Incorporating economics into the phosphorus index: An application to U.S. Watersheds

ABSTRACT:

Discharge of excess nutrients into surface water by agricultural production is a significant source of water pollution throughout the United States. A number of mechanisms can be used by policymakers to identify regions for initial abatement programs. One targeting mechanism that is commonly used is the phosphorus index, or P index. This paper develops the concept of an economic P index — one that incorporates into the conventional P index heterogeneous agricultural net returns across watersheds to better target abatement policies for agricultural phosphorus discharge. Using national-level data for phosphorus transport factors, source factors, and net returns, we find that targeting watersheds using an economic P index improves the potential cost-effectiveness of phosphorus abatement efforts by as much as 50% when compared with a conventional P index. Assuming average abatement costs vary in the same direction and magnitude as do agricultural net returns relative to phosphorus discharge potentials, targeting regions using an economic P index in coordination with a conventional P index reduces by more than 60% potential average costs of abatement.