A Decision Support System for selecting economic incentives to control nonpoint source pollution from agricultural lands.

Abstract

The Southwest Watershed Research Center of the Agricultural Research Service has developed a Prototype Decision Support System (PDSS) which ranks alternative management systems on an individual field based on the returns to the farmer and the quantities of agricultural pollutants leaving the field. A method has been developed which complements the PDSS by extending the analysis to the whole farm, to consider whole farm resource availability as well as aversion to variations in returns and resource availabilities. The method can be used to determine whether or not farmers have the economic incentives needed to induce the adoption of the highly ranked management systems, and if not, the magnitude of the economic incentives needed can be estimated. The method requires the definition of a representative farm, simulating the alternative management systems which are expected to address the major resource problems for which there are insufficient data, scoring those practices with the PDSS, and using an optimization model to determine the set of management systems which is both feasible and maximizes the area weighted score for the farm. This solution represents the socially preferred set of management systems when offsite effects are taken into account. A similar optimization model with a symmetric quadratic formulation is solved to determine the set of management systems a risk averse, profit maximizing farmer would prefer. By comparing the two solutions, the possibility of promoting management systems which can both improve farm income and reduce offsite damage can be determined. The cost to the farmer of adopting the management systems for their offsite benefits can also be estimated. An example for a 243 hectare farm from the deep loess hills in western Iowa was examined to consider farm income, sediment yield, nitrogen and atrazine emissions. The preferred management system from both the farmer's and society's points of view included a corn soybean rotation, no till tillage, and atrazine. Depending on the importance of controlling nitrogen emissions to the decision maker, the cost to the farmer (the required economic incentive) for limiting nitrogen loading to the desired level could reach $10/ha.