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Minnesota River board supports market incentives for conservation

MONTEVIDEO -- Minnesota is looking at giving market-based economics a role in cleaning up the state's waters.

The Minnesota River Board hopes to help shape the rules for it. Members of the Minnesota River Board agreed Monday in Montevideo to forward a list of suggestions on rules the counties would favor for a proposed conservation market. The Minnesota River board -- a joint powers board representing most of the counties in the Minnesota River basin -- is helping launch a nonprofit Conservation Marketplace of Minnesota.

The Marketplace hopes to serve as a broker to make possible deals between polluters looking to buy credits, and farmers and others who could provide them, according to Susie Carlin, Minnesota River Board assistant director.

Carlin said a conservation marketplace could offer financial opportunities for farmers in the basin. They would earn credits by adopting practices that reduce phosphorus or other sources of pollution to the river. In turn, they could sell those credits to factories, wastewater treatment plants or other entities that are looking to reduce their discharge of those pollutants to meet clean water regulations.

Minnesota has tried the approach on a limited basis. The best known example is Rahr Malting. It was allowed to build its own wastewater treatment plant and discharge into the Minnesota River in 1997 only after buying credits from landowners for practices that reduce nonpoint-source pollution from reaching the river.

As an example of how it might work here, Carlin said an existing wastewater treatment plant not meeting the state's new phosphorus limits in the Minnesota River basin could buy credits from farmers equal to the number of pounds of the nutrient it is discharging above the permit limit. The wastewater plant could stave off the need to make a major, multimillion-dollar investment until it is in a better financial position to do so.

Yet the improved land practices would serve to reduce the total phosphorus reaching the river and improve water quality.

The financial incentives may also make it possible for farmers to adopt conservation practices that do not qualify under federal or state programs, yet provide real benefits to the environment. Turning marginal cropland into pasture, and allowing it to be grazed, could provide credits and environmental benefits while also keeping the land in production, she pointed out.

The Minnesota Pollution Control Agency is currently in the process of developing rules for a conservation marketplace. The River Board members want the rules to allow greater flexibility than now proposed. They want the rules developed so that a number of farmers could aggregate their credits and sell them through a broker such as the Conservation Marketplace of Minnesota. The current, proposed rules call mainly for direct, one-on-one sales between polluters and those with credits, explained Carlin.

Most of all, she said they'd like the rules to specifically allow for brokers to play a role in the marketplace. Currently, the rules do no make any mention of possible intermediaries who could arrange for sales.

The current process toward developing a conservation marketplace in Minnesota is on track for adoption early next year, with the possibility of going to the governor's office for approval in February.

Shannon Fisher, Minnesota River Board director, said its ultimate approval will depend on the next governor being supportive of the idea. Right now, he believes that two of three major candidates for governor would support it.