You know how sometimes you throw things away that you don't want anymore? Like broken toys or empty juice boxes? Well, cities and towns have big places where they put all that trash called landfills.
But landfills can only have a certain amount of trash in them before they get too full and start to cause problems. So, the government made a rule called a landfill allowance that says how much trash can go in a landfill each year.
But some towns make more trash than others, so some towns might use up their whole landfill allowance before the year is over. That means they can't throw any more trash away until the next year.
Here's where the trading scheme comes in. If one town uses less than their landfill allowance, they can sell their extra allowance to a town that has already used up their allowance. That way, the town that used up all their allowance can still throw away trash and the town that used less than their allowance can make some extra money.
It's kind of like if you have extra candy and your friend didn't get any, you can give some to your friend so everyone is happy. Except instead of candy, it's landfill space.