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The Coordination and Design of Point-Nonpoint Trading Programs and Agri-Environmental Policies

Published online by Cambridge University Press:  15 September 2016

Richard D. Horan ,
James S. Shortle  and
David G. Abler
Richard D. Horan
Affiliation:
Department of Agricultural Economics, Michigan State University
James S. Shortle
Affiliation:
Department of Agricultural Economics and Rural Sociology, The Pennsylvania State University
David G. Abler
Affiliation:
Department of Agricultural Economics and Rural Sociology, The Pennsylvania State University
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Abstract

Agricultural agencies have long offered agri-environmental payments that are inadequate to achieve water quality goals, and many state water quality agencies are considering point-nonpoint trading to achieve the needed pollution reductions. This analysis considers both targeted and nontargeted agri-environmental payment schemes, along with a trading program which is not spatially targeted. The degree of improved performance among these policies is found to depend on whether the programs are coordinated or not, whether double-dipping (i.e., when farmers are paid twice—once by each program—to undertake particular pollution control actions) is allowed, and whether the agri-environmental payments are targeted. Under coordination, efficiency gains only occur with double-dipping, so that both programs jointly influence farmers’ marginal decisions. Without coordination, double-dipping may increase or decrease efficiency, depending on how the agri-environmental policy is targeted. Finally, double-dipping may not solely benefit farmers, but can result in a transfer of agricultural subsidies to point sources.

Keywords

environmental subsidiesenvironmental targetingnonpoint source pollutionpolicy coordinationtradeable pollution permitswater quality
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 33 , Issue 1 , April 2004 , pp. 61 - 78
Copyright
Copyright © 2004 Northeastern Agricultural and Resource Economics Association 

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