Watershed-wide nutrient credit trading has been suggested as a mechanism for reducing agricultural pollution entering the Chesapeake Bay, but a new study by Penn State University researchers suggests that the high cost of producing nitrogen credits through the establishment of riparian buffers on Pennsylvania farmland currently does not incentivize buffer establishment.

In a nutrient trading market, sources that reduce their nutrient runoff or discharges below target levels can sell their surplus reductions or “credits” to other sources. This approach allows those who can reduce nutrients at low cost to sell credits to those facing higher-cost nutrient reduction options.

However, increases in the market price of nitrogen credits or bundling nitrogen with other nutrient credits, such as phosphorus, ultimately could result in credit trading, providing an adequate incentive for agricultural riparian buffer establishment. The Northeast Woody/Warm-season Biomass Consortium and USDA’s National Institute of Food and Agriculture supported this work. For more information, read the Penn State News article.