NRCS Conservation Innovation Grants (CIG) Water Quality Trading Systems Fiscal Year 2012 Natural Resource Conservation Service (NRCS) & Office of Environmental Markets (OEM) January 24, 2012

Welcome & Remarks Ann Mills, Deputy Under Secretary USDA Natural Resources & Environment

The Water Quality Trading Systems Conservation Innovation Grants (CIG) are seeking to stimulate the development and adoption of water quality trading markets. “Our goal is to demonstrate that markets are a cost- effective way to improve water quality in places like the Chesapeake Bay watershed, and agricultural producers are critical to the function of these markets.” -Agriculture Secretary Tom Vilsack- O VERVIEW

Funding for Water Quality Credit Trading Chesapeake Bay Component - up to $5 million Chesapeake Bay Watershed: Includes the District of Columbia and parts of six States: New York, Pennsylvania, Delaware, Maryland, Virginia, and West Virginia. National Component – up to $5 million National 44 States, Caribbean Area (Puerto Rico and the Virgin Islands), and the Pacific Islands Area (Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands). F UNDING A VAILABILITY

CIG Water Quality Trading Systems Overview of Priority Criteria Wayne Honeycutt, Deputy Chief Science & Technology, NRCS

Multi-State collaboration is encouraged Established track record of water quality regulation and credit trading market development with key States and Departments involved Chesapeake Bay Component Chesapeake Bay Executive Order (EO 13508) RFP: Market Rules and Market Infrastructure Tools and Metrics Verification & Registry Outreach F UNDING P RIORITIES

What is Water Quality Credit Trading? Carl Lucero, Deputy Director Office of Environmental Markets T HE D ETAILS

B UYERS OF E NVIRONMENTAL C REDITS S ELLERS OF E NVIRONMENTAL C REDITS W ATER Q UALITY C REDITS M ARKET Development O VERVIEW OF W ATER Q UALITY C REDIT T RADING M ARKET C REATION OF A N OVEL M ARKET Overview of Water Quality Credit Trading Market

Developing the Demand for Water Quality Credits B UYERS OF E NVIRONMENTAL C REDITS : U NDERSTANDING AND S TIMULATING D EMAND B UYERS Treatment Plants Municipalities Developers NGOs Avoided Costs K EY DRIVERS & M OTIVATIONS Pre-Compliance Philanthropic

S UPPLY : W ATER Q UALITY C REDIT G ENERATION L AND M ANAGERS W ATER Q UALITY C REDITS Baseline & Threshold Practices Credit Estimation Tools Credit Generation Timeframe Eligibility Verification Registration Monitoring P ROTOCOLS Developing the Supply of Verified Water Quality Credits

Developing the Water Quality Credit Registry & Trading Platform Buyers of Environmental Credits S ELLERS OF E NVIRONMENTAL C REDITS W ATER Q UALITY C REDIT R EGISTRY & T RADING P LATFORM Transparency Clear Rules Monitoring R EGISTRY & T RADING P LATFORM Eligibility

Qualities of a Successful Market Successful Water Quality Credit Trading Market Verified Credits Permitted Buyers Low transaction costs Clear trading rules Sufficient buyers & sellers of credits Transparent transactions Strong enforcement & experience Coordination of Trading Systems between States Exchange Rates Reciprocity Parity

Conservation Innovation Grants Application Process Gregorio Cruz National CIG Program Manager

Review Announcement for Program Funding ( and Complete and sign form SF-424. Determine applicant eligibility: Federally recognized Indian Tribe, State, or local unit of government, non-governmental organization, or individual. Determine project location eligibility: 50 States, the Caribbean Area (Puerto Rico and the Virgin Islands), and the Pacific Islands Area (Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands). Describe the involvement of landowners who meet the EQIP eligibility requirements in the project. CIG Application Process

Establish project length. (between 1-3 years, starting on Sept 1, 2012) Complete project description (up to 15 pages) as required in the APF proposal section. Complete project budget information (SF-424A) and budget narrative as required in the APF proposal section. Establish federal funds request (up to $2 million). There is a 50% matching funds requirement. Submit application by March 2, CIG Application Process

Water Quality Market Network Successful applicants will be required to participate in a “Water Quality Market Network” convened by USDA. The Network will serve as a venue to share experience and coordinate activities to meet USDA water quality credit trading goals.

CIG Application Deadline & Delivery, Award Announcement & Start Dates, and Program Contacts For Applications to be considered: Due Date: Friday, March 2, 2012, by 4:00 p.m. EST Location : USDA- NRCS National Headquarters 1400 Independence Ave, SW Room 6227 South Building Washington, D.C Selection Announcement Date:July 20, 2012 CIG Project Award & Start Date: September 1, 2012 CIG Program Contact:Gregorio Cruz National CIG Program Manager Phone: (202) CIG Administrative Contact: Dan Lukash Grants & Gareements Specialist Phone: (202) OEM Program Contact:Carl Lucero Deputy Director, OEM Phone: (202)

Questions

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