A Multi-Objective Approach to Integrating Agricultural Economic and Environmental Policies

Agricultural nonpoint source pollution of soil and water resources is a major societal concern. Because of unabated NPS pollution, and despite more than a decade of policy, research and intervention, the relationship between agricultural production and environmental performance is still the subject of ongoing debate. Invariably, the environmental objectives conflict with one another and the policy choices involve significant trade-offs. The trade-off between soil erosion and water quality is a typical example of this contradiction. This paper describes a theory and conceptual framework for integrated agricultural economic and environmental modelling using a multicriteria decision-making approach grounded in multi-attribute utility theory. The empirical analysis and policy exercise evaluates policy trade-offs using a watershed-based model. The intent is to develop and implement a framework for policy analysis that provides for a better understanding of why some environmental problems persist despite evolving policies, technologies and market incentives. The multi-objective decision-making model is empirically verified for a specific eastern Iowa watershed. Two key results stand out from empirical analysis. There is a significant trade-off between economic and environmental goals, and even between environmental goals; therefore, a comprehensive analysis with reasonable compromise will give an ideal solution. Incorporating environmental objectives encouraged more environmentally sound cropping practices. In particular, environmentally sustainable crop rotation practices such as corn-soybeans-hay/oats was chosen more frequently by the model.