WGF Policy Analysis: 2019 Senate Bill 91, Legislation to Buy and Sell Water Pollution Credits through a Central Clearinghouse
Jim Baumann, March 18, 2019
Executive Summary of Wisconsin’s Green Fire Analysis
2019 Senate Bill 91 would create a clearinghouse for sale and purchase of water pollution credits between water pollution sources. Although water pollution credit trading is a provision in current federal and state law to help achieve pollutant reductions, the use of trading in Wisconsin has been limited.
This bill would establish a single non-public entity as a clearinghouse to encourage trading opportunities, providing limited state oversight. Wisconsin’s Green Fire’s analysis evaluates example start up and operating costs. Our analysis raises significant concerns as to whether a pollutant credit clearinghouse in Wisconsin can be managed sustainably without subsidy. Our analysis suggests that while the concept of a central clearinghouse for selling water pollution credits has value, the economics of trading schemes may be marginal given the current market limitations on the value of credits and the transaction costs that will need to be incurred. The limited oversight of the clearinghouse operator may also lead to inconsistent or inadequate performance.