Paying Farmers by How Much They Reduce Runoff Saves Money and Supports Conservation, Study Finds

By Hope Kirwan

For decades, U.S. farmers have been adopting conservation practices like cover crops and no-till planting using financial help through the federal Environmental Quality Incentives Program, or EQIP.

But a new study shows this may not be the most cost-effective way to stop runoff and improve water quality around working lands.

The report, from the University of Wisconsin-Madison and Environmental Policy Innovation Center, found that paying farmers based on the measured reduction of phosphorus contamination, what’s known as a “pay-for-performance” model, led to a 35 percent cost savings for every pound of contamination reduced.

Researchers used EQIP data on practices that were implemented by farms in Wisconsin and using a modeling software to estimate the amount of phosphorus the projects reduced.

“Where most agricultural conservation dollars go are ‘pay for practice’ types of outcomes, where a farmer can implement cover crops, and they know, no matter where they are at, kind of the menu price that they will receive for that,” said Jeff Hadachek, associate professor of agricultural and applied economics at the University of Wisconsin-Madison and an author of the report.