This report describes the experience of Fox-Wolf Basin 2000, a nonprofit watershed alliance in Northeastern Wisconsin, in its pursuit of watershed-based trading as an innovative and cost-effective tool for water quality improvement. It examines the region's history of water quality problems and its efforts to identify and solve them. The report analyzes the legal context and economic opportunities for watershed-based trading in the Fox-Wolf Basin, including point and nonpoint source regulatory schemes, as well as control-cost information for both types of sources. Next, the report details the monitoring and modeling work the organization is undertaking in support of trading, including validation, calibration, and application of the state-of-the-art Soil and Water Assessment Tool. The report then describes preliminary work commenced in each basin toward establishment of total maximum daily loads (TMDLs) and the relationship of that process to watershed-based trading. The report concludes with a discussion of the obstacles to watershed-based trading that Fox-Wolf Basin 2000 has encountered thus far and the future efforts that the organization plans in order to overcome these obstacles and complete a trade.