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Economics of Water Quality Protection From Nonpoint Sources: Theory and Practice

by Marc Ribaudo, Richard Horan, and Mark Smith

Agricultural Economic Report No. (AER-782) 113 pp, November 1999

Cover image Water quality is a major environmental issue. Pollution from nonpoint sources is the single largest remaining source of water quality impairments in the United States. Agriculture is a major source of several nonpoint-source pollutants, including nutrients, sediment, pesticides, and salts. Agricultural nonpoint pollution reduction policies can be designed to induce producers to change their production practices in ways that improve the environmental and related economic consequences of production. The information necessary to design economically efficient pollution control policies is almost always lacking. Instead, policies can be designed to achieve specific environmental or other similarly related goals at least cost, given transaction costs and any other political, legal, or informational constraints that may exist. This report outlines the economic characteristics of five instruments that can be used to reduce agricultural nonpoint source pollution (economic incentives, standards, education, liability, and research) and discusses empirical research related to the use of these instruments.

Keywords: Water quality, nonpoint-source pollution, economic incentives, pollution control policies

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Last updated: Monday, February 02, 2015

For more information contact: Marc Ribaudo, Richard Horan, and Mark Smith