Editor’s note: This commentary is by Jon Winsten, Ph.D., who is an agricultural economist and senior program officer for Winrock International. He lives and works in Shelburne.
[L]ake Champlain is a jewel. It is an important economic driver for our region’s tourism industry and provides immeasurable recreation and scenic value for those of us on or near it. We not only have a personal obligation to future generations to maintain the health of the lake as best we can, we now have an obligation to the federal government via the Lake Champlain Phosphorus Total Maximum Daily Load (TMDL). The TMDL is known as the phosphorus diet for the lake and spells out the levels of phosphorus entering each section of the lake that we cannot exceed to have a healthy lake. When you include the Vermont areas affected by the Lake Memphremagog and Long Island Sound TMDLs, we are on the hook to reduce nutrient losses from the vast majority of Vermont’s land area. This was the main driver for the 2015 Vermont Clean Water Act (Act 64), which has an estimated price tag of $2.3 billion over 20 years. This is equal to $3,672 for every man, woman, and child in Vermont or $184 per person per year!
As the 2019 Legislature draws to a close, there is a lot of discussion in Montpelier about where clean water funding will come from. These are important discussions. However, the problem is that we are not hearing any discussions about whether the clean water plan is likely to be successful or whether it is a cost-effective way to achieve and maintain healthy lakes and rivers. We have important work to do and a limited budget; if we do not have a laser focus on the most cost-effective actions, we will be sunk.
Science clearly shows that agriculture is the single largest source of nutrient loss from Vermont to Lake Champlain. We cannot solve our water quality problems without active participation by our farmers. At the same time, dairy farming, which has been the backbone of our rural economy and communities for over 100 years, is in the midst of an historic, serious and prolonged financial crisis. The average price Vermont farmers received for conventional milk in 2018 was $15.44 per 100 pounds of milk (cwt.), but the average cost of producing milk is the range of $18-$20 per cwt. We are losing dairy farms at an unprecedented rate. Let’s remember that we owe, in large part, the value of our remaining open land to our dairy farmers; their loss is a problem of for all of us.
Clearly, our clean water plan needs to engage our farmers, who are, by necessity, great problem-solvers. Unfortunately, our current approach to getting farmers on board, by “cost-sharing” best management practices, does not give farmers much flexibility, therefore stifling innovation, and often does not help the farm’s bottom line. This voluntary pay-for-practice approach, which is heavy on the paperwork, seems to ignore the body of knowledge on how to motivate people to take action (which is an entire article unto itself) by setting appropriate, achievable goals and providing rewards. Most importantly, this approach will not result in the most cost-effective actions on farms.
To achieve our clean water goals, as well as to benefit our farmers, our rural communities, and ourselves as taxpayers, we would be wise to adopt a pay-for-performance approach to reducing nutrient loss from agriculture. What is pay-for-performance conservation? It is an approach that rewards farmers based on the amount of verified nutrient loss reductions they can provide. How can we do this if we cannot measure nutrient loss at the edge of every field? Using science-based simulation models.
Science and common sense both clearly tell us that there is huge variability in the performance of any best management practice based on the characteristics of the field it is implemented on, such as slope, soil type, and distance to surface water. Our current approach does not take these factors into account, but merely assumes an average value regardless of where the best management practice is implemented. We need our farmers to seek out and implement the very most cost-effective actions to reduce nutrient loss from their specific fields. A payment per pound of phosphorus loss reduction motivates farmers because the more cost-effective they can be, the more money stays in their pockets.
In pilot-testing that Winrock International and UVM did 10 years ago in the Missisquoi River watershed, we offered farmers $25/pound of phosphorus loss reduction. We worked with farmers to analyze scores of field management changes that they might be interested in doing. The cost of the changes analyzed varied from -$54/pound (i.e. saving the farmer money) to $842/pound of phosphorus loss reduction (i.e. not cost-effective). Any changes that costs the farmer less than $25/pound would make them better off. If these farmers implemented all of the changes that made them better off, and only those changes, phosphorus loss reduction would be 0.26 pounds/acre across the entire farm at an average cost of $4.86/pound. This leaves $20.14/pound in the farmers’ pocket to help their bottom line and gets us more than 40% of the way to the TMDL goal for agriculture.
Because our current pay-for-practice approach does not use field-specific estimates of reduction, there are not reliable estimates for what actual load reductions will be. Without this, we cannot know the cost-effectiveness of these public investments or even if we will meet the goal. We need to do better than this. A recent study from the Economic Research Service of the USDA has estimated that pay-for-performance conservation could be more than four times as cost-effective than the current pay-for-practice approach.
It is time once again for Vermont to step into a leadership role for the nation and demonstrate that Yankee ingenuity can triumph over burdensome bureaucracy to achieve clean water and support the hands that feed us without costing us an arm and a leg. The question of how we will pay for this clean water plan may be much more easily answered if the plan only costs a fraction of the current estimate and has a greater probability of success.
