Water Quality Trading in the Lake Winnipeg Basin: A multi-level trading system architecture.

Lake Winnipeg is an iconic feature on the Canadian Prairie landscape and its multi-jurisdictional basin covers the majority of Western Canada's agricultural zone. Although the lake is of regional and national importance, its water quality is being degraded and it is now the most eutrophied large lake in the world. Toxic blue-green algal blooms impacting the lake are driven by phosphorus loads. Industrial and municipal wastewater point sources, diffuse nonpoint sources from agricultural lands and natural background sources all contribute to the overall phosphorus load flowing into the lake. Effectively remediating the lake's water quality will require novel approaches that aim to lower water pollution from both point and nonpoint sources.

Initiated in the United States in 1981, Water Quality Trading (WQT) is being touted as an ecologically and economically effective approach to reduce water pollution and improve water quality impaired from point and nonpoint sources. Implementing a WQT system in the Lake Winnipeg Basin may provide an opportunity to harness the power of markets to cost-effectively lower phosphorus emissions. Implementing a WQT framework within the Lake Winnipeg Basin will have to be carefully designed so that the supply and demand for water emission credits will lead to cost-effective phosphorus reductions trading.

The International Institute for Sustainable Development examined the potential application of a WQT system within the Lake Winnipeg Basin to lower phosphorus emissions impacting the lake. The WQT architecture presented for the Lake Winnipeg Basin consists of a multi-level watershed-based trading system. Inter sub-basin trading would allow for meeting an overall phosphorus load target for the lake while intra sub-basin trading would allow for meeting phosphorus load targets at the sub-basin outflows. The multi-level architecture is designed to simultaneously remediate Lake Winnipeg's water quality and enable regional and local integrated water resources management.