In a survey of Iowa farmers, extreme weather, including more floods and droughts, was identified as a top risk to farm operations in the state. Paired with other concerns, such as global trade issues and the economy, farmers are facing increasingly steep financial risks.

A fact sheet released last week by the Center for Rural Affairs, “Report Recap — Catching Waves: Farmers Gauge Risk to Advance Water Quality in Iowa,” analyzes risks, real and perceived, farmers face when implementing water quality improvement practices.” The publication also reveals that farmers in Iowa view the threat of potential regulation as a top concern.

“Perceptions held by Iowa’s producers should inform and help guide our water quality efforts going forward,” says Katie Rock, policy associate at the Center for Rural Affairs and author of the fact sheet. “Clearly, farmers are taking potential regulation and a changing climate more seriously.”

Farmers need to be involved
The results also found that farmer involvement was critical in improving water quality across the state. Projects are better implemented when producers are engaged as early as possible in the planning process. Farmers play a key role in project planning and implementation by attending public meetings and serving on watershed management authority boards, for examples.

“No one group is to blame for the serious challenges facing Iowa’s water quality,” Rock says. “However, we’ve found that when farmers become leaders for water quality improvement, it’s more often followed by success.”

Nearly 56% of farmers responding to the survey said they don’t feel social pressure to implement water quality practices. For farmers who consider installing practices, soil health ranked as a top factor with nearly 87% of respondents saying it was a consideration.

The fact sheet is based on a full report released by the Center for Rural Affairs. View the fact sheet online. Established in 1973, the center is a private nonprofit, working to strengthen small businesses, family farms and rural communities through action-oriented programs addressing social, economic and environmental issues.

A market-based approach to water quality?

USDA and EPA in late 2018 released a joint letter encouraging market-based, collaborative approaches to reduce excess nutrients in waterways. Few other details were offered on how to best take this approach.

Policy specialists at the Center for Rural Affairs see three possible market-based strategies for water quality improvement: nutrient reduction exchange, wetland mitigation banking and environmental impact bonds.

Comparable to a cap-and-trade program, the nutrient reduction exchange ties downstream municipalities to upstream partners through voluntary efforts. This approach focuses on reducing nitrogen and phosphorus by leveraging cost-effective projects that would be more affordable than removing nutrients at a water treatment plant. This strategy has been tried in the Ohio River Basin.

With wetland mitigation banking, flood risks can be minimized by holding and slowing the flow of water, as well as allowing nutrients and sediment to filter out. In addition, wetlands can provide a natural habitat for birds and waterfowl. The idea behind this approach is to encourage new investments in water quality and flood mitigation by restoring wetlands.

Environmental impact bonds have been used recently by major cities to finance infrastructure projects to improve water quality, particularly from stormwater runoff. Washington, D.C., first used this tool in 2016, followed by Baltimore, Md., and Atlanta, Ga.

What makes environmental impact bonds different from other green bonds is that they use a “pay for success” model focused on achieving environmental outcomes, which requires them to have a measuring and monitoring component for investors.

The center’s analysis concludes, “Any of these three market-based strategies could play a key role in building a cleaner, healthier and more productive future.”

Source: Center for Rural Affairs, which is responsible for the information provided and is wholly owned by the source. Informa Business Media and its subsidiaries aren’t responsible for any content contained in this information asset.