1. Nonpoint Source Pollution Reductions – Estimating a Tradable Commodity Allen R. Dedrick Associate Deputy Administrator Natural Resources & Sustainable Agricultural Systems Agricultural Research Service U. S. Department of Agriculture

2. Research Support for Environmental Credit Trading Allen R. Dedrick Associate Deputy Administrator Natural Resources & Sustainable Agricultural Systems Agricultural Research Service U. S. Department of Agriculture

3. Environmental credit trading programs Market-based mechanisms for allocating pollutant reductions among different sources Market-based mechanisms for allocating pollutant reductions among different sources Offer the lowest-cost methods to reduce net emissions Offer the lowest-cost methods to reduce net emissions

4. Role of agricultural science in developing trading systems Water quality and quantity included among goals Water quality and quantity included among goals Market-based solutions should be developed Market-based solutions should be developed USDA Secretary Ann Veneman's vision for achieving conservation goals

5. Role of agricultural science in developing trading systems Producers need voluntary conservation opportunities Producers need voluntary conservation opportunities Comprehensive conservation benefits index to assess value of all projects Comprehensive conservation benefits index to assess value of all projects Needs to be risk-based for objective scoring Needs to be risk-based for objective scoring Contracts awarded based on the greatest benefit/cost advantages Contracts awarded based on the greatest benefit/cost advantages USDA Secretary Ann Veneman's vision for achieving conservation goals

6. Objectives include trading credits in ways that achieve ancillary environmental benefits beyond the required reductions in pollutant loads, e.g., creation and restoration of wetlands, floodplains, and wildlife habitat Objectives include trading credits in ways that achieve ancillary environmental benefits beyond the required reductions in pollutant loads, e.g., creation and restoration of wetlands, floodplains, and wildlife habitat Need technical tools for making site-specific determinations of nonpoint source reductions in pollutants Need technical tools for making site-specific determinations of nonpoint source reductions in pollutants Role of agricultural science in developing trading systems EPA's Water Quality Trading Policy

7. Trading works best when….. The problem occurs over a large area The problem occurs over a large area There are many sources responsible for the problem There are many sources responsible for the problem The cost of controls varies from one source to another The cost of controls varies from one source to another Emissions can be consistently and accurately measured Emissions can be consistently and accurately measured

8. Major contributions from research organizations Developing methods for quantifying emissions and reductions under different conditions and at different scales (time and space) Developing methods for quantifying emissions and reductions under different conditions and at different scales (time and space) Comparing methods for efficiency Comparing methods for efficiency Developing and improving ways to reduce nonpoint source pollutants Developing and improving ways to reduce nonpoint source pollutants

9. Major contributions from research organizations Incorporating ancillary benefits whenever possible Incorporating ancillary benefits whenever possible Developing environmental benefits indices that are risk- based, are quantifiable, and can be assigned monetary value Developing environmental benefits indices that are risk- based, are quantifiable, and can be assigned monetary value

10. Research is an important part of USDA’s mission “Practical and scientific experiments” since 1862. “Practical and scientific experiments” since 1862. By World War II, USDA received about 40% of all Federal research funds. By World War II, USDA received about 40% of all Federal research funds. Agricultural Research Administration created during World War II. Agricultural Research Administration created during World War II. Agricultural Research Service created in 1953. Agricultural Research Service created in 1953.

11. ARS CSREES ERS NASS

12. Agriculture in U.S. Economy 16% of the $9 trillion U.S. gross domestic product 16% of the $9 trillion U.S. gross domestic product 17% of employed 17% of employed 8% of U.S. exports in 1999 8% of U.S. exports in 1999 <2% U.S. workforce on farms <2% U.S. workforce on farms 100% of the citizens are users 100% of the citizens are users

13. ARS improves the way America produces and uses food and fiber. Quality and nutritional value Quality and nutritional value Sustainability of natural resources and environmental quality Sustainability of natural resources and environmental quality Economic value for producers, consumers, and communities Economic value for producers, consumers, and communities

14. 104 Locations, ~70 in Natural Resources 104 Locations, ~70 in Natural Resources $1 billion annual budget (FY03), ~ $175 million annually in NR $1 billion annual budget (FY03), ~ $175 million annually in NR ~2,000 scientists ~2,000 scientists 1,000+ research projects 1,000+ research projects ARS Laboratory Locations

15. Examples of ARS research products that support development of environmental credit trading programs Measurement technologies for nutrients and sediments in water Measurement technologies for nutrients and sediments in water Models to estimate nutrients and sediments in water on different geographic scales Models to estimate nutrients and sediments in water on different geographic scales

16. Examples of ARS research products that support development of environmental credit trading programs Models linking pollutants, pollutant reductions, and “downstream” impacts Models linking pollutants, pollutant reductions, and “downstream” impacts Information linking management practices to nutrients and sediments in water Information linking management practices to nutrients and sediments in water

17. Measurement technologies for nutrients and sediments in water Acoustic, radar, and visible light technologies for measuring sediment loads in water Acoustic, radar, and visible light technologies for measuring sediment loads in water Automated stream sampling Automated stream sampling

18. Models to estimate nutrients and sediments in water on different geographic scales Revised Universal Soil Loss Equation (RUSLE) – an updated version of USLE that estimates soil erosion by raindrop impact and surface runoff, which then contributes to sediments in surface waters. Revised Universal Soil Loss Equation (RUSLE) – an updated version of USLE that estimates soil erosion by raindrop impact and surface runoff, which then contributes to sediments in surface waters. Soil Water Assessment Tool (SWAT) - widely accepted by government agencies for estimating loading and transport of sediments and nutrients in river basins. Soil Water Assessment Tool (SWAT) - widely accepted by government agencies for estimating loading and transport of sediments and nutrients in river basins.

19. Models to estimate nutrients and sediments in water on different geographic scales HUMUS (Hydrologic Unit Model for the United States) is based on SWAT and a GIS interface

20. Models linking pollutants, pollutant reductions, and “downstream” impacts Agricultural Non-Point Source Pollution Model (AGNPS) - predicts non-point source pollutant loadings within agricultural watersheds, assists with determining Best Management Practices, Total Maximum Daily Loads, risks to environmental resources, and cost-benefit analyses Agricultural Non-Point Source Pollution Model (AGNPS) - predicts non-point source pollutant loadings within agricultural watersheds, assists with determining Best Management Practices, Total Maximum Daily Loads, risks to environmental resources, and cost-benefit analyses

21. Information linking management practices to nutrients and sediments in water Impacts of riparian buffers, tillage systems, and other management practices on surface runoff Impacts of riparian buffers, tillage systems, and other management practices on surface runoff Reducing nitrogen fertilizer movement into surface and ground waters Reducing nitrogen fertilizer movement into surface and ground waters

22. Information linking management practices to nutrients and sediments in water Development of national phosphorus index to minimize nutrient losses into surface and groundwater Development of national phosphorus index to minimize nutrient losses into surface and groundwater Applications of precision farming for environmental benefits Applications of precision farming for environmental benefits

23. Research opportunities Conduct modeling, field experiments, and case studies to determine which Farm Bill conservation practices promote an optimum combination of pollutant load reduction, or carbon sequestration, versus intended or ancillary benefits. Conduct modeling, field experiments, and case studies to determine which Farm Bill conservation practices promote an optimum combination of pollutant load reduction, or carbon sequestration, versus intended or ancillary benefits.

24. Research opportunities Develop models that can integrate prediction of non-point source nutrient loading along with carbon sequestration, to examine total environmental benefits of programs and practices Develop models that can integrate prediction of non-point source nutrient loading along with carbon sequestration, to examine total environmental benefits of programs and practices

25. Conservation Effects Assessment Project (CEAP)  The principal focus of the CEAP effort is to produce an assessment of environmental benefits derived from implementing USDA conservation programs.  The project has two major components and reporting scales:  National Assessment  Watershed Assessment

26. CEAP--Conservation practices that will be emphasized include… conservation buffers conservation buffers nutrient management nutrient management pest management pest management tillage management tillage management pest management pest management irrigation management irrigation management

27. ARS Research Watershed Network

28. Research is an important foundation for any environmental credit trading program Existing tools may need modification for estimating nonpoint source pollutants and reductions on a large geographic scale. Existing tools may need modification for estimating nonpoint source pollutants and reductions on a large geographic scale. Monitoring tools and methods must be rapid and inexpensive for wide application. Monitoring tools and methods must be rapid and inexpensive for wide application.

29. Research is an important foundation for any environmental credit trading program New conservation practices must be developed and tested under different conditions for reliability. New conservation practices must be developed and tested under different conditions for reliability. Research reduces uncertainties in estimating pollutant reductions, thus contributing to their increased economic value. Research reduces uncertainties in estimating pollutant reductions, thus contributing to their increased economic value.