Providing Economic Incentives for Reducing
Agricultural Non-point Pollution
The purpose of this experiment is to examine farmers’ willingness
and ability to respond to performance-based conservation payments.
Our experimental watershed, Cullers Run, is
located in a rural area of the Appalachian Mountains of West
Virginia, USA.
Investigators: Alan Collins, Neil Gillies, and Peter Maille
Institutions
Involved: Agricultural and Resource
Economics program at West Virginia
University and Cacapon Institute
Funding
provided By:
U.S. Department of Agriculture, Cooperative State Research,
Education, and Extension Service, National Research Initiative
Project Investigator Information:
Alan
Collins is Associate Professor and Chair of the Agricultural and
Resource Economics Program in the Division of Resource Management
within the Davis College of Agriculture, Forestry, and Consumer
Sciences at West Virginia University. His contact information is:
Peter
Maille is a PhD graduate student in Natural Resource Economics in
Division of Resource Management at West Virginia University.
Email to: Peter Maille
The purpose of this experiment is to examine farmers’
willingness and ability to respond to performance-based conservation
payments. Our experimental
watershed, Cullers Run, is located in a rural area of the
Appalachian Mountains of West Virginia, USA.
Mathes (1995) describes the region as having
long narrow valleys with a humid, temperate climate. From 1998 to
2004 the area averaged 103 cm of precipitation per year, with the
growing season (May through September) receiving about 70% more than
in the non-growing season (Cacapon Institute, unpublished data).
The Cullers Run watershed has an area of
approximately 2,978 hectares, with 16.8% devoted to agriculture, and
the remaining area mostly forested. It is located in Hardy County,
which is the number one poultry production county in West Virginia
(USDA National Agricultural Statistics Service, 2005). There are
approximately 12 poultry houses conducting intensive poultry
production in the watershed. Cattle and sheep production is also
important. Row crops comprise 3.63% of the agricultural land,
mostly in the floodplain, and the remaining agricultural land is
devoted to pasture and livestock.
The Lost River, of which Cullers Run is a
sub-watershed, is classified as "impaired" due to excessive fecal
coliform bacteria. It was placed on the USEPA 303(d) list in
1998. As required by law, a total maximum daily load (TMDL)
study was performed. The TMDL plan calls for reductions of
fecal coliform pollution by 12%, 37%, and 38% from forest, cropland,
and pasture respectively (USEPA, 1998).
Land ownership within the
watershed varies with parcels ranging from less than one hectare to
over 240 hectares.
In Hardy County, over 35% of farm operators had something other than
farming as their primary occupation (USDA National Agricultural
Statistics Service, 2004). A review of publicly available tax
information reveals that, while most of the landowners are
residents, a substantial portion of the watershed is owned by people
who live elsewhere. Both resident and non-resident owners seem to
include in their ranks new owners and traditional long-term owners.
Cullers Run was chosen
for this project
because:
It
has a long history of water quality sampling data (since 1995)
collected at the same location
The data
consistently indicate that Cullers Run has relatively high
levels of nitrate-nitrogen (N) for the area. These levels
only very rarely exceed the potable water quality standard for
nitrate-N. No other standards apply.
It offers a discrete area to work
in on a small stream with a known nitrate gradient. For the
above reasons. it is a stream where there is a reasonably good
chance of measuring an effect of changes in agricultural
practices.
More
on the water quality component of the study is
here.
The
primary goal of this project is to assess performance-based economic
incentives to improve the quantity and quality of water flowing from
Cullers Run watershed in Hardy County, West Virginia. Specific
objectives are:
(1)
Derive and assess a pricing formula based on water quantity and
quality that provides an appropriate incentive for farmers to
implement best management practices (BMPs) to conserve surface water
resources;
(2)
Given the availability of incentive payments, assess changes in
farmer attitudes and behavior towards BMPs that protect and conserve
water resources relative to the traditional cost share approach;
(3)
Monitor changes in water quality and quantity in response to
performance-based economic incentives and compare to monitoring in
other watersheds where these incentives are not offered; and
(4)
Compare the cost effectiveness of water quality improvements for
incentive payments relative to the traditional cost share approach.
Under
this project, payments are made monthly to participating farmers in
Cullers Run watershed. Monthly payments are calculated based on the
equation below:
Water
volume is expressed in acre feet (1 acre foot of water is equal to
325,851 gallons). Water prices are shown below in Table 1. The
quality adjustment factor is the ratio of nitrate-N load (pounds per
month) in Waites Run divided by nitrate-N load (pounds per month) in
Cullers Run. Waites Run represents a natural (background) level of
nitrate-N.
To
participate, farmers must sign up. Then, acting as a group,
participating farmers will be responsible for determining how each
monthly payment is allocated among participating farmers.
Participating farmers are able to choose which BMP or other land
management change to implement in order to impact water quality.
Table 1. Water Price Summary
Water Prices
May through September
October through April
Cullers Run Stream Discharge
(ac-ft)
Dollars per Acre-Foot
Cullers Run Stream Discharge
(ac-ft)
Dollars per Acre-Foot
Up to 320
18
Up to 740
8
321-800
8
Over 740
5
Over than 800
5
The base payments are multiplied by the quality adjustment factor,
the ratio of Waites Run nitrate-N lbs/month over Cullers Run
nitrate-N, to get the final payment…
As an example: May 1998 (444 ac-ft) ×
($8/ac-ft) × (0.091) = $672
The project was
introduced to the community in December 2006 at the Mathias
Ruritan Club Meeting.
Invitation letters to
participate were sent out to Cullers Run farmers in January
2007.
Four dinner meetings
were held in Mathias during February and March 2007 to introduce
farmers to the project, answer questions, and discuss how the
project would work. A final meeting was held on March 26 with
written agreements made available for interested farmers to
sign.
Year one of the
project began on April 1, 2007 (with the first payment during
May 2007) and ends on April 30, 2008.
WV University's
"Farmers as Producers of Clean Water" Project
Cacapon Institute
The WVU "Farmers as Producers of Clean Water" project
will include a water quality monitoring component, with an
"experimental" stream – Cullers Run, and a "reference" stream –
Waites Run.
The big picture.
The states in the Chesapeake Bay watershed - Delaware, Maryland, New
York, Pennsylvania, Virginia, and West Virginia - the District of
Columbia, and the U.S. Environmental Protection Agency are working
together to reduce the flow of nutrients (nitrogen and phosphorus)
and sediment transported from each of the Bay States into the Bay.
Each of the Bay states has established Tributary Teams to develop
strategies for reducing nutrients and sediment, and to implement
their strategies. The goal of reducing nutrient flow from the land
to rivers and streams represents a long term commitment by the state
of West Virginia.
Why did we choose Cullers Run for this project? There is a long history
of water quality sampling data on Cullers Run (since 1995),
collected at the same location by the WV Department of Agriculture,
Cacapon Institute, and the US Geological Survey. These data all
indicate that Cullers Run has relatively high levels of
nitrate-nitrogen (N) for the area.
The Lost River watershed had the
highest levels of nitrate-N in the WV Department of
Agriculture's Potomac Headwaters Water Quality Study area, and
Cullers Run had the highest nitrate-N levels within the Lost
River watershed (WVDA, 2006).
Cullers Run consistently had the
second highest nitrate levels at regular Lost River sampling
sites in Cacapon Institute's studies going back to 1997. The
highest levels have been in the Lost River just above Upper
Cover Run in Mathias.
Interest in the source(s) of
nitrate-N in Cullers Run led Cacapon Institute to collect
periodic water samples at the intersection of CR-18 and CR18-1,
as well as the usual site at the intersection of CR 18 and Route
259. These samples show a consistent but variable increase of
nitrate-N between these two sites.
Why are we focusing on nitrogen and not phosphorus?
Due to the proportions of nitrogen and phosphorus in the manure used
to fertilize fields in our area, phosphorus is actually applied at a
greater rate, in relation to plant needs, than is nitrogen.
However, phosphorus binds to our soils, and mostly moves into
streams only during major storms. This makes phosphorus very
difficult to study in our streams. Because of this, nitrate can be
used as an indicator of fertilizer use.
Why is nitrate-N in Cullers Run high?
It's not because the farmers there are doing a "bad" job.
The water quality literature consistently finds that nitrogen in the
form of nitrate "leaks" from cropland more easily than from other
fertilized agricultural (or residential) lands, such as pasture.
Nitrate is relatively high in Cullers Run because it is a small
watershed with a significant amount of row crop agriculture, which
is unusual in this area.
Why did we choose Waites Run as our water quality reference
watershed? This 12.8 sq. mi. watershed near Wardensville is over 96%
forested, lies within the region, and monitoring data indicates that
its nitrate-N levels are quite low and respond very little to a wide
range of rainfall regimes (Cacapon Institute 2002). Waites Run also
has a USGS Flow Gage site.
The graph below shows historical nitrate-N data
collected by Cacapon Institute from 1999 to January 2007. Sample
sites are Cullers Run a short distance upstream of the Rt. 259
bridge (CuR Downstrm), Cullers Run at the intersection of CR-18 and
CR18-1 (CuR Upstrm), Waites Run in Wardensville, and the Lost River
just above Upper Cover Run in Mathias (LR Mathias). The data for
the period from September 1999 to September 2002, and from April
2006 to the present, represent samples collected on the same day at
all four sites. The period in between is for samples collected at
CuR Downstrm and LR Mathias only.
Water quality monitoring
for this project will be conducted by Cacapon Institute under a
subcontract with WVU. Water quality sampling will consist of
regularly scheduled twice monthly samples, and up to four storm
samples per year. Storm sampling will utilize an automatic sampler, with
sampling initiated using either rainfall or stream flow as triggers
(to be determined). Water quality parameters will include
conductivity, pH, temperature, nitrate-N, total phosphorus, fecal
coliform bacteria, and turbidity. Pebble counts
will be used to assess changes in the rate, quality and quantity of
sedimentation. Water quantity will be assessed in Cullers Run by
the flow at time of sampling at at the outlet of Cullers Run just
above Route 259 with a flowmeter.
Additionally, a water level sensor will be installed at Cullers Run
to allow continuous recording of stream water levels.
Cullers Run
offers a discrete area to work in on a small stream with a known
nutrient gradient. It is a stream where we have a reasonably good
chance of measuring an effect of changes in agricultural practices.
One issue of great concern to the Chesapeake Bay Program and its
West Virginia partners is determining how well agricultural and
other Best Management Practices work in the real world, versus how
well they work in controlled university studies. The Cullers Run
project has the potential to help shed light on that question.
