RT Journal Article
SR Electronic
T1 Water Quality Trading in the Presence of Conservation Subsidies
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 552
OP 572
DO 10.3368/wple.96.4.552
VO 96
IS 4
A1 Fleming, Patrick M.
A1 Lichtenberg, Erik
A1 Newburn, David A.
YR 2020
UL http://le.uwpress.org/content/96/4/552.abstract
AB Most studies of water quality trading analyze its cost-effectiveness in isolation from existing policies like conservation subsidy programs that pay farmers to use conservation practices. We investigate the interaction between trading and conservation subsidy programs using an integrated assessment model that combines farmer behavioral responses with a biophysical water quality model. Current subsidy program enrollees with comparative advantage in nitrogen abatement will sort into the trading program, worsening adverse selection. Actual increases in abatement from trading depend on incentivizing additional conservation practice acreage without inducing the conversion of vegetative cover to cropland. (JEL Q52, Q58)