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Benefits and Costs of Natural Resources Policies Affecting Public and Private Lands (from W1133)
Department of Agricultural Economics
Natural resource agencies and institutions at the federal, state, and local levels, as well as private landowners, attempt to balance economic growth and environmental quality. Emphasis on environmental quality is evident in provisions of the most recent Farm Bills; in agricultural land preservation programs at the local, state and federal levels; and in legislative mandates to federal agencies to justify their decisions regarding how natural resources are to be managed, including protecting environmental quality, providing wildlife habitat, and providing access for recreation. In federal regulatory impact analyses, agencies use a benefit-cost analysis framework, which requires quantification of the monetary value of all natural resources, including those not traded in markets and thus lacking market prices. The need for valid and reliable economic estimates of non-market resources continues to grow as management philosophies and people's demands for environmental quality change. For example, federal land management agencies have adopted ecosystem management as a guiding principle, which requires information on environmental, social, and economic aspects of the quality of, and / or project impacts on, natural resources. The objectives of this regional research project are designed to provide non-market benefit and cost information needed by decision makers in the public and private sectors. The rechartered project will address important stakeholder issues such as recreation access to public and private lands; the valuation of ecosystem services; and effective management of natural hazards such as invasive species and forest fires.
2010 Project Description
The objectives of multistate project W-2133 (Benefits and Costs of Natural Resources Policy Affecting Public and Private Lands) are:
1. Estimate the economic value of management actions and policies that reduce risk and uncertainty of natural hazards and agricultural land preservation
2. Develop and evaluate the accuracy and reliability of primary non-market valuation methods and benefit transfer for use by public agencies
3. Quantify the economic benefits of ecosystem services and evaluate mechanisms for their provision.
Under the umbrella of this multistate project, I am conducting research about policy and regulation related to water quality in Kentucky. In particular, I am evaluating the feasibility of a tradable permit program that would allow agricultural producers to contribute to improving water quality via the generation and sale of offset credits to entities regulated under the Clean Water Act (CWA). Such a program has the potential to lower the costs of achieving water quality targets while also offering a new revenue source to agricultural producers. My activities contribute primarily to the second and third objectives listed above.
During 2010, I generated numerous outputs related to this project. I developed surveys which will be distributed to nonpoint sources (agricultural producers) and point sources (primarily industry and municipal water treatment plants). These surveys will be delivered in 2011 and will collect data related to the costs to both types of sources for abating water pollution and to agricultural producers' willingness to participate in various forms of tradable permit programs. I have developed a database regarding point sources of water pollution in the Kentucky River watershed. It contains information about their locations, their emission of various pollutants, and their regulatory obligations and compliance under the CWA.
I have taught and mentored students. Two graduate students are developing Masters theses based on this research, and I am also supervising a post-doctoral scholar working on this project. I incorporated material from the project into two undergraduate courses I taught in 2010.
In connection with project, I participated in several events during 2010. I discussed the project at the annual symposium sponsored by the Kentucky Water Resources Research Institute. I also attended the annual conference of the Agricultural and Applied Economics Association, where I participated in several sessions related to water quality and policy. One of the graduate students working on the project presented preliminary research at a departmental seminar. Our group also presented our project to a meeting of representatives from various stakeholders concerned with water quality in Kentucky (i.e., advocacy groups, state government, and land owners). I also attended a workshop in spatial econometrics, a method of analysis well-suited for the research involved in the project.
In other research related to the multistate project, I have conducted research into the topics of bioenergy policy and climate change policy. I developed three grant proposals to federal agencies based on this research.
As a result of the water quality project, I and others involved (collaborators, students, audience members) have developed our knowledge regarding water quality issues in Kentucky. We have learned about the regulatory framework established by the Clean Water Act and associated regulation, especially regarding its impact on agriculture. We have thoroughly reviewed the scholarly literature concerning water policy, tradable permit programs, and agricultural participation in voluntary programs.
Working on this project has also contributed to improvements in mine and my students' and colleagues' skill sets. In particular, we have developed new proficiencies with spatial mapping software (ARCGIS), the EPA's EnviroFacts and NPDES permit databases, and spatial econometric analysis, as well as honing existing skills with database management, statistical analysis, and survey design. These skills will continue to serve us on projects for years to come.
As we complete the steps we have initiated, we anticipate that changes in actions and conditions will occur in the future. The results of our research will inform policymakers and lead to better use of incentive programs and improvements in Kentucky's water quality.
Hu, Wuyang, Alison Davis, Linda J. Cox, and Jack Schieffer, 2010. "An Ex Post Attribute Preference Analysis as a Follow-up of Stated Preferences for Desert Management Strategies," Annals of Leisure Research, 13(4): 630-651.