1. Am I eligible to sell nutrient banking credits?
By implementing conservation actions that lower nitrogen and phosphorus loads to waterways, landowners can generate credits and sell them to organizations whom voluntarily purchase the credits or entities such as waste water treatment plants, construction and development firms, or communities with Small Municipal Storm Water Systems that need credits to maintain compliance with government-provided permits. Virginia facilitates the trading of nitrogen and phosphorus credits between landowners and permitted facilities like wastewater treatment plants through the Department of Environmental Quality.
The first step in determining your eligibility is to visit Forests for the Bay's LandServer. LandServer will generate a quick and easy free report that estimates your potential to generate credits for a variety of market areas including nutrient trading, in addition to providing you with information about natrural resources on your property using publicly available data.
Landowners on the Eastern Shore or in the James, Potomac/Shenandoah, Rappahannock, or York River basins of Virginia are currently eligible to generate and sell nitrogen and phosphorus credits.
2. How do I generate credits by planting trees?
To reduce nutrient loads to waterways and generate credits, landowners may convert non-forested land (i.e., cropland, hay, or pasture) to forest through tree planting. Other non-forest enhancements may also generate credits; check the Virginia Department of Environmental Quality (DEQ) website for more information on these practices. Currently, only the permanent credits generated through land use conversions are actively being traded in Virginia.
In addition to each land use enhancement, landowners must also follow these guidelines:
- The nutrient credit trade cannot cause or contribute to water quality effects locally, downstream, or bay wide.
- Landowners must comply with all local, state, federal laws, regulations, and programs.
- The idling of whole or substantial portions of farms is not eligible to generate credits.
- Landowners must demonstrate that they have already reduced nutrient loads to levels required by the State of Virginia. These limits are known as “baselines.” The following best management practices must be met to achieve the “baseline”:
1. For farmers, a nutrient management plan must be implemented for all crop-, hay-, and/or pasturelands.
2. For farmers, cover cropping on cropland must meet the standard planting date and other specification defined by DEQ.
3. If there are livestock on the property, livestock exclusion fencing must be installed at a minimum width of 35 feet to restrict livestock from streams, rivers, lakes, and natural ponds. Alternative watering sources must be provided. Ponds specifically built for livestock watering that do not have a perennial flow do not need fencing.
4. Forest or grass buffers must be installed and maintained at a minimum width of at least 35 feet on all streams, rivers, lakes, and natural ponds on the property. Refer to the NRCS standards 390 or 391 in the USDA-NRCS Field Office Technical Guide for guidance on correct buffer installation.
- Enhancements paid for by government dollars (e.g. USDA Environmental Quality Incentives Program) or for another market purpose are not eligible to generate credits during the life of the project. However, a farmer’s private share of any cost-share program is eligible. However, state or government cost-share program can pay for the best management practices required to meet the baseline.
- Credits can only be generated once an enhancement is installed and the baseline is met.
The number of credits that your project generates will depend on a number of factors including your location within a Chesapeake Bay river basin, your selected ehancement(s), and the number of acres you intend to treat under the enhancements. You may use the Forest for the Bay’s Virginia Nutrient Reduction Calculator for non-forest to forest land conversion to determine the offsets you could theoretically generate on your property. The data in this calculator is generated from the BMP Enhancement and Land Conversion Offsets Calculation Worksheet in the Virginia DEQ Trading Nutrient Reductions from Nonpoint Source Best Management Practices in the Chesapeake Bay Watershed: Guidance for Agricultural Landowners and Your Potential Trading Partners.
3. How much money do credits sell for?
Prices vary depending on the current demands within each river basin. As of 2015, the going rates for Virginia range from $7,000 to $20,000 per pound of nutrients reduced.
4. How much will it cost me to generate and sell credits?
There are costs associated with generating and selling credits. You may choose to pay a consultant or other outside experts to design your project and help prepare a contract to sell credits. Once a project and contract are completed, the project must be verified by DEQ before credits can be generated. Fees related to project design and contract development will most cases need to be paid prior to the sale of credits.
5. Is there financial assistance available to me to aid in the generation and selling of credits?
Government cost-share are available to help landowners implement the best management practices needed to meet the baseline requirements for water quality trading. Marginal pasturelands and active or recently active croplands alongside waterways and/or waterbodies may be eligible for cost-share assistance to plant riparian forest buffers through the Farm Service Agency's Conservation Reserve Enhancement Program (CREP). Landowners enrolled in CREP may receive upwards of 87.5% cost-share on the eligible costs associated with planting trees and shrubs as well as other practices meant to keep cattle out of streams, including exclusion fencing, alternative watering sources, and cattle crossings. In addition, landowners receive an annual soil rental payment for the land taken out of production, plus an additional annual payment 200% of the county soil rental rates, a one time practice incentives payment, and a one time sign up bonus payment. The USDA-NRCS Environmental Quality Incentives Program (EQIP) also provides cost-share assistance for best management practices needed to meet the baseline requirements.
In addition to government funding, there may be non-governmental programs available to aid landowners in meeting their baseline requirements. Landowners interested in enrolling in CREP may apply to the Alliance for the Chesapeake Bay's Healthy Farm Stewardship Program. For each acre of riparian forest buffer planted by the landowner through CREP, the landowner may receive a voucher of up to $3,000 for implementation of other best management practices on the property, with a cap of $20,000 per farm.
Private funding, unlike government funding, may be used to finance the design of the tree planting projects and the costs associated with contract development. In some cases, you can arrange with conservation groups and consultants to bear up-front expenses, which can be recouped once credits are sold. Contact email@example.com to learn more about programs the Alliance currently is offering to support these efforts.
6. What is required of me to generate credits?
- All credits must be registered with the State of Virginia. This allows landowners to document their conservation actions and buyers to obtain certainty that each credit represents real nutrient reductions.
- The implemented best management practices must be permanent to insure perpetual offsets. Therefore the land must be protected under a deed restriction or easement.
- Projects need to be verified and monitored by DEQ.
7. Can I see specific requirements?
For more information, visit Virginia's nutrient trading website.
8. I am interested. Now what do I do?
- Generate a LandServer report to determine your river basin and identify funding opportunities available to help you reach your baseline.
- Estimate the offsets you could theoretically generate on your property using the Forests for the Bay's Virginia Nutrient Reduction Calculator.
- Contact firstname.lastname@example.org to receive help identifying conservation funding to help you meet your baseline.
- Identify an offset broker to facilitate a trade on your behalf. Offset brokers may include private nutrient banks, land conservation trusts, agricultural cooperatives, or others. Contact DEQ for a list of potential brokers.
- Achieve and verify the baseline requirements with DEQ.
- Implement your project.
- Complete transaction with a buyer and report to Virginia’s registry by filling out a copy of the Chesapeake Bay Tributary Nutrient Reduction Certificate available on the nutrient trading website.