Abstract for: Dynamic Simulation of a Thermal Water Quality Trading Program and Implications for Policy Design

This paper describes the Riparian Shading Simulator, a system dynamics model of a thermal water quality trading program, in which point sources are allowed to offset their effluent by paying landowners to plant shade trees. The model is used to explore consequences of policy designs with varying trading ratios and upstream-only rules. Results from the model can be used to help choose a trading ratio that balances the goals of enhancing ecosystem services and reducing costs. The model also indicates that policy makers should be careful about using upstream-only rules, since they can potentially cause shading to be concentrated in upstream areas and contribute to downstream hotspots.