WASHINGTON D.C. — American Farmland Trust (AFT) and its project collaborators received a $1 million Conservation Innovation Grant from the USDA, which will be used in the development of the first interstate water quality trading program for agriculture, in the nation.

The project is in its second phase, said Brian Brandt, director of AFT’s Agricultural Conservation Center. It will be a multistate trading project within the 14-state Ohio River basin. This phase of the project is focusing on Ohio, Indiana, Kentucky and possibly Illinois.

During Phase Two, AFT will be reaching out to Soil and Water Conservation Districts and other local contacts in pilot trade areas to find and work with farmers willing to install conservation practices and sell the resulting credits to participating utility companies, Brandt said.

“Practices can range from crop management practices to physical structures, such as putting in buffers and field borders so that they can get phosphorous/nitrogen reduction,” he said. “They can then be paid for those reductions that they make that would offset, plus a little more, some emissions that point sources are making in the water shed.”

Under the Clean Water Act, wastewater treatment plants are allowed to emit a certain amount of nitrogen or phosphorous into nearby lakes or rivers, Brandt said. As these regulations move forward and the emissions limit is reduced, those plants may have to upgrade. Also, if they want to add houses or more area to their service district, that would require upgrades.

“Maybe instead of doing those expensive upgrades, they can maintain the overall levels of nutrients in the watershed by entering into a trading program and paying farmers to install practices, or put in practices that reduce nutrient throughout the watershed,” Brandt said.

Those practices would be put into a model that estimates how much reduction of nitrogen, phosphorous or sediment would occur, he said.

Depending on what the estimated reductions are, are the farmer would be paid for every pound of nitrogen or phosphorous estimated to be reduced from coming off of that field.

Initially the money will either come from the grant or from American Electric Power and Duke Energy, which have also committed $400,000 to the second phase of this project. Some trades will probably take place in 2012, but more significant action will come in 2013.

“We have done some listening sessions in Ohio and Indiana about how we can set up the programs so that farmers want to participate (can), and the kinds of practices they’re interested in,” said Brandt, who grew up on a farm in Darke County, Ohio.

AFT and the Ohio Farm Bureau Federation (OFBF) are chairing the agricultural stakeholder committee, which will provide valuable feedback in the market structure to the collaborators. AFT is collaborating with the project lead, Electric Power Research Institute (EPRI), along with Hunton and Williams, LLP, the University of California at Santa Barbara and Kieser and Associates, LLC.

Besides funding from American Electric Power and Duke Energy, the project also received regional support from the OFBF, the Miami Conservancy District in Ohio and the Ohio River Valley Sanitation Commission.

For information, visit www.epri.com/ ohiorivertrading and www.farmland .org/programs/environment/solution .ohio.asp