A group incentive program for farmer adoption of best management practices.

摘要

The purpose of this dissertation is to design an incentive program to encourage farmer adoption of best management practices to control nonpoint source pollution from agriculture. A group incentive program which compensates farmers for actual losses due to pollution abatement is presented first. The moral hazard, selection issues, and the participation decisions are analyzed under risk aversion. The proposed incentive program is demonstrated in the Lake Decatur watershed, a Central Illinois watershed facing water quality problems due to nitrate pollution from agricultural sources. The expected program payments, costs of sponsoring the program and the expected environmental improvement from the program are presented and discussed. The subjective beliefs of farmers on the response of yields/profits to nitrogen application are elicited from a non-random sample of farmers in the study area. The elicitation results are then used to analyze reasons for the current nitrogen application rates of the farmers and the willingness-to-accept for a reduction in application rates.The simulation results showed that expected program payments range The simulation results demonstrate that reduction in nitrogen application rates significantly reduces average annual emissions and improves water quality in the lake. A fifty pound reduction in nitrogen application rate results in emission reductions ranging from 41% to 56% and reduction in probability of nitrate concentration exceeding the 10 mg/l level by as much as 50%.The analysis of farmer beliefs regarding response of yields to nitrogen application and their willingness-to-accept for a reduction in nitrogen application indicate that the farmers are too optimistic about the response of the yield. This results in farmers applying nitrogen at rates higher than the recommended rates and the willingness-to-accept for reduction in nitrogen application, higher than the expected program developed in this study.The program demonstrated in this study could be implemented as a short-term educational effort by promoting farmer experimentation. The key to success of such an educational effort is to educate the farmers about the correct response of yields to nitrogen application rates and that a reduction in nitrogen application from their current levels may not reduce their profits.