Do baseline requirements hinder trades in water quality trading programs?
The Environmental Protection Agency and the U.S. Department of Agriculture are promoting point/nonpoint trading as a way of reducing the costs of meeting water quality goals while giving nonpoint sources a larger role in meeting those goals. Farms can create offsets or credits in a point/nonpoint trading program by implementing management practices such as conservation tillage, nutrient management, and buffer strips. To be eligible to sell credits, farmers must first comply with baseline requirements. The EPA defines a baseline as the pollutant control requirements that apply to a seller in the absence of trading. EPA guidance recommends that the baseline for nonpoint sources be management practices that are consistent with the water quality goal. A farmer would not be able to create credits until the minimum practice standards are met. An alternative baseline is those practices being implemented at the time the trading program starts. The selection of the baseline has major implications for which farmers benefit from trading, the cost of nonpoint source credits, and ultimately the number of credits that nonpoint sources can sell to regulated point sources. We use a simple model of the average profit-maximizing dairy farmer operating in the Conestoga (PA) watershed to evaluate the implications of baseline requirements on the cost and quantity of credits that can be produced for sale in a water quality trading market, and which farmers benefit most from trading.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202|
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ribaudo, Marc, 2009. "Agriculture and Water Quality Trading: Exploring the Possibilities," Amber Waves, United States Department of Agriculture, Economic Research Service, March.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea09:49258. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.