Applying Water Quality Trading Experience to Colorado Senate Bill 24–037

ABSTRACT

Colorado Senate Bill 24–037 (SB24‐037) directs the University of Colorado and Colorado State University, with the Colorado Department of Public Health and Environment (CDPHE), to evaluate the feasibility of alternative compliance programs using green infrastructure (GI) and to establish up to three pilot projects. This technical note examines how water quality trading (WQT)—a regulatory framework allowing NPDES point sources to meet permit obligations through offset credits—implemented in other states can inform SB24‐037 pilot design. We define GI and nature‐based solutions in Colorado's context and develop three pilot archetypes spanning the state's compliance pressures, relevant out‐of‐state analogues, and the financing structures used in US WQT practice: riparian restoration for temperature compliance, nutrient offset trading in urbanizing watersheds, and stormwater retention credit banking. Drawing on Oregon temperature trading, Wisconsin and Chesapeake Bay nutrient trading, and the DC stormwater retention credit program, we find WQT can provide a regulatory pathway for GI‐based compliance, but realistic expectations are essential: most US trading programs have generated fewer trades than initially projected. SB24‐037 pilots should prioritize clear permit integration, conservative credit quantification, intermediate monitoring indicators, multi‐year maintenance funding, and explicit accounting for interactions with existing conservation subsidy programs.