The Gulf of Mexico's "dead zone"

Every summer, a Massachusetts-size section of the Gulf of Mexico is transformed into a vast tomb containing millions of bottom-dwelling sea creatures. Runoff of nutrient pollution from farms and factories along the Mississippi River feed massive algal blooms in the Northern Gulf that trigger hypoxia --- the draining of oxygen from the sea --- and the creation of an extensive Dead Zone.

Excess nitrogen and phosphorous releases by agriculture and industry throughout the Midwest are the main culprits. While scientists are still sorting out the relative contributions of these two nutrients to the problem, we are now in a position to move forward and identify concrete solutions to reducing nutrient runoff in an economical and cost effective manner.

Analysis and research performed by the World Resources Institute (WRI) shows that the use of market mechanisms like nutrient trading provides not only the greatest overall environmental benefits, but also is the most cost-effective strategy to reduce the Gulfís Dead Zone.

The idea of trading nutrient credits to fight hypoxia is based upon straightforward economic theory.

Some farms or factories will find that reducing their nutrient runoffs will cost them significantly less than their neighboring polluters. For example, an older factory may already require major upgrades to its infrastructure. When nutrient control measures are tacked on to the overhaul, the costs to comply with the regulations are low. Upgrading a newer plant, however, to meet the regulations would be comparatively expensive.

The older factory can therefore decrease its nutrient outflows beyond the required limits for a relatively low price, and sell the extra reductions as credits to companies in their area who would have paid much more to reduce their own runoff. Non-point sources, such as large farms, often incur much lower costs when reducing their nutrient runoff, and can serve as key players in a nutrient trading scheme.

Before implementing a trading system, however, EPA and state agencies must continue to refine and implement adequate water quality standards to provide targets for agriculture and industry to reduce their outflow of nitrogen and phosphorous into waterways. These targets can serve as the caps necessary to make a "cap and trade" system work. The EPA has previously set a goal of reducing nitrogen runoffs in the Gulf of Mexico by 30 percent by 2015 and is currently exploring curbs on phosphorous discharges.

The restoration of wetlands along waterways that feed the Gulf of Mexico can also serve as a compelling way to shrink nutrient outflows and stem hypoxia. According to The Wetlands Initiative, three Midwestern states (Iowa, Missouri, and Illinois) in the Upper Mississippi River Basin have drained 85 to 90 percent of their wetlands in the last 200 years. By isolating rivers from their backwater lakes and floodplain wetlands, the group contends that we have eliminated natural solutions to the nutrient problem.

Landowners who restore these natural habitats will both reduce nutrient outflow and provide additional benefits for their local biodiversity and wildlife. Through a nutrient trading system, the landowners can also sell their reduction credits to other neighboring sources of nitrogen and phosphorous.

This market-based approach has also proven remarkably successful in other environmental arenas. The Chicago Climate Exchange --- which counts companies such as Ford, DuPont, and Motorola as members --- actively trades credits for the reduction in emissions of global warming-causing greenhouse gases.

It has been five years since EPA first officially recognized the Gulf of Mexico's Dead Zone and over a year and a half since it released its new Water Quality Trading Policy. We are ready to move beyond the debates and finger-pointing and focus on solutions. Nutrient trading, coupled with strong and enforced regulations on the runoffs of both nitrogen and phosphorous, clearly presents the most effective and economical approach to solving the hypoxia dilemma.

Paul Faeth is executive vice president and managing director of the World Resources Institute. G. Tracy Mehan III, was assistant administrator for water at EPA (2001-2003). He is presently an environmental consultant in Arlington, VA.

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Nutrient runoff creates dead zone