Water quality credits are a green finance mechanism which support sustainable water management and aquatic habitat restoration by encouraging water-efficient technologies and practices. They act as an incentive to stakeholders to mitigate the environmental impact on water quality and use. Such mitigation can include converting land to semi-natural wetlands, woodlands or grassland habitats. This approach can generate positive nutrient impacts to wider ecosystems when designed and managed properly.
Much like carbon credits, water credits can be generated by stakeholders who demonstrate the appropriate management of water resources. Landowners within a certain watershed who implement conservation and restoration practices to lower pollutants are compensated for their efforts. Water quality trading allows more flexible and cost-effective approaches to reducing pollution.
They can then be sold to entities such as water utilities, developers or businesses as a way of offsetting and mitigating the nutrient pollution created by their project or activities. Mitigation initiatives include wetland restoration and aquatic habitat management. This can be either on-site or within ecosystems as close as possible to those affected by project development.
