In recent years, there has been growing interest in developing watershed-based trading as a regulatory tool to meet water quality goals. The incentives driving that interest are generally twofold. On one level, wastewater treatment operations are increasingly looking for cost-effective alternatives to expensive capital investments in their plants in order to meet treatment demands. On a second level, society is seeking ways to correct ongoing water quality degradation that cannot be exclusively addressed by treatment plants. Research shows that 40% of the nation's waters remain unsafe for fishing and swimming, and a major source of the problem is nonpoint source runoff. Trading is widely viewed as a win-win option to cooperatively meet both demands.