Discharge permit market and farm management nexus: an approach for eutrophication control in small basins with low-income farmers

Abstract

The economic concerns of low-income farmers are barriers to nutrient abatement policies for eutrophication control in surface waters. This study brings up a perspective that focuses on integrating multiple-pollutant discharge permit markets with farm management practices. This aims to identify a more economically motivated waste load allocation (WLA) for non-point sources (NPS). For this purpose, we chose the small basin of Zrebar Lake in western Iran and used the soil and water assessment tool (SWAT) for modeling. The export coefficients (ECs), effectiveness of best management practices (BMPs), and crop yields were calculated by using this software. These variables show that low-income farmers can hardly afford to invest in BMPs in a typical WLA. Conversely, a discharge permit market presents a more cost-effective solution. This method saves 64% in total abatement costs and motivates farmers by offering economic benefits. A market analysis revealed that nitrogen permits mostly cover the trades with the optimal price ranging from $6 to $30 per kilogram. However, phosphorous permits are limited for trading, and their price exceeds $60 per kilogram. This approach also emphasizes the establishment of a regional institution for market monitoring, dynamic pricing, fair fund reallocation, giving information to participants, and ensuring their income. By these sets of strategies, a WLA on the brink of failure can turn into a cost-effective and sustainable policy for eutrophication control in small basins.