Brent Sohngen, a professor in Ohio State University’s Department of Agricultural, Environmental and Development Economics, presented “Economic Incentives and Water Quality in Ohio”, an interesting talk about paying farmers for the reductions in runoff pollution they deliver. This economics-inspired approach differs from that typical of Soil and Water Conservation grants that pays for specific installations like riparian buffer strips, containment ponds for sewage, and conservation research program fallow fields.
Dr. Sohngen experimentally signed a contract that would pay farmers for pollution reductions in a small watershed in West Ohio. Unfortunately pollution increased when one of the farmers in the watershed decided to double his hog production. Still, Dr. Sohngen thinks the technique has promise, given that the farmers were responsible for more pollution than a nearby town's wastewater treatment plant. Given what we are willing to pay to upgrade the plant, shouldn't we be willing to pay a similar amount to the farmers?
I like the idea, but the economic logic seems to falter because it is based only on what society is willing to pay, not the cost to the farmer. I would have liked to ask about how much money, given the farmer's decision to invest in additional hogs, it would actually take for the farmer to pollute less. What is the opportunity cost of reduced pollution?