Farm economics to support the design of cost-effective best management practice (BMP) programs to improve water quality: Nitrogen control in the Neuse River Basin, North Carolina

ABSTRACT: This paper shows how farm economics information that is widely available can be used to help guide local resource managers and watershed groups in their efforts to design cost-effective programs to improve water quality. The focus is on the economic elements driving farmer and landowner decisions and how those compare with incentive payments to alter these decisions. The approach is illustrated for the case of Best Management Practices (BMPs) mandated for nitrogen control in the Neuse River Basin in North Carolina. The empirical research shows that the economics of the BMPs are very different for the three regions in the basin as distinguished by physiographic conditions. Economic differences in implementing BMPs should be taken into account by state and federal authorities when they are determining cost-share programs. The research also shows that the cost-share payments offered for grass buffers might not be in line with the relative reduction in nitrogen emission offered by this BMP.