DETERMINING TRADEOFFS BETWEEN WATER-QUALITY AND PROFITABILITY IN AGRICULTURAL PRODUCTION - IMPLICATIONS FOR NONPOINT-SOURCE POLLUTION POLICY

Agricultural nonpoint sources of water pollution have received increased attention over the past decade as routine monitoring has indicated the presence of contamination in both surface and ground waters. In Iowa (as well as other states), policy makers have debated the effectiveness of alternative policy mechanisms to control these agricultural pollution sources. In this study, we investigate both the water quality and farm profitability impacts of four policy options: regulation, taxation, intensive technical assistance including cost sharing, and research and education. Simulations of water quality and profitability impacts are run for a sample of farm fields in Iowa. Summarized results identify both the range of impacts from a particular policy and the tradeoffs between improvements in water quality and declines in farm profitability within and between policies. Results indicate that impacts differ across policy options and by location; however, improvements to both water quality and profitability can be achieved with some of these policies. These findings suggest that agricultural nonpoint source pollution policies can improve water quality without significant cost to farmers or statewide residents.