Credit Stacking

Water quality protection in agriculture often provides environmental co-benefits. Nutrient pollution controls, for example, may reduce carbon emissions. Policies to pursue pollution control in agriculture can be pursued independently of policies to provide other benefits, or in coordination. Credit stacking is an approach to coordination that assumes the use of market mechanisms for each environmental benefit and allows producers to participate in multiple markets with the intent of increasing the overall incentives for pollution control. This chapter illustrates the design of stacking in the case of nitrogen and carbon pollution control, examines environmental integrity issues in the design of stacking, and demonstrates that stacking can in theory increase water quality protection when supplying complementary environmental goods. Practical examples of stacking are still rare but interest in stacking is high.