The Allocation of Nutrient Load Reduction across a Watershed: Assessing Delivery Coefficients as an Implementation Tool

Delivery coefficients have long been used in economic analysis of policies that seek to address environmental problems like water pollution. However, the derivation and validity of delivery coefficients have not been examined carefully by empirical analyses. We derived estimates of delivery coefficients and then evaluated them as a bridge between complex simulation models and economic policies like water quality trading. We found that the allocations achieved outcomes that differed from intended water quality targets by less than 10% in most cases. For the least-cost allocation with heterogeneous costs, cost savings significantly outweighed deviations from water quality targets.     

A Metamodeling Approach to Evaluate Agricultural Policy Impact on Soil Degradation in Western Canada

A novel approach for integrating economic and environmental models is described in the context of evaluating soil degradation impacts of agricultural policy in western Canada. The key element of this approach is the development of metamodels, which are statistical summary functions of simulation data obtained from carefully designed experiments with physical process models. The metamodels are in turn used to predict the soil degradation impacts of farmers'land management responses to policy options. The metamodels provide flexibility to perform repeated policy scenarios without having to rerun the time-and resource-consuming physical process simulation models. The estimated wind and water erosion metamodels are very robust, with the majority possessing R-square values in the range of 0·80 to 0·97. The efficiency of the metamodels in facilitating the integration of a policy modeling system is described and applied to a scenario of increased crop residue management. Using regional aggregates of net farm income, total economic, surplus (consumer plus producer surplus) and total soil loss the economic and environmental tradeoff between the status quo and a no-till policy scenario is evaluated. The model-predicted economic welfare and environmental quality interaction suggests a clear win-win situation for society under this alternative policy scenario.     

An Improved Reverse Auction for Addressing Water Quality in Agricultural Watersheds Using Coupled Simulation-Optimization Models

As nutrients and sediment in agricultural watersheds continue to degrade water quality, attention is increasingly given to reverse auctions to cost-effectively address these pollutants. Typically, reverse auctions include a selection process which depends on both the monetary bid and a ranking of the environmental benefit, where the latter is often approximated using simple models, such as the Universal Soil Loss Equation （USLE）. When the environmental objective is to improve water quality, the cost-effectiveness of such ranking methods cannot always be assured since simple models may poorly approximate the effects on downstream water quality. In this paper, we introduce an alternative reverse auction approach that takes advantage of richer watershed process models and optimization tools that are now much more commonly available. This ＂improved＂ reverse auction allows decision-makers to better consider the cost-effective assignment of conservation practices and to address water quality or other environmental objectives. In a spatially detailed simulation, we demonstrate how this approach can improve the design of a reverse auction for the Raccoon River Watershed in Iowa, and estimate the potential gains from using the simulation-optimization approach relative to simpler ranking methods for selecting bids. We also point out that simple bid ranking schemes may not yield sufficient nutrient reductions to achieve water quality goals but bids areeasily selected to achieve any feasible water quality improvement in the ＂improved＂ auction process.