South Florida continues to become increasingly developed and urbanized. My exploratory study examines connections between land use and water quality. The main objectives of the project were to develop an understanding of how land use has affected water quality in Miami-Dade canals, and an economic optimization model to estimate the costs of best management practices necessary to improve water quality. Results indicate Miami-Dade County land use and water quality are correlated. Through statistical factor and cluster analysis, it is apparent that agricultural areas are associated with higher concentrations of nitrogen, while urban areas commonly have higher levels of phosphorous than agricultural areas. The economic optimization model shows that urban areas can improve water quality by lowering fertilizer inputs. Agricultural areas can also implement methods to improve water quality although it may be more expensive than urban areas. It is important to keep solutions in mind when looking towards future water quality improvements in South Florida.

Lake Okeechobee is the largest lake in the southeastern United States and is a central component of the hydrology and environment of the Everglades ecosystem in South Florida. The natural state of the lake has been degraded as wetlands and natural habitats in the Lake Okeechobee watershed have been replaced with farms, urban areas, and dairy operations. Excessive phosphorus loadings from these diverse sources have been identified as the leading causes of the lake’s impairment. For more than four decades, many resources have been allocated to regional and local restoration efforts to reduce phosphorus loadings into the lake. However, phosphorus loadings have not decreased and the recovery of the lake could take more time, particularly with today’s limited local budgets. Market-based instruments, such as water quality trading programs, have emerged over the past decades to cost-effectively achieve water quality objectives in impaired watersheds. The main objective of this dissertation was to assess the environmental and economic benefits of implementing a phosphorus trading program in Lake Okeechobee watershed, compared to a conventional command-and-control approach. A comprehensive literature overview of nationally and internationally implemented trading programs was conducted to highlight advantages and challenges of these programs towards achieving water quality goals, and to outline the essential elements of a successful program. Furthermore, a modeling framework, integrating a hydrologic-water quality model with an economic model, was developed to assess the potential cost savings that trading might offer over a command-and-control approach. The modeling framework was applied in three priority basins of the Lake Okeechobee watershed. In each case, while developing trading scenarios to achieve phosphorus load reduction targets, the trading program was less expensive than the conventional command-and-control approach. This research provided the foundation for stakeholders to better understand whether water quality trading has the potential to work in the Lake Okeechobee watershed and to facilitate the development of a pilot program. In addition, it offered some insights on the potential economic opportunities that pollution sources would have by participating in the trading program. The modeling framework developed in this dissertation could facilitate the assessment of future water quality trading programs in other watersheds.