Paying farmers for measured runoff cuts costs less than EQIP, study finds
Paying farmers for measured reductions in phosphorus runoff costs less per pound than the federal Environmental Quality Incentives Program, according to a University of Wisconsin-Madison and Environmental Policy Innovation Center report. The pay-for-performance model cut costs by 35% for every pound of contamination reduced.
Researchers compared EQIP payment rates with payments under Wisconsin’s Water Quality Trading Market, where municipal wastewater plants or companies with excess phosphorus discharges pay farmers to cut runoff in their watershed. EQIP paid an estimated $54.47 per pound of phosphorus reduced, while the trading market paid an average of $35.18.
Jeff Hadachek, an associate professor of agricultural and applied economics at UW-Madison and an author of the report, said most conservation payments follow a fixed price for practices such as cover crops, whatever the field. Paying for outcomes lets dollars be aimed at the most vulnerable soils.
The approach has costs. One Wisconsin producer had to pay up front for an engineer to verify the benefit, and the project took more than two years to design, approve and build. A similar pilot in the River Raisin Basin was roughly seven times more cost-effective per pound than EQIP estimates for the same area, according to a program official quoted in the coverage.
For conservation programs, the report points to a broader question about how public money is measured. For a related look at USDA conservation spending, see recent USDA conservation funding for 42 projects.
Source: WPR
Questions and answers
The researchers compared the estimated payment rate under EQIP with actual payments made under Wisconsin’s Water Quality Trading Market, measured per pound of phosphorus reduced. They used EQIP data on practices installed on Wisconsin farms and modeling software to estimate the phosphorus each project reduced.
The report found a 35% cost saving for every pound of phosphorus contamination reduced. Under the figures cited, EQIP paid about $54.47 per pound, while the Water Quality Trading Market paid an average of $35.18 per pound.
Municipal wastewater facilities or private companies with excess phosphorus emissions, called point sources, pay farmers and landowners, called nonpoint sources, to reduce runoff in their local watershed. The state regulates the program, which lets point sources meet their rules this way.
One Wisconsin producer said the project required him to pay up front for an engineer to verify the environmental benefit, something some producers may not afford. Cost-sharing money made the project worthwhile, but it took more than two years to design, approve and build on his land.
Hadachek said conservation dollars should move toward a system where environmental performance is measured better, rather than assuming that practice payments achieve it. He argued that tying payments to measured results would also let money be directed at the most vulnerable soils.
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