Wastewater Reuse, an Opportunity to Expand Nitrogen Discharge Permit Markets

Water quality trading (WQT) is an economically incentive-based strategy that focuses on finding the optimal discharge permit market for surface water quality management. The amounts of traded discharge permits determine the interactions of emission sources in the market. Pollutantsthat are able to provide extra permits can satisfy the demands of other participants for credits. Finding appropriate permit sellers and buyers depends on their marginal costs, enthusiasm for participating in the market and the impacts on the quality of checkpoint for waste load allocation (WLA). It was recommended that the feasibility and cost-effectiveness of WQT should be analyzed in advance for practice. This needsto estimate the projected loads, environmental standard limits, the incremental and total abatement costs, and finally to optimize WLA. In addition, the assignment of total maximum daily loads (TMDLs) is required. This can be carried out through the simulation methods. However, TMDLs and WLAs with focus on limiting total nitrogen (TN) may be different to the phosphorous or biochemical oxidation demand (BOD). Therefore, the outcomes of WQT may be dependent on different factors such as the spatial location of pollutants, discharge loads, river self remediation, and economical and environmental conditions. All emphasizes on this fact that WLA using WQT requires analytical studies in different cases. This research primarily aims atfinding the optimal WLA in the downstream of Sefidrud in which the trading discharge permits (TDP) based on TN may qualify the pollutantsfor market interactions. It intends to assess the feasibility of WQT policy and compares the analytical results to the case of Gharesoo River. Finally, the effectiveness of integrating wastewater reclamation with TDP is introduced as a solution and compared with the results of Gharesoo River.
The study area is limited to the downstream catchment of Sefidrud in which it starts at the spillway of Sangar Reservoir at headwater. This ends up to the Caspian Sea after 55 km length. Here, the main pollutantsare identified as domestic, agricultural and industrial sources. This area receives the effluents of 10 point sources and rice farm lands. The flow rates and the projected TN load (kg/day) discharged to the surface water are estimated using the export coefficients, typical concentrations of TN and the statistical reports of their discharges as for the Gharesoo River. These were simulated by Qual2kw and the terminus point is the checkpoint. TMDLs are calculated by limiting TN to 4.5 mg/L at checkpoint. The impacts of discharge load reduction incurred by emission sources are also determined through the sensitivity analysis and normalized as previous studies.
This research addressesthe feasibility of nitrogen discharge permit market in Sefidrud and compares its effectiveness to the Gharesoo River. For this purpose, in the first scenario, the outcomes of conventional TDP policy are calculated and in the second scenario, its integration of wastewater reclamation market is examined.
The simulation results reveal that the concentrations of total and organic nitrogen can be reduced from 10 and 6.6 mg/L at checkpoint to 4.5 and 1.4 mg/L, respectively. This is conducted using the TMDL policy. This improvement may totally cost 70 billion Rials in a year in the catchment. In this regard, if the wastewater treatment operators appropriately use the secondary units, it can be expected that the classification of river based on water quality index promotes one degree.
In order to study the feasibility of conventional TDP, the WLA is determined using the typical procedure outlined by previous studies. Allocation ofabatement duties to the pollutantswith lower marginal costs as permit sellers may decrease the annual TN abatement costs about 1340 million Rials. It only saves 2% in comparison with TMDL approach and may not receive significant outcomes. In contrary, the results of TDP in Gharesoo River approved its economical efficiency. Here, total savings may exceed 35%. This is discussed as a matter of difference in the total nitrogen discharged between the domestics and agricultural users. The ratios of nitrogen loads in domestic effluent to the agricultural drainage are, respectively, 0.58 and 0.71 for Sefidrud and Gharesoo Rivers. This ratio is introduced as an index to compare the feasibility of nitrogen discharge permit market. Since the point sources are typically assigned as permit sellers to supply credits for non-point sources, this index may imply that whether the trading has sufficient permits. Studying these two cases for nitrogen permit market indicatedthat in lower ratios, the market may find more limits to supply credits. In this regard, it is concluded that the success of market does not rely on the expansion of catchments. It mainly depends on the existence of centralized point-sources and the agricultural land uses. It is also confirmed that the balance between permit demand and supply is the key of a successful trade.
In the second scenario, this study introduces an integration of TDP and wastewater reclamation market. This intends to find an economical solution to increase the credits for trading. If the reclaimed water is used for irrigation of crop lands, about 15 credits may be added to the conventional trading. In addition, the necessity of nitrogen removal would be reduced. This is due to the fact that the agricultural users require the nutrient contents of reclaimed water and simultaneously domestic wastewater treatment plants prefer not to remove nitrogen to sell their effluents with higher values. Consequently, marginal nitrogen abatement costs are dramatically reduced. In this regard, total cost savings would be increased to 57% and 63% in Sefidrud and Gharesoo catchments, respectively. It shows that the integration of markets not only provides more flexibility to the system but also makes markets promising as an economical solution.
In the first scenario, the primary price of permits can only be determined on 150 thousands Rials. Some stakeholders and dischargers may lose their economical incentives for participation in TDP. As a result, they would leave the market and make the predicted interactions fail. In order to increase the robustness of conventional market, it is recommended that point-sources should use discount factor about 15 to 25% for credits. In this condition, the equity in benefits may increase and make market more stable. However, the shadows of unstable and breakable market turn this strategy into a challenging solution. Therefore, in the second scenario, the integration market is introduced. Regarding the analytical results, it is understood that market would be changed into a more flexible strategy that no longer is dependent on the permit price for stability. In contrary to the first scenario, the point sources are not obliged to use the discount factor. However, they would freely reduce the permit price to increase the economical incentives of the permit buyer (non-point source). It is claimed that in this scenario, the permits can be sold about 99% cheaper than the first scenario and simultaneously all sellers may use the maximum benefits obtained. These results have similarly been achieved in Gharesoo River as well.
Finally, it can be discussed that using the integrated reclaimed water and discharge permit market depends on the capabilities of wastewater treatment plants to supply permits enough in regard. In other words, a highly populated city is required in the study area to provide the secondary treated wastewater and its related permits for the integrated market. Therefore, some recent studies have introduced approaches in which they may find further flexibility and economical savings in the market. For example, using artificial aeration is recommended for small areas with permanent streams in which the dissolved oxygen and BOD concentration are the major quality problems of water. Here, the integrated market is able to fill the blanks for nitrogen control and reduce more abatement costs. The second approach is to identify the amounts of tradable permits through index like dissolved oxygen where multiple pollutants such as BOD and nitrogen have to be controlled simultaneously. For example, the dischargers who are not able to provide nitrogen limits should abate more BOD in their effluents to address DO limits instead. In TDP program, this approach can increase the flexibility for pollution abatement but has high uncertainty and complexity. This is recommended to be used only in small areas with limited non-point sources. Meanwhile, the integrated market can be associated with this approach and increase its outcomes. Third approach points to the fact that in trading between point-non point sources, the seasonal demands and supplies should be considered. Therefore, in large watersheds with high non point sources, using seasonal WLA may reduce the overall abatement costs and increase the equity. However, this depends on that wastewater treatment plants should be practically able to obey various WLA policies through different seasons. Consequently, designing operationally flexible tertiary treatment units is a key factor for successful seasonally integrated discharge permit and reclaimed water market. Therefore, it can be outlined that the integrated market can be combined with different technical or management based approaches but needsto be studied in advance. The selection of optimal alternative and also permit pricing mat require an analysis based on game theory approach.

This study concluded that water quality trading strategy is not necessarily an efficient and promising practice to manage all surface waters. It depends on how much stakeholders attain economical benefits to participate in this voluntary strategy;otherwise, it would be failed. In this case, for nitrogen discharge permit market, it is recommended that the reclaimed water is used for irrigation withhigh content of nutrients. Therefore, the obligations tohigh nitrogen abatement and its managementcosts would be decreased. This makes the conventional market change into a more flexible strategy that is almost independent onprimary permit price. As a consequence, the market shape turns into a free interaction with the lowest monitoring requirements. However, it requires further studies to analyze the details of interactions with respect to the variations of permit demands in time. In addition, the combination of different qualitative parameters such as BOD, TN and DO may change the economical outcomes.