Environmental and economic impacts of reducing total phosphorous runoff in an agricultural watershed

The economy of northwest Arkansas relies greatly upon livestock and poultry production. The supply of production by-products is increasingly coming under scrutiny as an important source of water pollution in the region. This study uses stochastic dominance techniques to evaluate, environmentally and economically, a range of ten best management practice scenarios to lessen water pollution in the Lincoln Lake watershed. The goal is to generate rankings that could be useful for supporting producers’ and watershed managers’ selection of management practices to reduce total phosphorous losses in runoff. Specifically, this study compares scenarios in terms of net return risk reduction for bermudagrass hay producers.The results showed that environmental and economic rankings differ from each other. Although all scenarios analyzed were effective in reducing total phosphorous losses when compared to a baseline, six of them also decreased net returns. This suggests that including some best management practices may lead to increased net return risk. However, some scenarios were identified that may increase net returns, reduce total phosphorous losses and do not differ considerably from producers’ current management practices.The previous results suggested that the joint environmental-economic impact was important when considering scenarios and that producers’ risk attitudes and best management practices’ economic impacts should be accounted for when selecting scenarios. Producers and watershed managers can weigh trade-offs between total phosphorous losses reduction and net returns variability when making water conservation decisions.

► Scenario selection differs when environmental and economic impacts are analyzed separately.
► Rankings of scenarios in terms of total phosphorous or net returns differ from each other.
► Adding best management practices may lead to increased net return variability.
► Producers’ risk attitudes matter.
► Total phosphorous losses may be decreased and net return may be increased simultaneously.