Farmers as Producers of Clean Water: 

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.

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bulletWater Quality Component
bulletWetland Construction
bulletPapers and Presentations

 

 

 

Project Title:  Farmers as Producers of Clean Water:  Providing Economic Incentives for Reducing Agricultural Non-point Pollution

 

Project

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:  

                                                                                                                                               

P.O. Box 6108                                                                         (304) 293‑4832   x4473    

West Virginia University                                                            (304) 293-3752 (Fax)

Morgantown, West Virginia  26506                                          Email to: Dr. Alan Collins

 

W. Neil Gillies is Executive Director at the Cacapon Institute.  His contact information: 

PO Box 68

High View, WV  26808 

304‑856‑1385

Email to: Neil Gillies

 

Peter Maille is a PhD graduate student in Natural Resource Economics in Division of Resource Management at West Virginia University.  Email to: Peter Maille

 

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Experiment Description

 

            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. 

 

Background

 

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:

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It has a long history of water quality sampling data (since 1995) collected at the same location

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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.

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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.

 

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Project Objectives

 

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.

 

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Economic Incentives

 

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

Annual Payment Summary
Mean
$7,721
High
$9,400
Low
$4,593

 

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Project Timeline

 

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The project was introduced to the community in December 2006 at the Mathias Ruritan Club Meeting.

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Invitation letters to participate were sent out to Cullers Run farmers in January 2007.

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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.  

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Year one of the project began on April 1, 2007 (with the first payment during May 2007) and ends on April 30, 2008.

 

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Water Quality Component of

WV University's "Farmers as Producers of Clean Water" Project

Cacapon Institute

Note: For more information about water quality in the Cacapon River watershed, including Cullers Run, visit our Publications page.

 

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.

bullet 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).
bullet 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.  
bullet 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.  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.

 

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Cullers Run Wetland Construction

 The Farmers as Producers of Clean Water project has had a number of notable successes:

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50% of the farmers in the watershed chose to participate.

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The farmers, functioning as a group, decided to “bank” 90% of their incentive payments to pay for nitrogen reduction projects.

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The farmers decided it was in their interest to learn as much as possible about sources of the nitrogen in their stream – which led them to request widespread stream sampling in the watershed.

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The extensive sampling led to the discovery of nitrogen rich groundwater following a concentrated flow path that flowed into Cullers Run, raising baseflow concentrations of nitrate as much as 4-fold in just a few feet of stream.

The above sequence of events, together, made it possible to complete the project by constructing a precision BMP -- a wetland designed to remove nitrogen from the nitrogen rich groundwater before it reaches Cullers run. If the wetland works as intended, it will reduce baseflow nitrate-nitrogen levels in the stream by as much as 50 percent.

Construction Slide Show

Updated on 4/12/2010 to include wetland planting.

 

 

Papers and Presentations

 

Papers:

 

Maille, Peter, and Alan Collins, "Farmers as Producers of Clean Water: A Field Experiment” in Water, Agriculture and Sustainable Well-being, Eds. U. Pascual, A. Shah, J. Bandyopadhyay. Oxford University Press: Delhi, India, forthcoming.  (PDF, 100 kb)

 

Collins, Alan R. and Peter Maille, “Farmers as Producers of Clean Water:  Getting Incentive Payments Right and Inducing Farmer Participation”, Selected Paper prepared for presentation at the American Agricultural Economics Association Annual Meeting, Orlando, FL, July 27-29, 2008. (PDF, 157 kb)

 

“Farmers as Producers of Clean Water: Getting Incentive Payments Right”, Peter Maille and Alan Collins, Paper presented at the Virginia / West Virginia Water Research Symposium, Blacksburg, VA, November 29, 2007. (PDF, 135 kb)

 

“Inducing Farmer Participation in a Watershed Level Program to Improve Water Quality”, Alan Collins, Peter Maille, and Neil Gillies, Paper presented at the Virginia / West Virginia Water Research Symposium, Blacksburg, VA, November 29, 2007. (PDF, 100 kb)

 

Maille, Peter.  Performance Based Payments for Conservation: Experience from a Water Quality Field Experiment. Dissertation submitted to the Davis College of Agriculture, Forestry, and Consumer Sciences at West Virginia University in partial fulfillment of the requirements fort the degree of Doctor of Philosophy in Natural Resource Economics. November 2008.  

 

Collins, Alan, Peter Maille, and Neil Gillies.  Final Report: “Farmers as Producers of Clean Water: Providing Economic Incentives for Reducing Agricultural Non-point Pollution” Agency: USDA, National Research Initiative Grant # 2006-35102-17261.  

 

Contracts:

 

Participating farmer contract.  First Year.  

 

 

Presentations and Posters:

 

Collins, Alan, Neil Gillies, and Danny Welsch.  Wetland Treatment of Nitrates: Design and Cost Efficiency.  Presented at: Land and Sea Grant National Water Conference, Portland, OR, May 23, 2012.  (PDF, 5 MB)

Collins, Alan and Neil Gillies.  Solving Agricultural Nitrate Pollution by Conversion of Non-Point into Point Sources.  Presentation at:  2010 USDA-CSREES National Water Conference, Hilton Head, SC, February 24, 2010 (PDF, 4 MB)

“Controlling Pollution with Opportunities, not Regulations”,  Peter Maille and Alan Collins, Poster presented at the USDA-CSREES National Water Conference, Sparks, NV, February 3-7, 2008. (PPT, 820 kb)

 

“Farmers as Producers of Clean Water: Getting Incentive Payments Right”, Alan Collins and Peter Maille, presented at the USDA-CSREES National Water Conference, Sparks, NV, February 5, 2008. (PPT, 881 kb)

 

“Farmers as Producers of Clean Water:  Providing Economic Incentives for Reducing Agricultural Non-Point Source Pollution”, Alan R. Collins and Peter Maille, paper presented at USDA-CSREES National Water Conference, Savannah, GA, January 30, 2007.  (PPT, 328 kb)

 

 

 

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