Research FrameworkResearch FrameworkAgricultural non-point pollution (ANP) is proving to be an Agricultural non-point pollution (ANP) is proving to be an exceptionally difficult problem to solve:exceptionally difficult problem to solve:

Conventional cost-share approaches are expensive Conventional cost-share approaches are expensive and seem to have fallen short of water quality goals. and seem to have fallen short of water quality goals. Additional regulation of farmers would be Additional regulation of farmers would be politically difficult.politically difficult.Water quality trading may provide some relief but Water quality trading may provide some relief but it is complex and not widely implemented.it is complex and not widely implemented.

Our Field ExperimentOur Field ExperimentIn our experiment we ask:In our experiment we ask:

DoesDoes continued water quality improvement require a radical continued water quality improvement require a radical realignment of institutions and roles? realignment of institutions and roles?

With this question in mind we are testing if farmersWith this question in mind we are testing if farmers located in Cullers Run, WV are willing and able to located in Cullers Run, WV are willing and able to respond to economic incentives that make water quality respond to economic incentives that make water quality and quantity and quantity commodities that commodities that farmers can “produce”. farmers can “produce”. This approach raises a This approach raises a number of technical number of technical challenges like how high challenges like how high payments should be, how payments should be, how is water quality factored is water quality factored in, and how can in, and how can payments be estimated payments be estimated to form a budget. to form a budget. These have been discussed These have been discussed elsewhere (Maille and Collins, forthcoming). The right elsewhere (Maille and Collins, forthcoming). The right hand side of this poster presents how we addressed a more hand side of this poster presents how we addressed a more fundamental set of challenges, namely, fundamental set of challenges, namely, how can how can opportunities be created to induce additional water quality opportunities be created to induce additional water quality improvements?improvements?

Selected BibliographySelected BibliographyBreetz et al., ‘Trust and Communication: Mechanisms for Increasing Farmers’ Participation in Water Quality Trading’, Breetz et al., ‘Trust and Communication: Mechanisms for Increasing Farmers’ Participation in Water Quality Trading’,

Land Economics, 81, 2005, pp. 170-90.Land Economics, 81, 2005, pp. 170-90.

Isik, H.B. and B. Sohngen, ‘Performance-Based Voluntary Group Contracts for Nonpoint Source Pollution’, Prepared forIsik, H.B. and B. Sohngen, ‘Performance-Based Voluntary Group Contracts for Nonpoint Source Pollution’, Prepared for

the American Agricultural Economics Association Annual Meeting, July 27-30, Montreal, Canada, 2003.the American Agricultural Economics Association Annual Meeting, July 27-30, Montreal, Canada, 2003.

Maille, P., and A. Collins, ‘Farmers as Producers of Clean Water: A Field Experiment’ in Maille, P., and A. Collins, ‘Farmers as Producers of Clean Water: A Field Experiment’ in Water, Agriculture and Water, Agriculture and

Sustainable Well-beingSustainable Well-being, Eds. U. Pascual, A. Shah, J. Bandyopadhyay. Oxford University Press: Delhi, India, forthcoming., Eds. U. Pascual, A. Shah, J. Bandyopadhyay. Oxford University Press: Delhi, India, forthcoming.

Millock, K. and F. Salanie, ‘Nonpoint Source Pollution When Polluters Might Cooperate. Topics in Economic Analysis Millock, K. and F. Salanie, ‘Nonpoint Source Pollution When Polluters Might Cooperate. Topics in Economic Analysis

and Policy’, 5(1), Article 12, Berkeley, CA: Berkeley University Press, 2005.and Policy’, 5(1), Article 12, Berkeley, CA: Berkeley University Press, 2005.

Poe et al., ‘Exploring the Performance of Ambient-Based Policy Instruments when Nonpoint Source Polluters Can Cooperate’, Poe et al., ‘Exploring the Performance of Ambient-Based Policy Instruments when Nonpoint Source Polluters Can Cooperate’,

American Journal of Agricultural Economics, 86, 2004, pp. 1203-10.American Journal of Agricultural Economics, 86, 2004, pp. 1203-10.

Ribaudo et al., ‘Economics of Water Quality Protection from Nonpoint Sources: Theory and Practice, Report Ribaudo et al., ‘Economics of Water Quality Protection from Nonpoint Sources: Theory and Practice, Report

Number AER782’, Washington DC: Economic Research Service, US Department of Agriculture, 1999.Number AER782’, Washington DC: Economic Research Service, US Department of Agriculture, 1999.

Romstad, E., ‘Team Approaches in Reducing Nonpoint Source Pollution’, Ecological Economics, 47, 2003, pp. 71-78.Romstad, E., ‘Team Approaches in Reducing Nonpoint Source Pollution’, Ecological Economics, 47, 2003, pp. 71-78.

Segerson, K., ‘Uncertainty and Incentives for Nonpoint Pollution Control’, Journal of Environmental EconomicsSegerson, K., ‘Uncertainty and Incentives for Nonpoint Pollution Control’, Journal of Environmental Economics

and Management, 15, 1988, pp. 87-98.and Management, 15, 1988, pp. 87-98.

Sohngen, B. and M.A. Taylor, ‘An Investigation into the Potential to Link Voluntary Incentive Payments to Water Sohngen, B. and M.A. Taylor, ‘An Investigation into the Potential to Link Voluntary Incentive Payments to Water

Quality Performance’, Presentation at the Midwest Economics Association Annual Meeting, March 9, Quality Performance’, Presentation at the Midwest Economics Association Annual Meeting, March 9,

Milwaukee, WI, 2005.Milwaukee, WI, 2005.

Vossler et al., ‘Communication and Incentive Mechanisms Based on Group Performance: An Experimental StudyVossler et al., ‘Communication and Incentive Mechanisms Based on Group Performance: An Experimental Study

of Nonpoint Pollution Control’, Economic Inquiry, 44, 2006, pp. 599-613.of Nonpoint Pollution Control’, Economic Inquiry, 44, 2006, pp. 599-613.

Actions and OutcomesActions and OutcomesWhat We DidWhat We Did Opportunities CreatedOpportunities Created Observed/Anticipated OutcomesObserved/Anticipated Outcomes

Farmers are paid Farmers are paid for water flowing for water flowing from Cullers Run.from Cullers Run.

Farmers receive limited Farmers receive limited property rights to water,property rights to water, thereby creating a quasi-thereby creating a quasi- private good.private good.

Fifteen households farming about 41% of the agricultural land Fifteen households farming about 41% of the agricultural land in the watershed are participating.in the watershed are participating.

Farming is strengthened by providing an additional income Farming is strengthened by providing an additional income producing opportunity. producing opportunity.

Payments are madePayments are madeto participating to participating farmers as a group.farmers as a group.

A team approach among A team approach among watershed farmers towards watershed farmers towards nitrate-N abatement isnitrate-N abatement is created. This contrasts created. This contrasts sharply with conventionalsharply with conventional cost-share wherecost-share where conservation agents workconservation agents work with individual farmers. with individual farmers.

Farmers are recruiting non-participating farmers located in Farmers are recruiting non-participating farmers located in areas suspected of being large discharge sources for areas suspected of being large discharge sources for

nitrate-N. nitrate-N. Farmers have developed a payment allocation scheme that Farmers have developed a payment allocation scheme that

provides cash to participating farmers while maintaining a provides cash to participating farmers while maintaining a fund to compensate for abatement costs. fund to compensate for abatement costs.

Local informal institutions and such as moral suasion, land Local informal institutions and such as moral suasion, land stewardship, and mutual support are brought to bear stewardship, and mutual support are brought to bear directly on ANP. directly on ANP.

Local knowledge is put to use in ANP abatement decisions.Local knowledge is put to use in ANP abatement decisions.

Payments are based Payments are based on water quantity on water quantity and quality (nitrate-and quality (nitrate-N) measurements N) measurements taken at the base of taken at the base of the watershed. the watershed.

Farmers are solely Farmers are solely responsible for determining responsible for determining the appropriate nitrate-N the appropriate nitrate-N abatement actions, rather abatement actions, rather than being responsible forthan being responsible for conforming to provisions conforming to provisions of a cost-share contract.of a cost-share contract.

Farmers have requested watershed wide water quality sampling Farmers have requested watershed wide water quality sampling

to help them pin point areas for nitrate-N abatement. to help them pin point areas for nitrate-N abatement. One farmer has initiated cost-share support for a manure shed One farmer has initiated cost-share support for a manure shed

as a result of information gained from watershed wide water as a result of information gained from watershed wide water quality sampling.quality sampling.

Allows farmers to consider least-cost abatement practices. Allows farmers to consider least-cost abatement practices. Brings to bear all of farmers’ abilities as land managers.Brings to bear all of farmers’ abilities as land managers.

Peter Maille, PhD Candidate Peter Maille, PhD Candidate

Dr. Alan Collins, Professor Dr. Alan Collins, Professor

Agricultural & Resource Economics Agricultural & Resource Economics

West Virginia UniversityWest Virginia University

Controlling Pollution with Opportunities, not RegulationsControlling Pollution with Opportunities, not Regulations2008 USDA-CSREES National Water Conference, February 3-7, 2008, Sparks, Nevada2008 USDA-CSREES National Water Conference, February 3-7, 2008, Sparks, Nevada

Funded by USDA/CSREES Funded by USDA/CSREES

National Research InitiativeNational Research Initiative

Project number 10009381Project number 10009381