Role of Governments in Addressing the Water Quality Impacts of Agriculture

What is Non-point Pollution? Enters water diffusely in the runoff or leachate from rain or melting snow. Generally a function of land use. Agriculture is generally recognized as the largest contributor of non-point pollution in the U.S.

Inputs Ambient Water Quality Damages Runoff

Agricultural Pollution Has Some Important Characteristics l Uncertain water quality damages l Uncertainty and randomness of flows l Heterogeneity l Inobservability l Asymmetric information l Time lags

Policy Instruments l Economic Incentives l Standards l Education l Research and development

Potential bases for policy ● Inputs and technology ● Emissions (runoff or loadings) ● Ambient quality Performance-based policies would be based on emissions or ambient quality

Current programs largely technology-based ● Financial incentives for “best management practices” ● Land retirement

Performance-based instruments ● Emission taxes/subsidies ● Emission standards ● Ambient taxes/subsidies ● Ambient standards ● Trading

Options for Designing Performance- based Policy ● Models can be used to estimate environmental performance (expected emissions) ● USLE is used by USDA for program eligibility and to measure ex post performance ● Variety of models exist for estimating nutrient loss ● Expected emission-based incentives account for inputs, technologies, and resource base.

Measuring damages It is possible to estimate economic value of changes in water quality through various techniques such as contingent valuation and travel cost. Estimating benefits requires surveys that are generally expensive. There are methods for using existing values (benefits transfer), but the literature is very thin.

Environmental Indicators ● Quantify information so its significance is more readily apparent ● Simplify information about complex phenomena, such as nonpoint pollution ● Can be targets of performance-based instruments ● Serve as a metric against which progress can be measured ● Used to target policies

Examples of indicators ● Sediment production ● Nitrogen runoff ● Filter strips ● Nitrate leaching ● Pesticide leaching ● Fish consumption advisory ● Composite index

Education and Research l Cannot by themselves be expected to achieve cost-effective water quality control l Proven valuable in support of other approaches

Adaptive management combines assessment with adjustment Adaptive management can be used during program implementation to assess progress and changes in practice implementation that might be needed when models unavailable. Requires monitoring of water resource over time, and tracking the collective impacts of changes in management.

Summary l Government has a role of developing policies for reducing nonpoint pollution l Performance-based policies are desirable l Developing emissions or runoff models and environmental indicators can enable greater use of performance-based instruments l The choice of a particular instrument depends on the local setting l Adaptive management enables improvements in policy over time