An environmental benefit-cost analysis case study of nutrient management in an agricultural watershed

Abstract

This paper illustrates the importance of valuing environmental goods and services associated with water quality improvements when assessing implementation of on-farm nutrient management plans as required by the Quebec Regulation Respecting Agricultural Operations (RRAO). Based on a case study in the Chaudiere River watershed, two scenarios were considered using the integrated, economic-hydrological, modelling framework provided by GIBSI: (i) a base-case scenario assuming application of all available manure; and (ii) an on-farm nutrient management scenario based on meeting phosphorus crop requirements with manure and treating any manure surpluses. Two types of management units were selected to evaluate these scenarios: (i) contiguous municipalities (administrative units of agricultural development); and (ii) subwatersheds. Results showed that management at subwatershed levels had larger benefit/cost (B/C) ratios when compared to contiguous municipalities. This illustrates that the watershed is a more meaningful management unit than the municipality, which is not a hydrological unit. For one of those subwatersheds, the B/C ratio was close to one although only various recreational benefits were accounted for in the evaluation. In all likelihood, if a more holistic set of benefits were accounted for, a B/C ratio greater than or equal to one would have resulted. A sensitivity analysis revealed that variations of 37.5%, -22.5%, and -20% for monetary benefits, on-farm manure treatment costs, and average probabilities of exceeding the targeted water quality standard (prevention of eutrophication of rivers), respectively, were necessary to obtain a B/C ratio greater than one. © 2006, Taylor & Francis Group, LLC.