ENVIRONMENTAL AND ECONOMIC DAMAGE CAUSED BY SEDIMENT FROM AGRICULTURAL NONPOINT SOURCES1

Environmental and economic damages caused by agricultural nonpoint source inputs of sediment and associated pollutants are examined. Widespread water quality problems are identified in lakes, rivers, and estuaries in agricultural areas, and billions of dollars of on-site and offsite costs result from this eroded soil every year. Some water bodies have been irretrievably damaged, and expensive rehabilitation programs are needed to remedy in-place water pollution problems if Clean Water Act goals are to be achieved. Unless effective abatement and rehabilitation programs are established, billions of dollars of benefits to future generations will not be realized as more waters become irretrievably damaged, and billions more will continue to be spent by government to treat symptoms of these sediment-related problems.     

POLICY OBJECTWES AND ECONOMIC INCENTWES FOR CONTROLLING AGRICULTURAL SOURCES OF NONPOINT POLLUTION1

In this paper, we review the physical characteristics of agricultural non point pollution and discuss the implications for setting appropriate pollution control objectives and designing incentive-based pollution control policies. First, we discuss that policy objectives must be designed carefully to ensure positive economic net benefits can be expected from pollution control. Next, we review several classes of incentives and recommend the use of design-based incentives (i.e., incentives based on variable input use, management practices, and land use) for controlling non point pollution. Cost-effectiveness requires that incentives elicit three types of responses from farmers: (1) use variable inputs at appropriate levels, (2) adopt appropriate management practices, and (3) make appropriate land use decisions at the extensive margin of production. If a set of incentives fails to induce the correct responses, the resulting runoff levels and hence ambient pollution levels and damages will be too large relative to policy goals. A review of existing programs suggests that greater program coordination and improved targeting of incentives are needed for further water quality improvements. Alternatively, properly designed market-based systems may be effective alternatives. These systems would reduce overall pollution control costs by allowing markets to allocate point source and non point source control costs more efficiently.     

OPTIMIZING NONPOINT SOURCE CONTROLS IN WATER QUALITY REGULATION1

ABSTRACT: A stochastic programming framework is developed to evaluate the economic implications of reliability criteria and multiple effluent controls on nonpoint source pollution. An integrated watershed simulation model is used to generate probability distributions for agricultural effluents in surface and ground water resulting from agricultural practices. Results from the planning model indicate that reliability and multiple effluent constraints significantly increase the cost of nonpoint controls but the effects vary by control alternative. The analysis indicates that an evaluation of multiple water quality objectives can be an important planning tool for designing nonpoint source controls for innovative programs to promote cost-effective water quality regulation.     

POINT‐NONPOINT SOURCE WATER QUALITY TRADING: A CASE STUDY IN THE MINNESOTA RIVER BASIN1

ABSTRACT: Contrary to the general trend of only a few actual trades occurring within point‐nonpoint source water quality trading programs in the United States, two trading projects in the Minnesota River Basin, created under the provisions of National Pollutant Discharge Elimination System (NPDES) permits, have generated five major trades and numerous smaller ones. In this paper, these two projects are described to illustrate their origins, implementation, and results. It was found that several factors contributed to the relatively high number of trades in these projects, including the offsetting nature of the projects (hence a fixed number of credits that the point sources were required to obtain), readily available information on potential nonpoint source trading partners, and an effectively internal trading scheme used by one of the two projects. It was also found that long term structural pollution control measures, such as streambank stabilization, offered substantial cost savings over point source controls. Estimates of transaction costs showed that the total costs of the trading projects were increased by at least 35 percent after transaction costs were taken into account. Evidence also showed that in addition to pollution reduction, these two trading projects brought other benefits to the watershed, such as helping balance environmental protection and regional economic growth.     

Where Did the Agricultural Nonpoint Source Trades Go? Lessons from Virginia Water Quality Trading Programs

Governmental agencies, nongovernmental organizations, and agricultural organizations promote water quality trading programs as an innovative policy to engage agricultural producers in conservation activities. Cost analyses suggest regulated sources can reduce compliance costs by purchasing agricultural nonpoint source credits. Yet, such “point‐nonpoint” trades are rare. This article assesses the demand for agricultural nonpoint sources in well‐developed nutrient trading programs in Virginia for industrial and municipal wastewater treatment plants, municipal stormwater programs, and land developers. Evidence suggests nutrient trading programs in Virginia will not stimulate investments in pollutant reduction practices on working agricultural lands. The lack of demand for agricultural nonpoint source credits can be attributed to a substantial degree to the design features and incentives present in multiple overlapping regulatory programs. The legal setting that dampens regulated source demand for nonpoint source credits in Virginia is broadly representative of conditions found elsewhere in the United States.     

Nonpoint source water pollution abatement and the feasibility of voluntary programs

This article details a case study of a voluntary, decentralized institutional arrangement for nonpint source water pollution control used in the Root River watershed in southeastern Wisconsin. This watershed was chosen because of its mix of urban, agricultural, and urbanizing land uses. The project objectives were to monitor and draw conclusions about the effectiveness of a voluntary, decentralized institutional system, to specify deficiencies of the approach and suggest means to correct them, and to use the conclusions to speculate about the need for regulations regarding nonpoint source pollution control or the appropriateness of financial incentives for nonpoint source control. Institutional factors considered include diversity of land uses in the watershed, educational needs, economic conditions, personality, water quality, number of agencies involved, definition of authority, and bureaucratic requirements     

ECONOMIC INCENTIVES FOR AGRICULTURAL NONPOINT SOURCE POLLUTION CONTROL1

ABSTRACT. The limited success of command-and-control policies for reducing nonpoint source (NPS) water pollution mandated under the Federal Water Pollution Control Act (FWPCA) has prompted increased interest in economic incentive policies as an alternative control mechanism. A variety of measures have been proposed ranging from fairly minor modifications of existing policies to substantial revisions including watershed-wide polices that rely on economic incentives. While greater use of economic incentive policies, such as environmental bonds and point/nonpoint source trading is being advocated in the reauthorization of the CWA, the expected effects of individual proposals will be modest. The characteristics of NPS pollution, namely uncertainty and asymmetrical information, underscores that there is no single, ideal policy instrument for controlling the many types of agricultural NPS water pollution. Some of the usual incentive-based policies, such as effluent taxes, are not well suited to the task. Individual incentive policies proposed for the reauthorized CWA, such as pollution trading or deposit/refund systems, are not broadly applicable for heterogeneous pollution situations. Economic incentive policies may be appropriate in some cases, and command-and-control policies will be preferable in others and may in fact complement incentive policies.     

ECONOMIC EVALUATION OF RIPARIAN BUFFERS IN AN AGRICULTURAL WATERSHED1

ABSTRACT: This study determines the most cost effective spatial pattern of farming systems for improving water quality and evaluates the economic value of riparian buffers in reducing agricultural nonpoint source pollution in a Midwestern agricultural watershed. Economic and water quality impacts of alternative farming systems are evaluated using the CARE and SWAT models, respectively. The water quality benefits of riparian buffers are estimated by combining experimental data and simulated water quality impacts of fanning systems obtained using SWAT. The net economic value of riparian buffers in improving water quality is estimated by total watershed net return with riparian buffers minus total watershed net return without riparian buffers minus the opportunity cost of riparian buffers. Exclusive of maintenance cost, the net economic value of riparian buffers in reducing atrazine concentration from 45 to 24 ppb is $612,117 and the savings in government cost is $631,710. Results strongly support efforts that encourage farmers to develop or maintain riparian buffers adjacent to streams.     

FARMERS’ATTITUDES TOWARD GOVERNMENT INVOLVEMENT IN PREVENTING AGRICULTURAL NONPOINT SOURCE WATER POLLUTION1

ABSTRACT: Concern over the pollution of our lakes and streams has become a major issue in the United States. Sedimentation from sigricultural lands has been identified as a significant factor in water pollution. Some citizens suggest that government should force compliance with soil loss standards, while others suggest that we ask farmers to voluntarily comply. Related questions are “DO farmers think government should be involved in controlling erosion and protecting water quality?”“To what extent should government be involved?” What level of government should be involved? Federal? State? Local?“Why should pay for water quality projects?” Farmers from a small watershed in northeastern Indiana were interviewed before and after a major demonstration project. Their responses suggest that farmers feel that individual landowners should be responsible for controlling erosion and agricultural nonpoint source water pollution. However, over 60 percent of the study fanners indicated that the federal government should play an important role, in terms of both technical and financial assistance.     

Exploring Nontraditional Participation as an Approach to Make Water Quality Trading Markets More Effective

Water quality trading (WQT) has the potential to be a low‐cost means for achieving water quality goals. WQT allows regulated wastewater treatment plants (WWTPs) facing discharge limits the flexibility to either reduce their own discharge or purchase pollution control from other WWTPs or nonpoint sources (NPSs) such as agricultural producers. Under this limited scope, programs with NPSs have been largely unsuccessful at meeting water quality goals. The decision to participate in trading depends on many factors including the pollution control costs, uncertainty in pollution control, and discharge limits. Current research that focuses on making WQT work tends to identify how to increase participation by traditional traders such as WWTPs and agricultural producers. As an alternative, but complementary approach, we consider whether augmenting WQT markets with nontraditional participants would help increase the number of trades. Determining the economic incentives for these potential participants requires the development of novel benefit functions requiring not only economic considerations but also accounting for ecological and engineering processes. Existing literature on nontraditional participants in environmental markets tends to center on air quality and only increasing citizen participation as buyers. Here, we consider the issues for broadening participation (both buyers and sellers) in WQT and outline a multidisciplinary approach to begin evaluating feasibility.     

OPTIMAL PROFITS UNDER ENVIRONMENTAL CONSTRAINTS: IMPLICATIONS OF NUTRIENT AND SEDIMENT STANDARDS1

To reduce nonpoint source pollution from nutrient, chemical, and sediment runoff, a number of environmental policy standards have been proposed. Such standards could be used to reduce nonpoint source pollution from nutrient, chemical, and sediment runoff to impaired water bodies. State governments can use voluntary approaches to meet nonpoint source pollution reduction goals. However, the practices that lower net returns will not be voluntarily adopted by farmers. Crop rotations and tillage practices may help producers to comply with the environmental standards while minimizing losses in farm profits. This study compares runoff from crop rotation practices and conventional continuous row cropping systems in Mississippi. The results are compared for different tillage systems in order to examine robustness of results. Nutrient runoff and sediment runoff are simulated using the Erosion Productivity Impact Calculator (EPIC). Sensitivity analysis of the sediment and nitrate reductions at 15 percent, 25 percent, and 35 percent are conducted. Under these scenarios, net returns are optimized under environmental constraints, and the marginal cost of sediment reduction ranges from US$1.61 to US$9.63 per ton depending on soil conditions, while the corresponding nitrate and phosphorus reductions costs range from US$1.21 to US$7.08 per kg and from US$0.09 to US$31.91, respectively. The empirical results from this study indicate that a nitrate reduction policy is relatively less costly than a sediment reduction policy. The results also demonstrate the importance of geophysical conditions and policy costs, which vary across regions.     

Ecological perspective on water quality goals

The central assumption of nonpoint source pollution control efforts in agricultural watersheds is that traditional erosion control programs are sufficient to insure high quality water resources. We outline the inadequacies of that assumption, especially as they relate to the goal of attaining ecological integrity. The declining biotic integrity of our water resources over the past two decades is not exclusively due to water quality (physical/chemical) degradation. Improvement in many aspects of the quality of our water resources must be approached with a much broader perspective than improvement of physical/chemical conditions. Other deficiencies in nonpoint pollution control programs are discussed and a new approach to the problem is outlined.     

Economic and Ecological Rules for Water Quality Trading1

Horan, Richard D. and James S. Shortle, 2011. Economic and Ecological Rules for Water Quality Trading. Journal of the American Water Resources Association (JAWRA) 47(1):59‐69. DOI: 10.1111/j.1752‐1688.2010.00463.x Abstract: Emissions trading in textbook form uses markets to achieve pollution targets cost‐efficiently. This result is accomplished in markets that regulators can implement without knowing pollution abatement costs. The theoretical promise of emissions trading, along with real‐world success stories from air emissions trading, has led to initiatives to use trading for water pollution control. Yet, trading, particularly when it involves nonpoint sources of pollution, requires significant departures from the textbook concept. This paper explores how features of water quality problems affect the design of markets for water pollution control relative to textbook emissions markets. Three fundamental design tasks that regulators must address for pollution trading to achieve an environmental goal at low cost are examined: (1) defining the point and nonpoint commodities to be traded, (2) defining rules governing commodity exchange, and (3) setting caps on the commodity supplies so as to achieve an environmental target. We show that the way in which these tasks are optimally addressed for water quality markets differs significantly from the textbook model and its real‐world analogs. We also show that the fundamental appeal of emissions trading is lost in the case of realistic water quality markets, as market designs that reduce the costs of achieving water quality goals may no longer be implementable without the regulatory authority having information on abatement costs.     

SOIL CONSERVATION PRACTICES AND WATER QUALITY: IS EROSION CONTROL THE ANSWER?1

ABSTRACT: This paper is a computer simulation analysis of an agricultural nonpoint pollution problem. Computer modeling is a universally applicable tool that can be used for establishing the linkages between and the quality of agricultural runoff in both surface and subsurface flow. The tradeoffs between the costs of soil conservation practices and water quality are reported, and the economic implications of such tradeoffs are discussed. Soil and nutrient losses resulting from crop production practices are analyzed using a field-scale computer simulation model (CREAMS). No-till planting, reduced tillage, and sod waterway systems are more cost effective than other practices for controlling soil and nutrient runoff losses. Nitrate leaching losses are increased slightly by most soil conservation practices. Terrace systems and permanent vegetative cover impose the greatest societal cost for water quality protection. Public cost sharing and tax incentives encourage farmers to adopt expensive structural practices, and policies are needed to get cost-effective practices implemented on critical acreage. Extensive treatment of land is necessary for agricultural best management practices (BMPs) to significantly improve water quality in areas that are intensively farmed.     

Landscape Planning for Agricultural Nonpoint Source Pollution Reduction I: A Geographical Allocation Framework

Agricultural nonpoint source pollution remains a persistent environmental problem, despite the large amount of money that has been spent on its abatement. At local scales, agricultural best management practices (BMPs) have been shown to be effective at reducing nutrient and sediment inputs to surface waters. However, these effects have rarely been found to act in concert to produce measurable, broad-scale improvements in water quality. We investigated potential causes for this failure through an effort to develop recommendations for the use of riparian buffers in addressing nonpoint source pollution in Wisconsin. We used frequency distributions of phosphorus pollution at two spatial scales (watershed and field), along with typical stream phosphorus (P) concentration variability, to simulate benefit/cost curves for four approaches to geographically allocating conservation effort. The approaches differ in two ways: (1) whether effort is aggregated within certain watersheds or distributed without regard to watershed boundaries (dispersed), and (2) whether effort is targeted toward the most highly P-polluting fields or is distributed randomly with regard to field-scale P pollution levels. In realistic implementation scenarios, the aggregated and targeted approach most efficiently improves water quality. For example, with effort on only 10% of a model landscape, 26% of the total P load is retained and 25% of watersheds significantly improve. Our results indicate that agricultural conservation can be more efficient if it accounts for the uneven spatial distribution of potential pollution sources and the cumulative aspects of environmental benefits.     

Continuing Issues in the Limitations of Pesticide Use in Developing Countries

The rationale for pesticide use in agriculture is that costs associated with pesticide pollution are to be justified by its benefits, but this is not so obvious. Valuing the benefits by simple economic analysis has increased pesticide use in agriculture and consequently produced pesticide-induced “public ills.” This paper attempts to explore the research gaps of the economic and social consequences of pesticide use in developing countries, particularly with an example of Nepal. We argue that although the negative sides of agricultural development, for example- soil, water, and air pollution; pest resistance and resurgence; bioaccumulation, bio-magnification; and loss of biodiversity and ecosystem resilience caused by the use of pesticides in agriculture, are “developmental problems” and are “unintentional,” the magnitude may be increased by undervaluing the problems in the analysis of its economic returns. Despite continuous effort for holistic system analyses for studying complex phenomena like pesticides impacts, the development within the academic science has proceeded in the opposite direction that might have accelerated marginalization of the third world subsistence agricultural communities. We hypothesize that, if these adversities are realized and accounted for, the benefits from the current use of pesticides could be outweighed by the costs of pollution and ill human health. This paper also illustrates different pathways and mechanisms for marginalization. In view of potential and overall negative impacts of pesticide use, we recommend alternative ways of controlling pests such as community integrated pest management (IPM) along with education and training activities. Such measures are likely to reduce the health and environmental costs of pesticide pollution, and also enhance the capabilities of third world agricultural communities in terms of knowledge, decision making, innovation, and policy change.     

PLANNING DIFFUSE POLLUTION CONTROL: AN ANALYTICAL FRAMEWORK1

ABSTRACT: Determination of an optimal nonpoint pollution control strategy demands information relating to (1) costs of pollutant reduction, (2) transport of pollutants, (3) water quality impact of pollutants, and (4) the economic impact of water quality changes. This paper briefly reviews the literature in each of these areas and suggests an analytical framework useful in the development of an optimal nonpoint pollutant control strategy.     

Efficacy of natural wetlands to retain nutrient, sediment and microbial pollutants

Wetlands can improve water quality through natural processes including sedimentation, nutrient transformations, and microbial and plant uptake. Tailwater from irrigated pastures may contribute to nonpoint source water pollution in the form of sediments, nutrients, and pathogens that degrade downstream water quality. We examined benefits to water quality provided by a natural, flow-through wetland and a degraded, channelized wetland situated within the flood-irrigation agricultural landscape of the Sierra Nevada foothills of Northern California. The non-degraded, reference wetland significantly improved water quality by reducing loads of total suspended sediments, nitrate, and Escherichia coli on average by 77, 60, and 68%, respectively. Retention of total N, total P, and soluble reactive P (SRP) was between 35 and 42% of loads entering the reference wetland. Retention of pollutant loads by the channelized wetland was significantly lower than by the reference wetland for all pollutants except SRP. A net export of sediment and nitrate was observed from the channelized wetland. Decreased irrigation inflow rates significantly improved retention efficiencies for nitrate, E. coli, and sediments in the reference wetland. We suggest that maintenance of these natural wetlands and regulation of inflow rates can be important aspects of a best management plan to improve water quality as water runs off of irrigated pastures.     

ESTIMATING THE BENEFITS OF PHOSPHORUS POLLUTION REDUCTIONS: AN APPLICATION IN THE MINNESOTA RIVER1

ABSTRACT: In order to make economically efficient decisions about water quality improvements, data on both the costs and benefits of these improvements is needed. However, there has been little research on the benefits of reducing phosphorus pollution which implies that policy decisions are not able to make the comparison of costs and benefits that is essential for economic efficiency. This research attempts to ameliorate this situation by providing an estimate of the benefits of a 40 percent reduction in phosphorus pollution in the Minnesota River. A 1997 mail survey gathered information on Minnesota residents'use of a recreational site on the Minnesota River, the Minnesota Valley National Wildlife Refuge, and their willingness to pay for phosphorus reductions in the Minnesota River. The random effects probit model used in this research to investigate household willingness to pay for phosphorus pollution reductions in the Minnesota River incorporates recent innovations in nonmarket valuation methodology by using both revealed and stated preference data. This model estimated annual household willingness to pay for phosphorus reductions in the Minnesota River at $140. These results may be used in combination with cost estimates to determine the economic efficiency of phosphorus clean up.     

我国农业非点源污染成因及解决对策

农业非点源污染目前已成为全球水污染的主要来源。对我国农业非点源污染成因的分析表明:农药、化肥的大量使用,不同灌溉方式、生产生活废弃物和规模化畜禽养殖等与农业非点源污染的形成之间均有密切的关系,应从农田径流控制、小流域综合治理、发展生态农业等方面开展农业非点源污染防治。实施农田养分最佳管理技术、开发农业非点源污染管理应用软件、完善农业生态补偿机制将成为我国农业非点源污染研究的发展趋势。