Thoughts on the Tradeoffs between Food Thoughts on the Tradeoffs between Food Production and Water Quality in the U.S.Production and Water Quality in the U.S.

Catherine L. KlingCatherine L. KlingIIowa State Universityowa State University

IFPRI Board Policy SeminarIFPRI Board Policy SeminarDecember 5, 2011December 5, 2011Washington DCWashington DC

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Source of TradeoffsSource of Tradeoffs Relationship between costs of conservation and Relationship between costs of conservation and

land prices land prices Conservation Reserve Program and crop price/land Conservation Reserve Program and crop price/land

price increases (Secchi et al.)price increases (Secchi et al.) Opportunity costs of many conservation actions Opportunity costs of many conservation actions

directly related to profitability/crop pricesdirectly related to profitability/crop prices

Historically, concern by environmental groups that Historically, concern by environmental groups that as land prices (profitability) increases, conservation as land prices (profitability) increases, conservation budgets will go less far. budgets will go less far.

But, this is corollary of todays topic: if we demand But, this is corollary of todays topic: if we demand more environmental improvement, this raises food more environmental improvement, this raises food pricesprices

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How to Measure these Tradeoffs?How to Measure these Tradeoffs? Integrated land use water quality modeling Integrated land use water quality modeling

system system

Water quality and hydrologyWater quality and hydrology Economics/land use modelsEconomics/land use models Genetic Algorithms to find least cost solutions or Genetic Algorithms to find least cost solutions or

more directly costs of more directly costs of

Hypoxic conditions: Gulf of MexicoHypoxic conditions: Gulf of Mexico

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Gulf Hypoxia Gulf Hypoxia • Over 400 hypoxic areas worldwide, combined affected area of 245,000 km2 (Diaz and Rosenberg, 2008) Depleted oxygen creates zones incapable of supporting most life

•Naturally occurring, but significantly enhanced by anthropogenic sources of nutrients

•43% N and 41 % P reaching hypoxic zone originates from UMRB (USGS)

• Hypoxic zones result in stressed marine and estuarine systems, mass mortality and dramatic changes in the structure of marine communities (Diaz and Rosenberg, 1995).

• Gulf of Mexico effects still poorly documented, brown shrimp fishery effects, recreational fishing,

World wide hypoxic zonesWorld wide hypoxic zones

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Squa

re k

ilom

eter

s

Year

n.d.

Area of Mid-Summer Bottom Water HypoxiaArea of Mid-Summer Bottom Water Hypoxia(Dissolved Oxygen < 2.0 mg/L)(Dissolved Oxygen < 2.0 mg/L)

Data source: N.N. Rabalais, Louisiana Universities Marine Consortium, R.E. Turner, Louisiana State UniversityFunded by: NOAA, Center for Sponsored Coastal Ocean Research

5-yr average

goal

long-term average

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189,000 square miles in seven states,189,000 square miles in seven states, dominated by agriculture: 67% of total area,dominated by agriculture: 67% of total area, > 1200 stream segments and lakes on EPAs > 1200 stream segments and lakes on EPAs

impaired waters list, impaired waters list,

Upper Mississippi River Basin

Reduced Fertilizer Reduced Fertilizer

Reduces both costs and yields, may increase riskReduces both costs and yields, may increase risk

Currently some/much “Over application” Currently some/much “Over application” according to agronomic needs according to agronomic needs

Other abatement strategies: cover crops, Other abatement strategies: cover crops, buffers, denitrification, etc.buffers, denitrification, etc.

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Approximating costs of fertilizer reductionsApproximating costs of fertilizer reductions

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 2000

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N fertilizer, lbs/acre

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ertil

izer

Predicted Yield Reduction

20% Nfertilizer

reduction

Land Retirement (CRP)Land Retirement (CRP)

Panoramic view of gamma grass-big blue stem plantinghttp://www.fsa.usda.gov/Internet/FSA_Image/ia_767_15.jpg

Ag Farmland ValuesAg Farmland Values

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“Two recent land value surveys reported a 22% increase in Nebraska from February 2010 to February 2011, and prices up 25% in Iowa from March 2010 to March 2011. (Johnson, Wilson, and Van Newkirk, 2011; Iowa Farm and Land, Chapter 2, 2011)” Mike Duffy, Choices,

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Tradeoffs of NPS control costs and Tradeoffs of NPS control costs and water quality benefitswater quality benefits

Nitrate loadings at the outlet vs. costsNitrate loadings at the outlet vs. costs

Empirical cost curve for nitrate reductions

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Nitrates, % of baseline

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Unconstrained cost curve

Binding constraint on 30% Preduction

“Least Cost Control of Agricultural Nutrient Contributions to the Gulf of Mexico Hypoxic Zone,” Sergey Rabotyagov, Todd Campbell, Manoj Jha, H. Feng, Philip W. Gassman, Lyubov Kurkalova, Silvia Secchi, and Catherine L. Kling.

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Consequences of seeking a 30% Consequences of seeking a 30% reduction in NOreduction in NO33

Conservation and Land use to achieve reductionConservation and Land use to achieve reduction N fertilizer reductions N fertilizer reductions grassed waterways (extensive)grassed waterways (extensive) terraces (combined with N fertilizer reductions)terraces (combined with N fertilizer reductions) additional (substantial) land retirementadditional (substantial) land retirement

The annual additional cost is estimated to be The annual additional cost is estimated to be $ 1.4 billion (more than quadrupling baseline cost)$ 1.4 billion (more than quadrupling baseline cost)

Final ThoughtsFinal Thoughts

Pressure to improve environmental performance Pressure to improve environmental performance will in some cases be costly in terms of yield or will in some cases be costly in terms of yield or higher need for other inputshigher need for other inputs

LessonsLessons Need to design policy to most cost effectively Need to design policy to most cost effectively

achieve environmental goalsachieve environmental goals Policies can be designed to place burden of these Policies can be designed to place burden of these

costs in different sectors (subsidies=taxpayers, taxes costs in different sectors (subsidies=taxpayers, taxes = producers and consumers, etc.)= producers and consumers, etc.)

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