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Water Quality Trading in the Presence of Conservation Subsidies

Author

Listed:
  • Patrick M. Fleming
  • Erik Lichtenberg
  • David A. Newburn

Abstract

Most studies of water quality trading analyze its cost-effectiveness in isolation from existing policies like conservation subsidy programs that pay farmers to use conservation practices. We investigate the interaction between trading and conservation subsidy programs using an integrated assessment model that combines farmer behavioral responses with a biophysical water quality model. Current subsidy program enrollees with comparative advantage in nitrogen abatement will sort into the trading program, worsening adverse selection. Actual increases in abatement from trading depend on incentivizing additional conservation practice acreage without inducing the conversion of vegetative cover to cropland.

Suggested Citation

  • Patrick M. Fleming & Erik Lichtenberg & David A. Newburn, 2020. "Water Quality Trading in the Presence of Conservation Subsidies," Land Economics, University of Wisconsin Press, vol. 96(4), pages 552-572.
  • Handle: RePEc:uwp:landec:v:96:y:2020:i:4:p:552-572
    Note: DOI: 10.3368/wple.96.4.552
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    Citations

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    Cited by:

    1. Kim, Youngho & Lichtenberg, Erik & Newburn, David, 2022. "Payments and Penalties in Ecosystem Services Programs," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322103, Agricultural and Applied Economics Association.
    2. Kim, Youngho, 2023. "Payments for Ecosystem Services Programs and Climate Change Adaptation in Agriculture," 2023 Annual Meeting, July 23-25, Washington D.C. 335971, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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