USDA Announces CIG Funding for Water Quality Markets

January 14th, 2012

On Friday, January 13, USDA announced the availability of $10 million for water quality credit trading projects through the Conservation Innovation Grants (CIG) program.

According to USDA’s vision of water quality credit trading, “a producer who implements conservation practices to reduce water quality pollutants can also benefit by generating water quality market credits that could be sold in an open market, which would reduce the costs of implementing and maintaining the conservation practices.”

The Natural Resources Conservation Service (NRCS), which administers the CIG program, will reserve half of the funding “for the design and implementation of a coordinated water quality trading system across the Chesapeake Bay region.” The remaining $5 million will be available for credit trading demonstration projects across the country.

Project proposals are due March 2. Projects will be selected for funding in July and will begin in September. Grantees will be able to receive up to $2 million per grant; however, there is a 50 percent match (50 percent of the cost of the project must be covered by non-federal funds). All projects must involve producers who are eligible for the Environmental Quality Incentives Program (EQIP).

NRCS will be hosting an informational webinar on January 24 to outline the minimum qualification requirements and to answer proposal application questions.

NRCS requests CIG proposals for projects that:

Support the completion of state water quality market rules and infrastructure needed to carry out water quality trading between point and non-point sources;

Deploy and test tools and metrics needed for crediting and verifying the effectiveness of conservation practices on agricultural lands;

Establish certification, registry and reporting systems; and

Educate and reach out to agriculture and other sectors.

Project proposals must propose verification and monitoring protocols. From what we can tell, NRCS is not providing national guidance on the development of those protocols. There will also be no national formula to guide the valuation of trading credits.

See the Announcement of Program Funding for a more detailed description of what NRCS is looking for in a water quality credit trading project proposal.

Non-governmental organizations, state and local governments, Indian tribes, and interested individuals can apply online at grants.gov or read the full Announcement of Program Funding.

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