Water quality trading is becoming an increasingly important compliance option for utilities subject to new regulations on phosphorus, nitrogen, and temperature. Unlike traditional discharge permits, these new water quality parameters are influenced heavily by agriculture and urban runoff, setting the stage for holistic watershed solutions that were n o t previously possible. Since the Clean Water Act became law in the early 1970s, state and federal water quality agencies have focused most o f their attention on industrial and municipal wastewater -- to good effect. Significant public and private investments aimed at cleaning up polluted discharge spawned new industries and technologies, creating a remarkable improvement in many of the country's rivers, lakes, and streams. These days, the raw sewage, chemicals, heavy metals, and other pollutants that catalyzed the Clean Water Act are largely contained. But new pollutants of concern, generally nontoxic pollutants influenced significantly by nonpoint source activities, are forcing the industry and agencies to look at practical watershed-based approaches for compliance.