October 20, 2000

The Honorable Governor Tommy G. Thompson
State of Wisconsin

Secretary George F. Lightbourn

Department of Administration

Mr. Russel Brock, Chair

Land and Water Conservation Board

Dear Gentlemen:

Enclosed is the third annual report of the progress and status of the pilot projects being conducted under the "trading of water pollution credits" statute. As required by s. 283.84(5), Stats, (1977 Act 27), the Department is to annually submit this report to the Governor, the Secretary of Administration and the Land and Water Conservation Board. The report details the progress made in achieving water quality goals and coordinating state and local efforts to improve water quality as it relates to the trading of pollution credits.

As described in this report, primary watershed based trading efforts continue to focus on each of the pilots. Several communities around the state are actively pursuing a watershed based trade. Information and education efforts continue as an important part of the pilots. During the last year, significant progress was made answering the question: "Is watershed based trading an environmentally beneficial, cost effective approach to improving water quality?" Implementation of trades are anticipated over the next year.

Watershed based pollutant trading legislation has provided the Department with the opportunity to study, and potentially implement, watershed based trades. Thank you for your interest and continued financial support of this innovative tool for achieving cost-effective water pollution control. Your support enables us to continue our evaluation and development of a watershed-based trading program.

Sincerely,

George E. Meyer

Secretary