Agriculture Reference
In-Depth Information
Only a short synopsis of the results of this study is outlined in this paper. A more
detailed explanation of the findings and recommendations of the study and a description
of the model used can be found in Greenhalgh and Sauer (2003).
Taking a broader look at the environmental impacts of the various policy options,
nutrient trading performed better than the other options assessed (Annex Figures A.1a
through A.1f). Nutrient trading provided the largest decreases in nitrogen reaching the
Gulf of Mexico and the greatest improvements in farm income. In addition, nutrient
trading demonstrated improvements in local water quality as well as reductions in GHG
emissions and soil losses. Other policy options performed well for some environmental
parameters but not for others. For instance, conservation tillage subsidies gave the largest
reductions in soil loss and reasonable reductions in nitrogen delivered to the Gulf of
Mexico, but resulted in decreases in farm income. This decrease comes from an increase
in farm acreage which led to increased crop production, and a subsequent decline in crop
prices.
The other important aspect of assessing different policy options is how cost-effective
they are at meeting the goal of interest, in this case reducing the amount of nitrogen
reaching the Gulf of Mexico from the Mississippi River Basin. In other words, which
policy gives the 'biggest bang for your buck'. The lowest-cost mechanisms in our study
were the performance-based options, such as nutrient and GHG trading (Annex
Figure A.2). However, the most cost-effective solutions were the options based on
nutrient trading, which achieved large reductions in the amount of nitrogen delivered to
the Gulf of Mexico at low prices.
Our conclusion at the end of this study was that nutrient trading was indeed a
worthwhile policy solution for helping meet water quality targets, and for providing other
environmental benefits.
Analysis of phosphorus water quality impairments
Similarly, in an analysis of policy options to improve phosphorus-impaired waters in
Wisconsin, Michigan and Minnesota, performance-based mechanisms were the most
cost-effective (Faeth, 2000).
This study tested four policy options:
a point source performance standard where point sources had to meet more stringent
regulatory requirements;
conventional agricultural subsidies for mulch tillage, no-till and nutrient management;
a point source performance requirement coupled with trading which allowed point
sources to trade with other point and non-point sources to meet the new regulatory
requirement; and
a trading programme coupled with performance-based conservation subsidies where
point sources and non-point sources shared the nutrient reduction obligations, and non-
point sources were allowed to meet their obligation using their least-cost option rather
than the adoption of a particular BMP.
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