Hostname: page-component-586b7cd67f-tf8b9 Total loading time: 0 Render date: 2024-11-24T16:39:48.287Z Has data issue: false hasContentIssue false
  • English
  • Français

Perverse Incentives with Pay for Performance: Cover Crops in the Chesapeake Bay Watershed

Published online by Cambridge University Press:  15 September 2016

Darrell J. Bosch ,
James W. Pease ,
Robert Wieland  and
Doug Parker
Darrell J. Bosch*
Affiliation:
Department of Agricultural and Applied Economics at Virginia Tech, Blacksburg, Virginia
James W. Pease
Affiliation:
Department of Agricultural and Applied Economics at Virginia Tech, Blacksburg, Virginia
Robert Wieland
Affiliation:
Main Street Economics in Trappe, Maryland
Doug Parker
Affiliation:
California Institute for Water Resources at University of California Agriculture and Natural Resources
*
Correspondence: Darrell Bosch ▪ Department of Agricultural and Applied Economics ▪ Virginia Tech ▪ Blacksburg, VA 24060 ▪ Telephone 540.231.5265 ▪ Email [email protected].
Get access

Abstract

Policymakers are concerned about nitrogen and phosphorus export to water bodies. Exports may be reduced by paying farmers to adopt practices to reduce runoff or by paying performance incentives tied to estimated run-off reductions. We evaluate the cost-effectiveness of practice and performance incentives for reducing nitrogen exports. Performance incentives potentially improve farm-level and allocative efficiencies relative to practice incentives. However, the efficiency improvements can be undermined by baseline shifts when growers adopt crops that enhance the performance payments but cause more pollution. Policymakers must carefully specify rules for performance-incentive programs and payments to avoid such baseline shifting.

Keywords

baselineChesapeake Baycover cropsexportmathematical programmingnitrogenperformance incentivepractice incentive
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 42 , Issue 3 , December 2013 , pp. 491 - 507
Copyright
Copyright © 2013 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abler, D.G., and Shortle, J.S. 1991. “The Political Economy of Water Quality Protection from Agricultural Chemicals.” Northeastern Journal of Agricultural and Resource Economics 20(1): 53–60.Google Scholar
Chesapeake Bay Program. 2011. “Watershed Implementation Plan Tools” web page. Chesapeake Bay Program, Annapolis, MD. Available at www.chesapeakebay.net/about/programs/watershed_implementation_plan_tools (accessed April 7, 2011).Google Scholar
Dill, S. 2011. “Custom Work Charges in Maryland 2011.” Fact Sheet FS683, University of Maryland Extension, College Park, MD.Google Scholar
Environmental Protection Agency. 1999. Draft Guidance for Water Quality-based Decisions: The TMDL Process (2nd edition). Report EPA-841-D-99-001, Office of Water, EPA, Washington, DC. Available at water.epa.gov/lawsregs/lawsguidance/cwa/tmdl/propguid_Guidance.cfm. (accessed October 11, 2010).Google Scholar
Environmental Protection Agency. 2012a. Jurisdictions’ Reports on Trading and Offset Program Reviews. EPA, Washington, DC. Available at http://www.epa.gov/reg3wapd/pdf/pdf_chesbay/Phase2WIPEvals/Trading_Offsets/PortfolioOfReports.pdf (accessed June 25, 2012).Google Scholar
Environmental Protection Agency. 2012b. “Chesapeake Bay TMDL.” EPA, Washington, DC. Available at www.epa.gov/reg3wapd/tmdl/ChesapeakeBay/index.html (accessed June 25, 2012).Google Scholar
GAMS Development Corporation. 2011. “General Algebraic Modeling System” web page. GAMS Development Corporation, Washington, DC. URL: www.gams.com (accessed August 18, 2011).Google Scholar
Hawkins, R. 2000. “The Use of Economic Instruments and Green Taxes to Complement an Environmental Regulatory Regime.” Water, Air, and Soil Pollution 123(1): 379–394.Google Scholar
Hoag, D.L., and Hughes-Popp, J.S. 1997. “Theory and Practice of Pollution Credit Trading in Water Quality Management.” Review of Agricultural Economics 19(2): 252–262.Google Scholar
Horan, R.D., and Lupi, F. 2005. “Economic Incentives for Controlling Trade-related Biological Invasions in the Great Lakes.” Agricultural and Resource Economics Review 34(1): 75–89.Google Scholar
Jung, C., Krutilla, K., and Boyd, R. 1996. “Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives.” Journal of Environmental Economics and Management 30(1): 95–111.Google Scholar
Maryland Department of Agriculture. 2011. Cover Crop Program, 2011. Maryland Department of Agriculture, Annapolis, MD.Google Scholar
Maryland Department of Agriculture. 2012. Maryland's Winter Cover Crop Program. Maryland Department of Agriculture, Annapolis, MD. Available at www.mda.maryland.gov/pdf/cc_poster12.pdf (accessed February 13, 2013).Google Scholar
Mid-Atlantic Water Program. 2006. The Mid-Atlantic Nutrient Management Handbook. MAWP 06-02, Mid-Atlantic Water Program, Virginia Tech University, Blacksburg, VA.Google Scholar
National Agricultural Statistics Service. 2010a. “Quick Stats.” NASS, U.S. Department of Agriculture, Washington, DC. Available at http://quickstats.nass.usda.gov (accessed December 21, 2010).Google Scholar
National Agricultural Statistics Service. 2010b. “Field Crops: Usual Planting and Harvest Dates.” Agricultural Handbook Number 628. NASS, U.S. Department of Agriculture, Washington, DC. Available at http://usda01.library.cornell.edu/usda/current/planting/planting-10-29-2010.pdf (accessed May 29, 2012).Google Scholar
National Agricultural Statistics Service. Various years. “Maryland: Crop Progress and Condition.” NASS, U.S. Department of Agriculture, Washington, DC. Available at www.nass.usda.gov/Statistics_by_State/Maryland/Publications/Crop_Progress_&_Condition/index.asp (accessed May 29, 2012).Google Scholar
National Research Council. 2001. Assessing the TMDL Approach to Water Quality Management. Washington, DC: National Academy Press.Google Scholar
Powell, R.N. III. 2008. Chesapeake Bay Cover Crop Enhancement Conference: Making It Work in Maryland. Available at www.chesapeake.org/OldStac/ccecmaterials/powell.royden.md.pdf (accessed February 13, 2013).Google Scholar
Ribaudo, M., Horan, R.D., and Smith, M.E. 1999. Economics of Water Quality Protection from Nonpoint Sources: Theory and Practice. Economic Research Service, U.S. Department of Agriculture, Washington DC.Google Scholar
Simpson, T., and Weammert, S. 2007. Cover Crop Practices: Definition and Nutrient and Sediment Reduction Efficiencies. University of Maryland/Mid-Atlantic Water Program, College Park, MD.Google Scholar
Staver, K., and Brinsfield, R.B. 1998. “Using Cereal Grain Winter Cover Crops to Reduce Groundwater Nitrate Contamination in the Mid-Atlantic Coastal Plain.” Journal of Soil and Water Conservation 53(3): 230–240.Google Scholar
Stephenson, K., Norris, P., and Shabman, L.A. 1998. “Watershed-based Effluent Trading: The Nonpoint Source Challenge.” Contemporary Economic Policy 16(4): 412–421.Google Scholar
University of Maryland and Maryland Departments of Planning, Agriculture, Environment, and Natural Resources. 2010. “Nutrient Management Law and Regulations Overview, 2010.” State of Maryland, Annapolis, MD. Google Scholar
University of Maryland Extension. 2010. “Crop Budgets, 2010.” Available at http://mdgrainmarketing.umd.edu/Crop%20Budgets/index.cfm (accessed August 27, 2010).Google Scholar
Virginia Department of Conservation and Recreation. 1995. Virginia Nutrient Management Standards and Criteria. Division of Soil and Water Conservation, Richmond, VA.Google Scholar
Wieland, R., Parker, D., Gans, W., and Rigelman, J. 2010. Least-cost Supply of Nitrogen Reduction from Two Important Agricultural Non-point Source Best Management Practices in Maryland. Harry R. Hughes Center for Agro-Ecology, College Park, MD.Google Scholar
Winsten, J.R. 2009. “Improving the Cost-effectiveness of Agricultural Pollution Control: The Use of Performance-based Incentives.” Journal of Soil and Water Conservation 64(3): 88A–93A.Google Scholar
Winsten, J.R., Baffaut, C., Britt, J., Borisova, T., Ingels, C., and Brown, S. 2011. “Performance-based Incentives for Agricultural Pollution Control: Identifying and Assessing Performance Measures in the United States.” Water Policy 13(5): 677–692.Google Scholar
Winsten, J.R., and Hunter, M. 2011. “Using Pay-For-Performance Conservation to Address the Challenges of the Next Farm Bill.” Journal of Soil and Water Conservation 66(4): 111A–117A.Google Scholar