The Empirics of Environmental and Distributional Impacts of Conservation Targeting Strategies

This study compares the environmental and economic effects of alternative targeting strategies (benefit, cost, and benefit-cost ratio targeting) for reducing nitrate-N water pollution in the Des Moines Watershed in Iowa. The objective is achieved by applying an integrated modeling system to nitrate-N runoff from the Des Moines Watershed. Our integrated modeling system consists of an econometric model and a physically-based hydrologic balance simulation model. The econometric model estimates the opportunity cost of CRP participation is calculated at each parcel. The Soil and Water Assessment Tool (SWAT) is then used to simulate the level of nitrate-N runoff at each NRI parcel in the watershed. Our results show that the benefit-cost targeting achieves the highest nitrate-N runoff reduction for a given budget. The cost targeting results in the largest amount of land out of production. This strategy, however, results in the smallest environmental benefits. The benefit targeting takes the smallest amount of resource out of production and results in highest output level. The percent differences in the amount of land retired and total nitrate-N runoff reduction among alternative targeting strategies tend to be larger when the conservation budget is smaller. Finally, benefit targeting and benefit-cost ratio targeting tend to result in similar environmental and economic outcomes. Differences in nitrate-N runoff and acres of land retired between these two strategies are shown to be quite small.