pressures, the primary cause of this stress is the overabundance of nutrients flowing into its rivers, streams, and estuaries. The two main nutrients — nitrogen and phosphorus — are naturally occurring substances that are essential for living organisms. However, large amounts of these nutrients, most often generated by human activity, result in excess algae growth. This excess algae depletes oxygen from the water, blocks sunlight for underwater plants, and upsets the functioning of a healthy aquatic ecosystem.

The Chesapeake Bay is particularly vulnerable to nutrient overload because it drains an area of over 64,000 square miles and averages a mere 21 feet in depth. All of the rivers, streams, and drainage systems located within this watershed eventually discharge their water into the Bay. According to the U.S. Environmental Protection Agency (EPA), during a year with average rainfall, this water carries with it over 250 million pounds of nitrogen and almost 20 million pounds of phosphorus. These nutrients come from a wide variety of sources, including sewage treatment plants, industrial facilities, runoff from agricultural fields and urban areas, and even air pollution. With the human population in the watershed expected to grow by over 2 million people over the next 20 years, new strategies will be necessary to manage and reduce nutrient loads from all sources in order to restore and protect the health of the Bay ecosystem.