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Developingperformance-baseDincentivesfor agriculturalpollution controli r d

Y W h d p From the Performance-based Environmental Policies for Agriculture (PEPA) Initiative A project of the University of Vermont and Winrock International

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Developing Performance-basedIncentives for Agricultural Pollution Control

Linking arm management decision-making to environmental outcomesFrom the Performance-based Environmental Policies for Agriculture (PEPA) Initiative

c (nps) h u d s , - h d

k w k d. a h h h , h y d z h - w d

nps h . th j , d f h p - d i a p c , h pepa i

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th - d d w y d h

. i h d , - d : Are payments for achieving speci c environmental performance targets,

d h ;

Allow farmers to achieve speci ed environmental performance targets y w y h y h ;

Incentivize farmers to choose the most cost-effective actions to meeth ;

Provide additional income to farmers for reducing costs for NPS control; and

May provide a cleaner environment and greater accountability for taxpayers.

th y h j h q- . t h

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m h p - d e p Initiative can be found at www. exincentives.com. For assistance, contact Project Director Jonathanr. W 802-656-0036 jw @w k.

t cIntroduction . . . . . . . . . . . . . . . . . . . . . . . .3Step 1: i h h y ? . . . . .5Step 2: m w h k y k h d . . . . . .5Step 3: Plan rst meeting . . . . . . . . . . . . . .5Step 4: f . . . . . . . . . . . . . . . . .7Step 5: g h . . . . . . . . . . . . .8Step 6: s d . . . . . . . . . . . . . . .9

Step 7: W - d . . . . . .10Step 8: D d . . . . .10Step 9: th d . . . . . . . . . . . . . . . . .11Step 10: f z d . . . . . .11Step 11: D d . . . .11Step 12: f w- . . . . . . . . . . . . . . . . . . .11Contact . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

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Introduction

* th epa H d k D W h d p r d po W h ://www. . / w w/ /w h d_ handbook/index.html. It contains in-depth information about quantifying existing

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th d d d d d w h d planners and stakeholders on how to develop watershed-speci c

d h d d - dincentives as an approach to improve the ef ciency, cost-effectiveness,

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The need for more exible and cost-effective approaches for . th y h

h h h u d s d - h d (bmp ) y

take speci c tracts of land out of production. This approach does not provide exibility or incentive for farmers to nd more cost-effectivesolutions that make sense within their speci c farming operations. This

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The purpose o this handbook

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Developing Recommendations

Determine if your watershed is a good candidate for developing performance-based incentive

Initiate informal conversations with key stakeholders to determine if there is interest in setting up performance-based incentives

Hold rst meeting to present concept, identify and prioritize agricultural water quality issuesand determine what information is required

Gather any required information that is missing

Hold second meeting to brainstorm on potential performance targets, incentivemechanisms and links to existing programs or regulations

Write rst draft of the performance-based incentives recommendationfor watershed

Distribute draft of recommendations to group

Hold third meeting to discuss draft recommendations,develop consensus on changes and determine next steps

Create nalized recommendations

Write-up and distribute recommendations

Follow-up

Farmers who participated in this project saw the things

they could change somewith a little effort, some witha lot to reduce phosphorus

going into the watershed. Tobe able to put a number onthat with a payment is a good

solution. John Gates, organic dairy

farmer, Franklin, Vt..

th d d h h d k d dexistence of an accurate scienti c assessment of the water qualityissues and impairments that exist in the watershed. It is usually the case

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issues are already clearly known. However, if clear scienti c evidenceis lacking that identi es both the issues (e.g. nitrogen (N), phosphorus(p), d , d ) d h ( . .

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but the majority of farmers refute this claim, it will be dif cult to secure d h w k. i h

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The Process

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Step 1: Is this process right or you?

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a n r c s (usDa-nrcs), d d , h

Land Grant University, as well as non-pro t and industry groups that d/ h k w q y.

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and/or agricultural water quality issues. The state university extension d .

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General agreement by stakeholders, including farmers, that agriculture h w h d w q y ;

Existence of a group or partnership interested in or already addressing w q y ; d

Desire to explore alternative approaches to address agricultural water .

Step 2: Meet with key stakeholders

Step 3: Plan frst meetingStart to plan and schedule the rst meeting at least four weeks prior.

i , h k h d , y d .Its important to think about the timing of your rst meeting. Be aware of

h d , h d y d , d d y h y .

Although it may be tempting to invite more people, a maximum 20-25 w w k wh - - d d .

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8-12 local farmers. It is essential that farmers be well represented h . th y h d y h

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Four weeksbe ore frstmeeting.

Continued on next page

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Step 3: Continued q y d w

Senior-level agency representation. There are several agencies that ared h . i

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Natural Resources Conservation Service (NRCS);state and local of ces

State agency of agriculture

State agency for environmental conservation

Scientists and researchers who understand the connections w d w q y h w

Representatives from all other relevant groups. For the purposes of , d

d w h h . s h h d , :

Local soil and water conservation district and/or the NRCSr c d D p

Local agricultural cooperative

Citizen environmental groups EPA (if it is actively addressing the watershed)

State Farm Bureau and/or other agricultural producers groups

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The small watershed pro-cess provides a knowledgebase and comfort level for

the farmers. It allows themto reach optimal productionwith minimum additionsWhen you can see that kind of decline in nitrogen use,

you can see that the farmersare getting it.

Tim Recker, President, Iowa Corn Growers Association

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The goal of the rst meeting should be to plant the seeds of d d d - d . th d

d h d h h h h the achievement of some speci ed outcome or level of environmental

. th not h

any speci c practice or change. Performance-based incentives representa signi cantly different approach from the current NRCS practice- d h h e Q y i p(eQip), c r p (crp), c re h p (crep), d c s y p(csp). i h h w k d d hd d h . i h d d q

h , - d h w d h .

The rst meeting should include the following four components:

1. Explanation o the Concept and Goalsi h h d d h :

The goal of this process is to create more exible, cost-, d h dd

w q y h w h d;

The best way to achieve exibility and lower-cost solutions to w q y h

triggered by achieving a speci ed level of performance (or );

That performance-based incentives induce farmers to seek outh d - h h

speci ed performance target and incorporate environmental ; d

To be successful, all participants need to be willing to think outside the box and brainstorm for ways that can make thiswork within the context of the speci c watershed.

2. Prioritize Water Quality Issuesth wh h w q y ( )

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h . i h w dd h , z h d ddh .

3. Identi y Per ormance MeasuresStarting with the highest priority issue, the rst task is to identify

h q y h .

Step 4: First meeting

Continued on next page

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Step 5: Gather in ormationm h w h dd

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Examples of the type of additional information include the following:

The details of any current and future water quality monitoring efforts;

The existence of any and all models that can quantify or predictrelevant NPS pollution losses from elds or farms and/or the delivery

d h w dy.

Schedule secondmeeting or 3-6

weeks later

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h d d w h h d htarget, which is the speci ed level(s) of the performance measure that

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th ( ) h d y d water quality concern and directly in uenced by farm managementd . i h h

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4. Summarize Progress and Plan Next Meetinga h h h h w k d , h

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the opportunity to express any comments, suggestions, or criticisms thatthey may have. If information gaps were identi ed that are necessary for

h , h ( ) w h h h d k speci ed time and manner.

Once this is complete, the last step is to schedule the next meetingwh h h . id y, h

h w h d h d h w d w h w d y d w k . s hnext meeting for three to six weeks later seems to be the right amount of

. i h , h w hh h d h . i

, d h k y.

Step 4: Continued

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Step 6: Second meetingth h d d h d

and decisions from the rst meeting in order to complete a preliminaryd - d h

w h d. th h d w h h - based incentive concept and the results of the rst meeting followed by

h d k . th h d dd d h d d h d d w.

1. Identi y General Per ormance TargetsDetermining speci c performance targets and incentive payment w k y q dd h h w d

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a y d d - h w d d nps w d d w d . t z h , y d w d d h d h h y d h

d nps h , additional reductions are likely to be more dif cult and expensive to achieverelative to producers that have not made such extensive efforts in the past.H w , h h h w h y d at or below a speci ed level of pollution comes with a cost; it is likely to

k y d h w q y.

f d , y w d d , h d k d h y

existing levels of stewardship.

2. Describe Incentive Mechanismsa d d , h - y

w y q dd h y d h h . H w , d h ( ) h hincentive could take will be a valuable part of the nal recommendation.Incentive mechanisms can range from direct payments to tax relief to

h . th j d the use of positive incentives, but penalties, nancial or otherwise, can also

d .

th h h d d y h wh y k y (1) d k h , (2) y , d (3)

scally justi able.

Continued on next page

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Step 8: Distribute recommendationsThe recommendations should be complete four to six weeks after

h d d w w k h h h y h w h d . D

d h . p d speci c instructions on when and how comments and suggestions should

d d h .

At least twoweeks be orethird meeting

Step 7: Write-up recommendationsth j d ( ) h d w k h

and decisions produced from the rst two meetings and compile it into d h - d

d d . th h d of the working groups efforts from the rst and second meetings in a clear

d y- - d d h . i h d h d d w h d q d d h

h - d h w h d w h d y q d

- h h.

3. Discuss Requirements or Farmer Participationth y w d h h h d

- d d d h

example, if a farm has direct barnyard runoff into a stream, this may need to be recti ed before the producer is eligible to receive incentive payments in

h .

4. Discuss Relationship to Existing Programsth - d h y

tested under the PEPA initiative are primarily inducing changes in eld practices. In many ways, this lls the gap left by federal- and state-level h d j y d

. i y h h h d y q h h - h

the ability reach a speci ed farm-level performance target. If so, the rela -h w h d d - d

and other existing programs, such as EQIP, may need to be explored.

6. Summarize and Plan Next Steps.Tie the pieces together to create the rst sketch of the performance-based

d . D d d w wh w h h d

d .

Step 6: Continued

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Step 10: Finalize recommendationsThe project coordinators will need to nalize the recommendations

d h d d h h d . th h d d q k y h .

Step 11: Distribute recommendationsth j d h d w - d d h

d h w h w k h h d and set deadlines for comments and a vote on accepting the nal

d .

Step 12: Follow-upThe next step is to conduct formal and informal outreach on the d - d . th h

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y .

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Which organization and staff are best suited and willing to take on thew k - ?

How will the pilot-testing be carried out? In part of the watershed d y? W - h d w q y ? i , w h d

?

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Within ourweeks o thirdmeeting

Step 9: Third meetingth h h d d h d

document and establish the next steps.

th h d d k h d d d d h d y d.

o h h h ,they can determine next steps, such as conducting targeted outreach on the

d d/ k d - d w h d.

It gave me another way tolook at my farm and what

I was doing. Anytime youcan think a bit more about how youre doing things,its going to bene t you and

your farm economically.

The long-range bene t for the environment is reallyimportant, too. John Gates, organic dairy

farmer, Franklin, Vt.

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p j d :Jonathan R. Winsten, Ph.D

208-g m Hu y vb , vt 05405

t : 802-656-0036Fax: 802-656-4975

e- : jw @w k.

D s k h d -d , p -i a p c

Visit the project web site at www. exincentives.com

th n f j d y th u y v d the U.S. Department of Agriculture, Cooperative State Research, Education, and Extension Service,

n i d W Q y p , d a n . 2006-51130-03668.