Investors Weigh in on Water Quality Trading, Cardin Bill

EKO ECO Guest Blogger on June 11, 2010 Comment

By Whitt Kelly, Intern Ecosystem Marketplace

In recent months, Senator Cardin introduced senate bill S.1816, the Chesapeake Clean Water and Ecosystem Restoration Act of 2009. At its core this bill reauthorizes the Chesapeake Bay Program (by amending the Clean Water Act), as is required on a periodic basis. But it goes beyond 'taking care of business' and establishes a federally-enforced watershed TDML (Total Daily Maximum Load) for nitrogen, phosphorus, and sediment loading to the Chesapeake Bay. The bill will hold the Bay states accountable for meeting water quality pollution reduction goals.

Back on Capitol Hill, a group of investors representing private capital met to discuss the role of private capital in environmental policies, with emphasis on the Cardin Bill. The panel consisted of a group of tenured investors, including Chandler Van Voorhis of C2I, Pat Coady of Coady Diemar Partners, Gregg Garnick of Structured Growth Capital, and discussion leader John Campagna of Restore Capital.

The overarching theme stressed by the panel was the integration of private capital in environmental markets. Campagna noted that there were trillions of dollars loaned by local banks last year to commercial agricultural companies, so the private capital is out there. Campagna's goal is for the government to work together with private capital to create incentives and security to encourage private growth.

So how does this go into the creation of the up and coming water quality trading market, which is key in Bay restoration? Panelists stressed learning from past mistakes in the carbon and wetland mitigation markets. The brevity of previous Kyoto agreements, Van Voorhis noted dampened long regulations to avoid the confusion and uncertainty that tainted the early days of carbon markets.

And lastly the concerns of local Farmers and watershed property residents were considered. Political representatives from Virginia worried that farmers would not want to take out loans to participate in water quality trading -- citing lack of knowledge of trading policies and risk of failing to produce saleable credits. The investors countered that they usually pay money upfront, which provides financial certainty for the farmers, incentive for them to change their ways.

Listen to a clip on the the Farmer discussion
Blog clip- Farmers.wav