An innovative approach for total maximum daily load (TMDL) allocation and implementation is the watershed-based pollutant trading. Given the inherent scientific uncertainty for the tradeoffs between point and nonpoint sources, setting of trading ratios can be a contentious issue and was already listed as an obstacle by several pollutant trading programs. One of the fundamental reasons that a trading ratio is often set higher (e.g. greater than 2) is to allow for uncertainty in the level of control needed to attain water quality standards, and to provide a buffer in case traded reductions are less effective than expected. However, most of the available studies did not provide an approach to explicitly address the determination of trading ratio. Uncertainty analysis has rarely been linked to determination of trading ratio.

This paper presents a practical methodology in estimating “equivalent trading ratio (ETR)” and links uncertainty analysis with trading ratio determination from TMDL allocation process. Determination of ETR can provide a preliminary evaluation of “tradeoffs” between various combination of point and nonpoint source control strategies on ambient water quality improvement. A greater portion of NPS load reduction in overall TMDL load reduction generally correlates with greater uncertainty and thus requires greater trading ratio. The rigorous quantification of trading ratio will enhance the scientific basis and thus public perception for more informed decision in overall watershed-based pollutant trading program.

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