For decades, U.S. farmers have been adopting conservation practices like cover crops and no-till planting using financial help through the federal Environmental Quality Incentives Program, or EQIP.
But a new study shows this may not be the most cost-effective way to stop runoff and improve water quality around working lands.
The report, from the University of Wisconsin-Madison and Environmental Policy Innovation Center, found that paying farmers based on the measured reduction of phosphorus contamination, what's known as a "pay-for-performance" model, led to a 35% cost savings for every pound of contamination reduced.
Researchers used EQIP data on practices that were implemented by farms in Wisconsin and using a modeling software to estimate the amount of phosphorus the projects reduced.
"Where most agricultural conservation dollars go are 'pay for practice' types of outcomes, where a farmer can implement cover crops, and they know, no matter where they are at, kind of the menu price that they will receive for that," said Jeff Hadachek, associate professor of agricultural and applied economics at the University of Wisconsin-Madison and an author of the report.
Hadachek and his coauthors compared the estimated EQIP payment rate to actual payments made per pound of phosphorus reduction under Wisconsin's Water Quality Trading Market.
The state-regulated program allows municipal wastewater facilities or private companies that have excess phosphorus emissions, what are called "point sources" of contamination, to comply with state regulations by paying farmers and landowners, considered "nonpoint sources," to reduce runoff in their local watershed.
The report found that EQIP paid an estimated $54.47 for every pound of phosphorus reduced, while the Water Quality Trading Market paid farmers an average of $35.18 per pound.
"What this would support is a move towards a system where environmental performance, at the very least, is measured better," Hadachek said. "Rather than just spraying dollars around the landscape and assuming that they achieve environmental performance, this also generates an opportunity where dollars can be targeted at the most vulnerable soils."
Farms see different benefits for same practice
The reason why pay-for-practice programs end up costing more is that popular practices like cover crops or no-till planting don't provide uniform benefits for every farm, according to Jason Knouft, associate director of Saint Louis University's WATER Institute.
"Every farmer's property is different, whether it's the soil type, what type of crops they're using, what the topography of the landscape is," Knouft said. "So you really can't apply a one-size-fits-all approach."
This not only means that individual projects can be less cost efficient, but Knouft said it can also make it harder to move the needle on reducing excess phosphorus across a region's waterways.
While more landowners and producers are adopting conservation practices, Knouft said researchers are finding vastly different levels of nutrient reductions in different areas of the Mississippi River watershed. And in some cases, they're not seeing any improvements.
"So the question then is: Why is it working in some places, and why isn't it not working in others?” Knouft said. “My sense is that it comes back to this idea that all of these applications are place-based."
Knouft said while the tailored approach is more effective, it's also much more time-intensive.
That was the experience for Brian Schaal, a third-generation dairy farmer from southeast Wisconsin.
He needed to find a way to address a serious problem with erosion on one of his fields that borders a small drainage canal. Schaal said his local land conservationist recommended looking at the state's Water Quality Trading Market to get help paying for the project.
"Implementing this on our own was cost prohibitive," he said. "But with some cost-sharing money, now it made sense for us to do this."
Schaal said the project required him to pay up front for an engineer to verify the environmental benefit, something he said some producers likely wouldn't be able to afford. But it led to a contract that will pay him for the reduction in runoff long term.
The downside was that it took more than two years to get the project designed, approved and actually built on his land. Still, it's not all that different from a USDA program like EQIP, according to Schaal.
"I think that's what deters a lot of people from doing some of this is the time that it takes," he said.
New programs emphasize outcomes
There's new evidence that the outcomes-driven model is gaining traction.
The Trump administration's new Regenerative Pilot Program is billed as an "outcomes-based approach to conservation." The program, which uses $650 million in EQIP funding, allows farmers to submit a whole-farm management plan and uses soil health testing to credit farms for their conservation work.
In Michigan, a new Pay-for-Performance program was just launched by Michigan State University using funding from the Michigan Department of Agriculture and Rural Development.
Jeremiah Asher, assistant director of MSU's Institute for Water Research, said the program is part of the state's efforts to reduce phosphorus runoff into the Western Lake Erie Basin, which has experienced harmful algal blooms for over a decade.
He said a similar pilot project in the River Raisin Basin proved to be roughly seven times more cost-effective per pound of phosphorus reduction compared to an estimate of EQIP payments in the same area.
Asher said one of the biggest hurdles to success is getting farmers used to a different approach, including the fact that payments could vary widely for the same practice.
"In their eyes, they're all similar-sized fields, and they're all getting cover crops. Why are (the payments) different?" he said. "We work with our technical assistance providers to help communicate that these are field by field. Each field performs a little different than the other one, and not all your payments are going to be exactly the same."
Asher said in a bid to help build trust in the new program through existing relationships, the project has made an effort to recruit private agriculture retailers like seed dealers to help farms navigate the new model.
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest and Great Plains. It reports on food systems, agriculture and rural issues.
