Comparing Participation in Nutrient Trading by Livestock Operations to Crop Producers in the Chesapeake Bay Watershed

Despite decades of nutrient-runoff reduction efforts via regulation, financial and technical assistance, and education, manure remains a significant contributor to Chesapeake Bay nutrient loadings. In the Bay watershed, animal feeding operations (AFOs; livestock operations that confine animals) are responsible for the majority of acreage onto which manure is applied, and over a quarter of these operations produce more manure nutrients than they can use on the farm. An alternative method of reducing discharges from livestock operations may be to involve them in nutrient trading, in which producers sell representations of their pollution reductions as credits. Past analysis of farmer participation in nutrient trading has focused almost exclusively on crop producers. In contrast to crop-only producers, livestock producers face regulations that require them to meet nutrient application standards on their farms, and they have added costs of manure shipping to meet those standards. Therefore, they may be less likely to participate in nutrient trading than crop-only producers. An analysis of producer-participation decisions reveals that those producing more manure nutrients than can be applied on their farms are especially unlikely to participate in nutrient trading based on reductions in nutrient applications to cropland. Since these operations already have relatively little cropland, they can generate relatively few credits from pollution reductions.