Improving the Efficiency of Voluntary Water Quality Conservation Programs

Abstract

Voluntary approaches have traditionally been used to address environmental externalities emanating from agricultural production in the United States. However, voluntary approaches have largely failed to improve water quality in impaired waters. This paper assesses how to increase the efficiency of voluntary conservation in the context of the Chesapeake Bay. Field-level data representative of cropland in the bay watershed are analyzed using a programming model to quantify the gains of targeting technology-based incentives and of performance-based incentives. Performance-based approaches were the most efficient. The efficiency of technology-based approaches was improved by targeting cropland with features indicative of low marginal abatement costs. (JEL Q18, Q25)