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Water 2016, 8(6), 245; doi:10.3390/w8060245

Role of Conservation Adoption Premiums on Participation in Water Quality Trading Programs

1
Baruch Institute of Costal Ecology and Forest Science, Clemson University, P.O. Box 569, Clemson, SC 29442, USA
2
Department of Soil Science, North Carolina State University, Raleigh, NC 27695, USA
3
Department of Agricultural and Resource Economics, Colorado State University, Fort Collins, CO 80523-1172, USA
*
Author to whom correspondence should be addressed.
Academic Editor: Athanasios Loukas
Received: 26 April 2016 / Revised: 24 May 2016 / Accepted: 2 June 2016 / Published: 9 June 2016
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Abstract

Over half of lakes, reservoirs, and ponds in the United States are threatened or impaired, mostly by nutrients. One policy to improve water quality is water quality trading (WQT). While the concept is appealing, adoption of conservation practices in these programs has been anemic at best. Using a case study in the newly-formed WQT market in Jordan Lake, North Carolina, we propose that part of the problem is a large adoption premium (AP) for this program. AP is the amount that farmers require over and above direct adoption costs to participate. In this study, farmers were asked at in-person interviews about their willingness to accept (WTA) a payment to adopt a particular conservation practice (riparian buffers) in order to generate and sell credits. We compared farmers’ WTA to their direct cost of participation, which allowed us to estimate an AP. On average, the AP more than doubles the cost of purchasing credits. The AP sums all of the known indirect costs already cited in the literature, and more, into a single value and is relatively simple to estimate. Knowing the AP would improve the ability of policy makers to accurately estimate what is needed to boost adoption rates in WQT programs and other conservation programs as well. View Full-Text
Keywords: water quality trading; conservation practices; wedges; adoption premium; farmer decision-making; Jordan Lake water quality trading; conservation practices; wedges; adoption premium; farmer decision-making; Jordan Lake
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Motallebi, M.; O’Connell, C.; Hoag, D.L.; Osmond, D.L. Role of Conservation Adoption Premiums on Participation in Water Quality Trading Programs. Water 2016, 8, 245.

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