Water Emissions Trading (WET)

Some water quality problems, such as eutrophication, may be difficult and expensive to solve. Market based (financial) policy instruments can help to reach targets in the most cost-effective way. WET or Water Emissions Trading (='water quality trading' or 'tradable discharge permits') has been experimented with and implemented in the USA and elsewhere for over two decades. Together with Arcadis and CE-Delft, Eco-consult has explored possibilities in The Netherlands for the Dutch government (full report in Dutch and Summary in English). If you read Dutch, this presentation will give you a quick introduction. If you prefer English, choose the presentation for the event on WET in Utrecht University on January 27, 2010. It introduces the concept of WET and discusses some possible problems that have to be adressed before implementation in Europe. A report of the meeting is here.

Finally, I recommend my report Water Emissions Trading in Europe – a literature overview and discussion of opportunities, presented at the World Congress on Water, Climate and Energy, Dublin, 14 May 2012. For a quick overview of this report, view the Powerpoint presentation based on this report. At this IWA-congress, the IWA adopted a resolution recommending that the EC facilitates and stimulates research into WET: IWA-resolution. For a project proposal, including an introduction to WET, here's a 3 page flyer (pdf).

What is WET?

WET is the principle of emissions trading applied to discharges to water. If an emitter reduces emissions, he can sell the surplus permits and use the revenues to pay for the reduction measures. The buyer can avoid taking relatively costly reduction measures. In this way everybody saves money, while the overall reduction targets can be reached.

Although the principle is the same, WET is very different from emissions trading systems for air pollution. Main difference is that WET is mostly much smaller geografically, down to just a handful of emitters. In the book 'Water-Quality Trading’, by Jones, Bacon, Kieser and Sheridan (2006, WERF) four types of WET are distinguished. These categories are similar to the WRI-classification (Selman, 2009). The Pros and Cons in the following table are my own assesment







Centrally managed trading


Central authority determines allowed trades and price.

Long Island Sound

Resembles traditional regulation and a discharge levy

Less local freedom, less market allocation, less cost-effective, bureaucratic

Trading associations

Bilateral trades

Group of emitters is collectively responsible for achieving emission target, and trades amongst themselves.

Tar-Pamlico Trading Association (founded 1989)

Legally simple (if pilot-project status granted), group permit

Limited number of cost saving trades available?

Market-like trading

Exchange market

This type is most like larger air pollution cap-and-trade systems, such as EU ETS.

Lower Boise River

Lowest costs, liquid market

Technically and legally complicated?

Small-scale offset programs

Sole-source offsets

One source offsets its emissions by paying measures at neighbouring emitters.

Rahr Malting Company

Small-scale, simple

No liquid market, risk of market power



  • respects the polluter pays principle, (at least on an individual emitters level)
  • provides flexibility and freedom to the emitters,
  • stimulates innovation towards cleaner technology,
  • reaches environmental targets at the lowest (societal) cost, and
  • fits well in the Water Framework Directive. 

Apart from recent isolated initiatives in a few member states, WET is still unknown in Europe. Eco-consult has a number of contacts that are working with WET in EU-member states (and the US). We have carried out an exploratory study for Dutch government, and are collecting relevant literature. Eco-consult is cooperating in developing WET with Torenbeek-consultant and the WaterFocus Cooperative of which I am foundingmember and thus co-owner.

Initiatives in Europe

Studies into WET or water (quality) trading have been done, or are being done in Belgium, Sweden, Northern Ireland, Germany, Poland, Italy, Finland-Baltic countries (research on nutrient trading for the Baltic Sea), and The Netherlands (several studies, including nutrients and cooling water). If you know of others, please let me know.

Would you like to be kept informed?

I want to promote research and information exchange about WET, and monitor developments within Europe and elsewhere. If you are interested in WET and want me to inform you on the progress we make, let me know your e-mail address, or join the Linkedin group, and I will keep you up to date. Of course you can also e-mail me directly if you have specific questions, or information you would like to share.

Get more Joomla!® Templates and Joomla!® Forms From Crosstec