Skip to main content Accessibility help
×
Home

Perverse Incentives with Pay for Performance: Cover Crops in the Chesapeake Bay Watershed

  • Darrell J. Bosch (a1), James W. Pease (a1), Robert Wieland (a2) and Doug Parker (a3)

Abstract

Policymakers are concerned about nitrogen and phosphorus export to water bodies. Exports may be reduced by paying farmers to adopt practices to reduce runoff or by paying performance incentives tied to estimated run-off reductions. We evaluate the cost-effectiveness of practice and performance incentives for reducing nitrogen exports. Performance incentives potentially improve farm-level and allocative efficiencies relative to practice incentives. However, the efficiency improvements can be undermined by baseline shifts when growers adopt crops that enhance the performance payments but cause more pollution. Policymakers must carefully specify rules for performance-incentive programs and payments to avoid such baseline shifting.

Copyright

Corresponding author

Correspondence: Darrell Bosch ▪ Department of Agricultural and Applied Economics ▪ Virginia Tech ▪ Blacksburg, VA 24060 ▪ Telephone 540.231.5265 ▪ Email bosch@vt.edu.

References

Hide All
Abler, D.G., and Shortle, J.S. 1991. “The Political Economy of Water Quality Protection from Agricultural Chemicals.Northeastern Journal of Agricultural and Resource Economics 20(1): 5360.
Chesapeake Bay Program. 2011. “Watershed Implementation Plan Tools” web page. Chesapeake Bay Program, Annapolis, MD. Available at www.chesapeakebay.net/about/programs/watershed_implementation_plan_tools (accessed April 7, 2011).
Dill, S. 2011. “Custom Work Charges in Maryland 2011.” Fact Sheet FS683, University of Maryland Extension, College Park, MD.
Environmental Protection Agency. 1999. Draft Guidance for Water Quality-based Decisions: The TMDL Process (2nd edition). Report EPA-841-D-99-001, Office of Water, EPA, Washington, DC. Available at water.epa.gov/lawsregs/lawsguidance/cwa/tmdl/propguid_Guidance.cfm. (accessed October 11, 2010).
Environmental Protection Agency. 2012a. Jurisdictions’ Reports on Trading and Offset Program Reviews. EPA, Washington, DC. Available at http://www.epa.gov/reg3wapd/pdf/pdf_chesbay/Phase2WIPEvals/Trading_Offsets/PortfolioOfReports.pdf (accessed June 25, 2012).
Environmental Protection Agency. 2012b. “Chesapeake Bay TMDL.EPA, Washington, DC. Available at www.epa.gov/reg3wapd/tmdl/ChesapeakeBay/index.html (accessed June 25, 2012).
GAMS Development Corporation. 2011. “General Algebraic Modeling System” web page. GAMS Development Corporation, Washington, DC. URL: www.gams.com (accessed August 18, 2011).
Hawkins, R. 2000. “The Use of Economic Instruments and Green Taxes to Complement an Environmental Regulatory Regime.Water, Air, and Soil Pollution 123(1): 379394.
Hoag, D.L., and Hughes-Popp, J.S. 1997. “Theory and Practice of Pollution Credit Trading in Water Quality Management.Review of Agricultural Economics 19(2): 252262.
Horan, R.D., and Lupi, F. 2005. “Economic Incentives for Controlling Trade-related Biological Invasions in the Great Lakes.Agricultural and Resource Economics Review 34(1): 7589.
Jung, C., Krutilla, K., and Boyd, R. 1996. “Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives.Journal of Environmental Economics and Management 30(1): 95111.
Maryland Department of Agriculture. 2011. Cover Crop Program, 2011. Maryland Department of Agriculture, Annapolis, MD.
Maryland Department of Agriculture. 2012. Maryland's Winter Cover Crop Program. Maryland Department of Agriculture, Annapolis, MD. Available at www.mda.maryland.gov/pdf/cc_poster12.pdf (accessed February 13, 2013).
Mid-Atlantic Water Program. 2006. The Mid-Atlantic Nutrient Management Handbook. MAWP 06-02, Mid-Atlantic Water Program, Virginia Tech University, Blacksburg, VA.
National Agricultural Statistics Service. 2010a. “Quick Stats.NASS, U.S. Department of Agriculture, Washington, DC. Available at http://quickstats.nass.usda.gov (accessed December 21, 2010).
National Agricultural Statistics Service. 2010b. “Field Crops: Usual Planting and Harvest Dates.Agricultural Handbook Number 628. NASS, U.S. Department of Agriculture, Washington, DC. Available at http://usda01.library.cornell.edu/usda/current/planting/planting-10-29-2010.pdf (accessed May 29, 2012).
National Agricultural Statistics Service. Various years. “Maryland: Crop Progress and Condition.” NASS, U.S. Department of Agriculture, Washington, DC. Available at www.nass.usda.gov/Statistics_by_State/Maryland/Publications/Crop_Progress_&_Condition/index.asp (accessed May 29, 2012).
National Research Council. 2001. Assessing the TMDL Approach to Water Quality Management. Washington, DC: National Academy Press.
Powell, R.N. III. 2008. Chesapeake Bay Cover Crop Enhancement Conference: Making It Work in Maryland. Available at www.chesapeake.org/OldStac/ccecmaterials/powell.royden.md.pdf (accessed February 13, 2013).
Ribaudo, M., Horan, R.D., and Smith, M.E. 1999. Economics of Water Quality Protection from Nonpoint Sources: Theory and Practice. Economic Research Service, U.S. Department of Agriculture, Washington DC.
Simpson, T., and Weammert, S. 2007. Cover Crop Practices: Definition and Nutrient and Sediment Reduction Efficiencies. University of Maryland/Mid-Atlantic Water Program, College Park, MD.
Staver, K., and Brinsfield, R.B. 1998. “Using Cereal Grain Winter Cover Crops to Reduce Groundwater Nitrate Contamination in the Mid-Atlantic Coastal Plain.Journal of Soil and Water Conservation 53(3): 230240.
Stephenson, K., Norris, P., and Shabman, L.A. 1998. “Watershed-based Effluent Trading: The Nonpoint Source Challenge.Contemporary Economic Policy 16(4): 412421.
University of Maryland and Maryland Departments of Planning, Agriculture, Environment, and Natural Resources. 2010. “Nutrient Management Law and Regulations Overview, 2010.State of Maryland, Annapolis, MD.
University of Maryland Extension. 2010. “Crop Budgets, 2010.” Available at http://mdgrainmarketing.umd.edu/Crop%20Budgets/index.cfm (accessed August 27, 2010).
Virginia Department of Conservation and Recreation. 1995. Virginia Nutrient Management Standards and Criteria. Division of Soil and Water Conservation, Richmond, VA.
Wieland, R., Parker, D., Gans, W., and Rigelman, J. 2010. Least-cost Supply of Nitrogen Reduction from Two Important Agricultural Non-point Source Best Management Practices in Maryland. Harry R. Hughes Center for Agro-Ecology, College Park, MD.
Winsten, J.R. 2009. “Improving the Cost-effectiveness of Agricultural Pollution Control: The Use of Performance-based Incentives.Journal of Soil and Water Conservation 64(3): 88A93A.
Winsten, J.R., Baffaut, C., Britt, J., Borisova, T., Ingels, C., and Brown, S. 2011. “Performance-based Incentives for Agricultural Pollution Control: Identifying and Assessing Performance Measures in the United States.Water Policy 13(5): 677692.
Winsten, J.R., and Hunter, M. 2011. “Using Pay-For-Performance Conservation to Address the Challenges of the Next Farm Bill.Journal of Soil and Water Conservation 66(4): 111A117A.

Keywords

Related content

Powered by UNSILO

Perverse Incentives with Pay for Performance: Cover Crops in the Chesapeake Bay Watershed

  • Darrell J. Bosch (a1), James W. Pease (a1), Robert Wieland (a2) and Doug Parker (a3)

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed.