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

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  • Horan, Richard D.
  • Shortle, James S.
  • Abler, David G.

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 agrienvironmental 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, doubledipping 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.

Suggested Citation

  • Horan, Richard D. & Shortle, James S. & Abler, David G., 2004. "The Coordination and Design of Point-Nonpoint Trading Programs and Agri-Environmental Policies," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(1), pages 1-18, April.
    • Handle: RePEc:ags:arerjl:31374
    DOI: 10.22004/ag.econ.31374
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    1. Richard D. Horan & James S. Shortle & David G. Abler, 1999. "Green Payments for Nonpoint Pollution Control," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1210-1215.
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    Cited by:

    1. Batie, Sandra S., 2005. "The Demand for Economic Policy Analysis: Is Anyone Listening?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(2), pages 1-8, October.
    2. Woodward, Richard T. & Newburn, David A. & Mezzatesta, Mariano, 2016. "Additionality and reverse crowding out for pollution offsets in water quality trading," Ecological Economics, Elsevier, vol. 128(C), pages 224-231.
    3. Karen Fisher-Vanden & Sheila Olmstead, 2013. "Moving Pollution Trading from Air to Water: Potential, Problems, and Prognosis," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 147-172, Winter.
    4. repec:ags:aaea22:335843 is not listed on IDEAS
    5. Hansen, Line Block & Termansen, Mette & Hasler, Berit, 2017. "Effectiveness Of Markets In Nitrogen Abatement: A Danish Case Study," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 260887, European Association of Agricultural Economists.
    6. Shortle, James, 2013. "Economics and Environmental Markets: Lessons from Water-Quality Trading," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(1), pages 1-18, April.
    7. Li, Zhi & Liu, Pengfei & Swallow, Stephen K., 2022. "The performance of multi-type environmental credit trading markets: Lab experiment evidence," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    8. Ribaudo, Marc & Greene, Catherine & Hansen, LeRoy & Hellerstein, Daniel, 2010. "Ecosystem services from agriculture: Steps for expanding markets," Ecological Economics, Elsevier, vol. 69(11), pages 2085-2092, September.
    9. Motallebi, Marzieh & Hoag, Dana L. & Tasdighi, Ali & Arabi, Mazdak & Osmond, Deanna L. & Boone, Randall B., 2018. "The impact of relative individual ecosystem demand on stacking ecosystem credit markets," Ecosystem Services, Elsevier, vol. 29(PA), pages 137-144.
    10. Elsa Martin & Hubert Stahn, 2009. "On The Coordination Of The European Agri-Environmental And Water Internalizing Policies," Working Papers halshs-00360993, HAL.
    11. Marc N. Conte & Robert Griffin, 2019. "Private Benefits of Conservation and Procurement Auction Performance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 759-790, July.
    12. Woodward, Richard T., 2011. "Double-dipping in environmental markets," Journal of Environmental Economics and Management, Elsevier, vol. 61(2), pages 153-169, March.
    13. Sanna Lötjönen & Markku Ollikainen, 2017. "Does crop rotation with legumes provide an efficient means to reduce nutrient loads and GHG emissions?," Review of Agricultural, Food and Environmental Studies, Springer, vol. 98(4), pages 283-312, December.
    14. Duke, Joshua M. & Liu, Hongxing & Monteith, Tyler & McGrath, Joshua & Fiorellino, Nicole M., 2020. "A method for predicting participation in a performance-based water quality trading program," Ecological Economics, Elsevier, vol. 177(C).
    15. Heberling, Matthew T. & García, Jorge H. & Thurston, Hale W., 2010. "Does encouraging the use of wetlands in water quality trading programs make economic sense?," Ecological Economics, Elsevier, vol. 69(10), pages 1988-1994, August.
    16. James Shortle & Richard D. Horan, 2013. "Policy Instruments for Water Quality Protection," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 111-138, June.
    17. Gren, Ing-Marie & Ang, Frederic, 2019. "Stacking of abatement credits for cost-effective achievement of climate and water targets," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.

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    Environmental Economics and Policy;

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