Academic journal article Contemporary Economic Policy

Role of Voluntary Programs in Agricultural Nonpoint Pollution Policy

Academic journal article Contemporary Economic Policy

Role of Voluntary Programs in Agricultural Nonpoint Pollution Policy

Article excerpt

I. INTRODUCTION

Public awareness about the health and environmental consequences of agricultural chemical use has continued to grow following publication of Rachael Carson's Silent Spring in 1962. That concern led policymakers to form the Environmental Protection Agency (EPA) in 1972 and to enact legislation such as the Clean Water Act and the Federal Insecticide, Fungicide, and Rodenticide Act. However, agricultural nonpoint-source pollution--that is, water pollution from runoff of fertilizers, pesticides, and agricultural land sediment--remains largely unregulated.(1)

Solving a number of important remaining water pollution problems requires reducing agricultural nonpoint pollution. However, the best way to achieve that reduction is unclear.

Agricultural nonpoint pollution policy traditionally has relied on voluntary programs such as those administered by the USDA Soil Conservation Service. These programs often couple technical assistance with a subsidy covering a portion of the recommended practice's cost. Voluntary programs are popular with farmers. However, conventional wisdom suggests that farmers would be unlikely to adopt voluntarily pollution-reducing practices without a subsidy covering full costs of the practice plus any revenue loss.

Abbreviations

EPA: Environmental Protection Agency

PMB: Private Marginal Benefit

PMC: Private Marginal Cost

WTA: Willingness-to-accept

Alternatives to voluntary programs include regulation, increased farmer liability for water quality damages, and taxes on pesticide and fertilizer purchases. Policymakers commonly regulate pesticides but rarely regulate fertilizers. (Nebraska, for example, does restrict fertilizer use in areas that are susceptible to nitrate contamination of groundwater.) EPA, through its pesticide registration process, may limit pesticide use to particular crops or particular regions. EPA also may restrict farm laborers from entering fields just after spraying. The Food and Drug Administration sets maximum allowable tolerances for pesticide residues on foods. EPA may ban use of a pesticide that constitutes an undue health or environmental threat by cancelling its registration. Regulation is a reasonably effective way of dealing with toxic substances such as pesticides. However, regulation can be a cumbersome and expensive alternative for non-toxic substances that cause environmental damages when present in excessive amounts. With some exceptions, sediment pollution and fertilizer pollution fall into this category.

Liability is another important alternative policy. Although certain states, such as Connecticut, use limited farmer liability for groundwater pollution, liability also is problematic. Lawsuits can produce "highly unsystematic levels of compensation, distorted incentives, and high transactions costs" (Menell, 1991). Economists often recommend taxes on fertilizer and pesticide purchases since such taxes would reduce the use of polluting inputs. However, studies show that to have a noticeable impact on nitrogen fertilizer usage, nitrogen taxes would have to be over 100 percent (Johnson et al., 1991).

Voluntary programs coupled with subsidies are not free of shortcomings, but in certain cases voluntary programs may be more effective than one might expect because the farming business possesses a unique structure. In farming, the owner/operator and the owner/operator's family generally reside on the farm site. Industrial or "corporate" farms owned by nonresident shareholders are uncommon. In 1987, 99.2 percent of all farms were sole proprietorships, partnerships, or family held corporations (U.S. Department of Commerce, 1989). Therefore, the owners and decision makers on a farm may bear a portion of the pollution costs of their production decisions and thus have an incentive to reduce that pollution.(2) For example, pesticides and fertilizers can leach into the farmer's own well water and endanger family health in addition to polluting water off the farm, such as the community water supply. …

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