Improving agricultural pollution abatement through result-based payment schemes

• Published in: Land use policy 2018-09, Vol.77, p.209-219
• Main Authors: Sidemo-Holm, William, Smith, Henrik G., Brady, Mark V.
• Format: Article
• Language: English
• Subjects: Agri-environmental scheme; Agricultural economics; Agricultural land; Agricultural pollution; Agricultural Science; Agricultural Science, Forestry and Fisheries; Agricultural Sciences; Agricultural wastes; Air pollution; Arable land; Buffer strip; Buffers; Case studies; Cost analysis; Cost benefit analysis; Cost control; Cost-effective; Earth and Related Environmental Sciences; Economic incentives; Effectiveness; Environmental incentives; Environmental management; Environmental policy; Environmental Sciences; Environmental Sciences related to Agriculture and Land-use; Farm management; Farmers; Feasibility; Feasibility studies; Geovetenskap och miljövetenskap; Incentives; Jordbruksvetenskap; Land; Land pollution; Land use; Lantbruksvetenskap och veterinärmedicin; Lantbruksvetenskap, skogsbruk och fiske; Miljö- och naturvårdsvetenskap; Miljövetenskap; Natural Sciences; Naturvetenskap; Nonpoint source pollution; Nutrient removal; Nutrient runoff; Payments; Performance based policy; Phosphorus; Pollutants; Pollution; Pollution abatement; Pollution control; Pollution effects; Resource management; Water pollution; Water resources; Water supply
• ISSN: 0264-8377; 1873-5754; 1873-5754
• DOI: 10.1016/j.landusepol.2018.05.017

•Result-based payments incentivize cost-effective agricultural pollution abatement.•Farmers adopt fewer but more effective abatement measures when paid based on results.•Less pollution and more crop production with result-based payments.•Abatement results and ensuing payments can be calculated by modeling abatement. Action-based payments that compensate farmers for adopting land-management measures to preserve and enhance the environment have been criticized for being ineffective. The root of the problem is that farmers are not paid for achieving a desired environmental benefit, but compensated for their costs of management. There is growing interest in formulating result-based economic incentives. By paying for an environmental benefit and allowing flexibility in how to achieve it, farmers are given an incentive to exploit their comparative advantages for achieving a desired environmental benefit cost-effectively. However, the feasibility and relative effectiveness of result-based payments for reducing agricultural pollution is contentious. In this study, we designed and evaluated a result-based payment scheme for nonpoint-source pollution abatement from arable land. In a case study in southern Sweden, the cost-effectiveness of the new scheme was compared with that of an existing action-based scheme for vegetated buffer strips to prevent the pollutant, particulate phosphorus, from reaching water resources. The results suggest that result-based payment schemes based on modeled outcomes of pollution abatement are feasible and will considerably improve cost-effectiveness compared to action-based schemes, by relocating buffer strips to where they are more effective and not simply where they have the lowest costs for farmers.