Project II

Examining the Economic Impacts of Best Management Practice Implementation and Water Quality Outcomes in the Cannonsville Reservoir Basin

Justification:

Subsidizing farm level BMP is one means New York City uses to reduce non-point phosphorus (P) loading to surface waters in the privately owned NYC watersheds. However, very little scientific or applied research has explored BMP efficiency at the watershed or basin scale, and consequently, little economic research has been performed to evaluate cost effectiveness of BMP implementation at the watershed or basin scale. Researchers are currently estimating the nutrient loading and economic impact of implementing P BMPs in the Cannonsville Reservoir Basin of the NYC system.
BMPs being implemented in the Cannonsville Reservoir watershed on a whole farm basis include crop rotation and tillage, barnyard improvements, manure management and export, nutrient management, fencing, and filter/buffer strips. Each BMP has a set of costs associated with it. These costs include installment, maintenance and opportunity costs. In addition, each BMP has a set of benefits associated with it. These include the combination of federal, state, and local level payments that each farmer receives to implement the particular BMP.

Objectives:

Our objective is to determine the economic impacts of BMPs on a farm by farm basis, and to examine how these lessons can be extended to the larger basin. On one farm watershed, we are interested in examining how and where the BMPs can be placed and what the economic impacts are to the farmer. To explore this issue, we use a set of scenarios and specifically make use of the concept of the wetness index -derived HRUs in order to determine if, and how much land should be taken out of production and what the costs and benefits are to the farmer, as well as the water quality impact. This combination of information associated with BMP implementation-the water quality and economic implications-are important to examine. Next, we will examine how the spatial placements of BMPs in a basin containing multiple farms (and thus farmers) will affect overall water quality and the associated economic implications. Our results will help farmers and farm planners determine the best combination and placement of BMPs on their individual farms within a watershed that will result in decreased nutrient loading and sustainable economic results. We will use benefit cost analysis, the Variable Source Loading Function (VSLF), and the Soil and Water Assessment Tool (SWAT).

Progress to Date:

To date we have performed extensive analysis on the water quality and economic implications of BMPs in a one farm watershed in the Cannonsville Reservoir Basin of New York State. We have defined the various scenarios designed to place BMPs in areas of high probability to contribute to nutrient loading and computed their costs and benefits. Using the Variable Source Loading Function model and Net Present Value analysis, the results show that converting land use into buffers and installing barnyard BMPs are both very effective in decreasing dissolved P loading, but are also costly for the farmer. The time frame over which the BMPs are implemented is very important for the annualized net present value for the project to be positive for the farmer. Planners need to examine the environmental and economic aspects of BMP implementation, and for more land to be protected, higher incentives will be needed.

Impact:

At some point implementing BMPs and/or continuing to remove land from agricultural production will reduce farm profit, and may not have a continued effect on decreasing P export (i.e., diminishing returns). However, critical area protection must be weighed against the risks of P export to water bodies. The results of this study are expected to provide planners a framework with which they can analyze both the water quality and economic implications of BMP selection and placement and advise farmers on BMP choice and placement.

Location of the Cannonsville watershed in New York State.