N.),  NY

   The Passaic River, which traverses both New Jersey and a
   small portion of New York, has historically been an area
   of significant  industrial activity and is now one of the
   most impacted rivers in the northeast. Approximately
   two million people—one quarter of New Jersey's
   population—live within 669 square miles of the
   803-square-mile watershed. In addition, 23 reservoirs,
   all within the  nontidal portion of the river, provide
   potable water to New Jersey's residents.


   The New Jersey Department of Environmental Protection
   recently funded watershed characterization and
   assessment studies. These revealed that surface water
   quality standards for nutrients, dissolved oxygen, pH,
   temperature,  pathogens, metals, and pesticides are
   often exceeded.

   •  Phosphorus loads must be reduced to restore water
      quality in the rivers, lakes, and reservoirs.

   •  Nineteen wastewater treatment plants within the
      nontidal portion of the Passaic River watershed
      each discharge more than 1 million gallons per day
      of treated  effluent. The plants, studies assert,
      contribute  a large percentage of the phosphorus

   •  Upgrading wastewater treatment plants to meet an
      effluent limitation for total phosphorus would be
      extremely costly. All  additional costs would be passed
      on to taxpayers in the form of higher sewer  rates
      unless a water quality trading program with the
      potential to significantly lower costs is implemented.
                                 • *T •.«-  ~^aS           r. - ^  fSZ?^-
                   Headwaters of the Passaic River in the Highlands of New Jersey.

                    RESTORATION ACTIVITIES

                    EPA Targeted Watersheds Grant funds will be used to
                    develop, implement, and evaluate an effective water
                    quality trading program for the nontidal Passaic River
                    Watershed that adheres to EPA's Water Quality Trading
                    Policy. The focus  of the program will include both
                    point-point source trading and point-nonpoint source
                    trading. The partners will:

                    •  Review available studies to identify potential trading
                      scenarios and examine ongoing projects around the
                      country to identify models that can be adopted

                    •  Evaluate potential trading scenarios from a scientific
                      and economic perspective and develop a model that
                      will  quantify potential load reductions and cost

                    •  Evaluate the public policy and  legal aspects,
                      including permitting and enforcement implications,
                      of water quality trading as  it pertains to the Passaic
                      River watershed and  New Jersey statutes,
                      regulations, and policies

                    •  Develop and implement a trading program,
                      including facilitating trading negotiations and
                      recommending modifications to permits

                    •  Report results  at local, regional, and national
                      meetings and in peer-reviewed journals

                    •  Develop a website for the project. A website has
                      been initiated for the project at


 The watershed contains 19 major point sources. Each
  may require different levels of upgrade to achieve water
  quality standards, making a trading program very
  attractive. An active coalition assembled to complete
 this endeavor includes:

  •  The Passaic River Basin Alliance, a nonprofit coalition
    of wastewater treatment plants in the Passaic Basin

  •  Experts from Rutgers and Cornell Universities

  •  The New Jersey Department of Environmental

  •  A nonprofit organization of New Jersey

  •  The New Jersey Association of Environmental
    Authorities, a nonprofit organization of state
    wastewater treatment plants, water utilities, solid
    waste facilities, and collection system operators
                                                      Whippany River, one of the many tributaries to the Passaic River that will be protected
                                                      through the water quality trading project.
"The EPA Targeted Watershed Grants Program has provided a unique opportunity to
develop a water quality trading program for the Passaic River Basin that brings
together stakeholders with diverse goals, and align their efforts to improve water
quality at reduced cost. We aim to achieve a win-win result for the environment and
our stakeholders."

- Christopher C. Obropta, Ph.D., RE., Rutgers Cooperative Extension