The North American Experience with Environmentally Sustainable Agriculture Water Policies

Transcription

1 The North American Experience with Environmentally Sustainable Agriculture Water Policies Marc Ribaudo 1, Louise Bissonnette 2, Roberto Ismael Vázquez Ochoa 3, Jorge Argueta Spínola 4, Kari Cohen 5, Tim Marta 2, and Thomas Christensen 5, 1 United States Department of Agriculture, Economic Research Service 2 Agriculture and Agri-Food Canada, Agri-Environmental Policy Bureau 3 Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación 4 Comisión Nacional del Agua (CONAGUA) National Water Commission 5 United States Department of Agriculture, Natural Resources Conservation Service This paper is a contribution of the Tri-National Initiative on Environmentally Sustainable Agriculture and Water Quality. The Initiative is an informal working group of Canada, the U.S. and Mexico. Introduction The Tri-National Collaborative Initiative on Environmentally Sustainable Agriculture and Water Quality originated from an informal agreement between the Deputy Minister for Agriculture and Agri-Food Canada and his counterparts from Mexico and the United States of America to hold a Tri-National Workshop, in Canada, in October Three Tri-National Working Groups were established to collaborate in the areas of Policy Instruments, Program Delivery (focused on Beneficial Management Practices), and Research and Information relative to environmentally sustainable agriculture and water quality. The work consists of sharing national information and conducting tri-national analysis for the three subject areas. The presentation will review the development, processes, mechanisms, and expected results of the Initiative. This paper focuses on policy instruments to achieve environmental sustainability relative to agriculture and water quality. Fundamentally since environmental quality is a public good, it has characteristics that make it unprofitable for the private sector to provide at socially optimal levels. Policymakers can choose from a wide range of policy instruments to compel farmers to adopt management practices that provide or protect environmental quality. These range from fully voluntary to regulatory and include: Education or Decision Support Technical Assistance Financial incentives Cost-share and incentive payments Land retirement payments Market-based Incentives Taxes and fees Compliance mechanisms Regulatory requirements Individual policy instruments are applied in the context of an overall framework of conservation and environmental policies. The nature of this framework, and the degree to which it allows coordination between individual policies/programs and between different layers of government (Federal/state/local), can have an impact on the effectiveness of different policy instruments. Policy Instruments Overview Education or Decision Support is an instrument aimed at improving conservation practices by raising the awareness of farmers. The use of education as a tool for improving environmental quality is based on the assumption that farmers are not fully aware of their operations impacts on water resources, or of the availability and nature of alternative production practices that reduce water pollution or conserve water. In addition, it is assumed that farmers would adopt the alternative practices for reasons of economics or stewardship they had complete information. Common mechanisms for conveying information to farmers include demonstration projects, newsletters, seminars, field days, and the internet. Technical Assistance is hands-on, direct assistance to land owners and farmers who are ready to adopt and implement new conservation practices and technologies. Technical assistance is similar in some ways to education, but it is more one-and-one, and commands greater resources from conservation agencies. A representative from a conservation agency works directly with the farmer, providing direct conservation planning, design, and implementation assistance. The successful implementation of practices Tri-National Initiative: Policy Instruments Page 1 of 22

2 supported by technical assistance depends largely on the same factors that determine the success of education: longterm profitability of the practice, and/or strength of stewardship on the part of the farmer. In addition, the management skill of a farmer plays an important role in conveying assistance into the successful implementation of a practice. Financial incentive-based policies provide positive monetary incentives (payments to farmers) designed to encourage environmentally beneficial activities, or negative incentives (taxes or fees farmers pay) designed to discourage environmentally harmful activities. In practice, positive incentives have been the predominant financial incentive tool used to promote conservation in agriculture. Cost-share/incentive payments pay farmers for voluntarily adopting and implementing desirable conservation practices or land uses. Cost share payments are typically a percentage of the cost of the practices (e.g. 50 to 75 percent for USDA financial incentive programs), and are generally used for structural practices, such as terraces, vegetative buffer strips, and manure storage structures. Incentive payments are not necessarily based on costs, but are set at a level necessary to get farmers to adopt a practice. Typically, incentive payments are used to encourage management practices such as nutrient management, conservation tillage, or integrated pest management. In some programs, incentive payments are used to purchase easements that reduce pressure to convert farmland to more developed uses that could result in an increase in water pollution. Land retirement or rental payments are made to farmers for voluntarily retiring land from crop production. Land retirement payments are generally more expensive than payments for conservation practices on working lands, but can produce large environmental benefits over the long term. Similar to incentive payments, the design of the program is critical to ensuring that the land that can provide the most environmental benefits at least cost is offered into the program and accepted. Market-based approaches take advantage of a demand for environmental improvement by industries that are required to meet environmental goals by allowing agriculture to be a supplier of environmental quality. The trading of environmental credits allows regulated firms to meet their obligations by purchasing these services from lower-cost providers. Farmers can benefit by participating in such markets if the cost of generating credits is less than the price they command. Examples of such markets include point-nonpoint trading of nutrient credits and wetland mitigation banking. An important feature of market-based approaches is that they leverage conservation payments from the private sector, rather than from public programs. Environmental taxes are per-unit charges for actions contributing to environmental degradation. Charges may be associated with emissions (such as a fixed dollar value per pound of soil lost) or with input use (such as a tax on fertilizer). As long as the charges are greater than the cost of implementing the appropriate conservation practices the farmer would be better off to adopt those practices. The challenge for the managing agency is to target the taxes to the appropriate activities, and to set a tax rate that results in the desired changes. Compliance mechanisms require a basic level of environmental performance as a condition of eligibility for participation in agriculture programs not primarily directed at environmental benefits. In a sense, compliance leverages farm program payments for environmental protection. Program eligibility generally depends on the implementation of an approved set of conservation practices to protect a particular resource. In the U.S., compliance is used to protect highly erodible soils and wetlands. Because existing programs are used for leverage, compliance mechanisms require no budget outlay for producer payments, although considerable technical assistance could be needed to develop conservation compliance plans. Compliance mechanisms were enacted in the U.S. primarily as a method for removing apparent inconsistencies between farm income support programs (which can encourage more intensive agriculture) and conservation programs. Regulatory requirements lie at the far end of the policy spectrum in terms of the degree to which participation is voluntary. Rather than attempting to facilitate or encourage improved environmental performance, policymakers can simply require it. Regulations can ban the use of a particular input or practice deemed a significant threat to public safety or the environment, or can require the use of a beneficial practice. The ban on the production and application of the chemical DDT is an example of the former. The mandatory use of a nutrient management plan by large animal feeding operations is an example of the latter. Regulation can be very effective, but requires detailed knowledge of which inputs or practices to require or to limit, and which operations to cover. Regulation also needs a strong enforcement component to be effective. Tri-National Initiative: Policy Instruments Page 2 of 22

3 Country Synthesis Policy Frameworks Mexico Most of Mexico s population and economic activity is concentrated in the center and northern part of the country. Here, the pressure of demand and relative scarceness of supply has resulted in an overexploitation of aquifers. Because agriculture is the primary water user, it is important that a culture of water conservation be supported through policies that stimulate saving and water use efficiency. Mexico believes that the administration, conservation, and use of water should be governed by environmentally sound criteria with a sound scientific base. Water conservation programs address both agriculture, where water is used, and forest watersheds, where water resources originate. The National Plan of Development (PND ) in the Mexico s Vision in 2025 proclaims that Mexico will be a nation with a stable and competitive growth and an including development; balanced with the environment Of the six political axes it highlights, five are connected with water: the social and human development; the justness in programs and equality of opportunities; the capacity and initiative; the support to federalism; and the development in harmony with nature. Therefore, it recognizes the value of water as a strategic element to assist the population's basic needs, and impel the development of economic activities, foreseeing it as a fundamental requirement for the care and preservation of the environment. On the planning process, non-government institutions participate in the distribution of water through 86 watering districts that cover a surface of 3,499,478 hectares. These districts were built, conserved, operated and administered by the federal government up until The users of watering districts were constituted into Civil Associations (CA). Civil Associations originate in watering areas, depending on the size, number of users, and available hydraulic infrastructure, called Modules of Watering. Civil Associations are integrated in Societies of Limited Responsibility (SLR) in charge of the administration of the net bigger infrastructure channels, drains and roads of Watering Districts. In total 466 civil associations and 12 societies exist united under the National Association of Watering Users, A.C. (ANUR), representing 546,549 users. Canada In Canada, the responsibility for agriculture is shared between federal (national), provincial and territorial (sub-national) governments. There is a long history of collaboration among these levels of government in advancing the interests of the Canadian agriculture and agrifood sector. Much of this collaboration is usually directed through strategies and policy statements which are used at all levels of government, industry and non-governmental organizations to help set a direction for future work to ensure the health of the environment and the continued vitality of the economy. These frameworks and strategies usually identify priorities and opportunities, and they outline the steps and the tools necessary for effective implementation. In Canada, such a system exists to address environmental sustainability of water relative to agriculture, among other environmental, economic and social aspects of the agricultural sector. Federal Government The Agricultural Policy Framework (APF) is a comprehensive national initiative aimed at enabling the Canadian agricultural sector to adapt to ongoing changes to its operating environment, domestically and abroad. The APF is composed of several elements that, when addressed together and effectively, will help Canada become a leader in food safety, innovation, and environmentally responsible food production: Environment Food safety and food quality Renewal Science and Innovation Business Risk Management The Environment element of the APF aims to improve the health of the environment by making Canada a world leader in using environmental resources in a manner that ensures their quality and availability for present and future generations. This will be achieved through the acceleration of efforts to reduce agricultural risks to the environment and provide benefits to Canada's water resources, soil, air and biodiversity. Several programs under the APF provide farmers with access to resources and information which encourage and facilitate the adoption of practices that help to reduce agri-environmental risks and provide benefits to the quality and supply of water. These programs focus on minimizing and controlling nutrients, pathogens and pesticides. A framework agreement was signed by federal and provincial and territorial governments to establish a comprehensive and long-term commitment to the agriculture sector and set the stage for the implementation of the fiveyear APF. This agreement also provides a framework for Implementation Agreements between the federal government and each provincial and territorial government that will set out the precise measures that each Party will take to fulfill their respective obligations under the APF. Provincial governments Implementation Agreements were signed with the federal government and all provinces and territories to implement the APF and to support the delivery, reporting and evaluation of programming, and transparent reporting to all Canadians. Although each implementation agreement varies from one province to another in terms of specific priorities and targets, all are committed to working towards the common national goals under the environment component of the APF in the areas of soil, air, water and biodiversity. As Tri-National Initiative: Policy Instruments Page 3 of 22

4 in the case of water quality, each province and territory is working towards a reduction in the average level of residual nitrogen from agriculture on farmland and a reduction in the risk of nitrogen contamination of water from agriculture. Provinces are also contributing to the development of beneficial management practices (BMPs) and the evaluation of information and technologies related to water quality. This information and technologies will be used for the purposes of encouraging nutrient management, water management (quantity and quality), and riparian land management. Several provinces have also released biodiversity action plans which will guide the conservation actions of all provincial and municipal resource sectors within the province. These biodiversity action plans include actions targeted at the watershed level that apply to water-based habitat. For example, the Saskatchewan Biodiversity Action Plan is aimed at improving policies, programs, planning, management systems and access to information in support of biodiversity conservation and sustainable use of resources by all sectors. The plan sets priorities of the province at local, national and international scales and identifies actions of sectors of government and society to contribute to biodiversity conservation. There are several objectives under this plan that commits the governments of Saskatchewan to enforce surface water quality objectives, including protecting source water from contamination by pesticides and promoting the conservation of wetland ecosystems which act as natural water filters and provide wildlife habitat. Many provinces have developed water policies and strategies over the past several years in order to develop effective water management approaches and activities to address the provinces water quality and quantity issues. For example, the province of Manitoba has released a water strategy which is the current policy document in that province for guidance on decisions in the areas of water quality, conservation, use and allocation, water supply, flooding, and drainage. One of the primary goals of Manitoba s water strategy is to develop watershed based planning across the entire province employing a participatory process that considers present and future anticipated demands on water, within a sustainable vision. Non-governmental Organizations Industry and farm organizations are also directly involved in the administration of the APF. Several provinces have third-party agreements with local nongovernment organizations to deliver on an environmental program or activity. For example, the Ontario Soil and Crop Improvement Association (OSCIA) is charged with delivering the Canada-Ontario Farm Stewardship Program by reviewing BMP project proposal applications, providing project approvals, conducting final inspections upon completion of the project, and processing claims. In addition to their role on the delivery and implementation of the APF, some organizations also have basic environmental goals or policy statements which outline the steps they are taking to ensure the environmental sustainability of their industry. For example, the Canadian Federation of Agriculture, which is an umbrella group for Canadian farm organizations, believes that great importance should be placed on measures of environmental management to ensure maintenance of land resources which provide food for the people of Canada and a large part of the world's population. Through its environmental policy statement, the CFA supports numerous initiatives, including on-farm environmental planning, renewable energy, climate change, and endangered species protection. United States The U.S. has a long history of supporting conservation in agriculture. The U.S. Department of Agriculture (USDA) implements a broad range of conservation programs intended to protect natural resources and the environment. Conservation programs originate in Farm Bills, legislation passed by Congress roughly every five years since The Farm Security and Rural Investment (FSRI) Act of 2002 sharply expanded funding for conservation programs, focusing much of the increase on programs for working agricultural lands, i.e., cropland and grazing land. USDA conservation programs have traditionally used voluntary approaches to address agricultural resource issues. These approaches can avoid the inherent difficulties in regulating nonpoint sources of pollution and can minimize economic harm to farmers by educating them and providing them with incentives to willingly improve production practices. In passing the 2002 Farm Act, Congress reaffirmed a preference for addressing natural resource problems caused by agriculture through a consolidated set of financial assistance programs supported by research and education. Since the 1970 s, Federal regulations administered largely by the U.S. Environmental Protection Agency (EPA) have placed some constraints on agricultural production. Each of the 50 U.S. states has its own set of policies and programs that support conservation or place constraints on agriculture. Some Federal environmental regulations, such as the Clean Water Act, are implemented by the States. In general, the bulk of funding for conservation programs (education, technical assistance, and financial assistance) comes from the Federal government, while most of the regulations are implemented at the State level. Education Mexico Mexico is committed to train producers to use water efficiently. Such training helps producers meet regulatory requirements on water use, and would improve producers earnings. Specifically, education focuses primarily on reducing water losses during distribution and application, and solving drainage and soil salinity problems. One example of a training program is through the National Tri-National Initiative: Policy Instruments Page 4 of 22

5 Crusade for Forests and Water, administered by SEMARNAT. Objectives for program success in managing, conserving, and regenerating water and forest resources are: 1. Achieve a national alliance with institutions (public and private) and populations living near water resources and forest areas in order to care for them. 2. Introduce the knowledge that water and forest are related and integrated into one cycle. 3. Take significant action in critical areas where forests are dying and water resources are scarce. 4. Introduce people to a new environmental culture that contributes towards achieving sustainable development. Part of the program s success depends on the involvement of more non-government organizations (NGO s) working and managing forest areas, in cooperation with the states. Education is centralized, and is an important factor in providing the knowledge required to take effective actions. Canada Federal Government At the federal level, Agriculture and Agri-Food Canada (AAFC), utilizes various forms of decision support tools to encourage farmers to adopt beneficial farming practices. Producers have access to a wide range of information products which address water quality issues including reports, studies, scientific research and data, fact sheets, brochures, newsletters, and internet sites. The National Environmental Farm Planning Initiative will help Canada's agricultural producers develop and implement environmental farm plans (EFPs) through provincially delivered EFP programs available to all agricultural managers across Canada. Producers are encouraged to develop environmental farm plans, implement beneficial management practices (BMPs) and to continuously evaluate the environmental performance of their farming operations. An EFP is a voluntary and confidential process used by individual farmers to systematically identify environmental risks and benefits from their own farming operation, and to develop an action plan to mitigate the risks. The EFP process allows farmers to set priorities for actions which address on-farm environmental concerns, as well as those which serve the public interest. Environmental farm planning provides farmers with better tools to manage their operations in an environmentally responsible manner. Producers who develop an EFP have an increased awareness of environmental risks and benefits on the farm, and potential solutions for managing them. The National Land and Water Information Service (NLWIS), when operational, will be a web-based portal that will provide information about land, soil, water, air, climate, and biodiversity. The water portion of the program will consist of quantity and quality data for surface and groundwater. NLWIS will assist land use decision makers in support of environmentally sustainable agriculture. The National Agri-Environmental Health Analysis and Reporting Program (NAHARP) builds on existing science-based agri-environmental indicators, and plays a role in guiding policy and program design, and can help determine which policy and program options will be most effective. As policies and programs are implemented, information from NAHARP helps in the development and continuous improvement of information related to the interaction between agriculture and the environment, and the development of tools to integrate the environment and the economy. The information generated also provides a general report card that can help track the environmental performance of Canadian agriculture. NAHARP consists of three components that address the need for reliable environmental information in the agricultural sector: Agri-environmental indicators: are science-based measures of key environmental conditions, risks, and changes resulting from agriculture, and of management practices that producers use to mitigate these risks. Indicators that deal specifically with the risk of water contamination include risk of environmental harm by nitrogen, pesticides, pathogens and phosphorous. Integrated economic/environmental modelling and analysis: analytical tools are used to provide a predictive capacity for assessing the outcome of different policies and programs, from both economic and environmental perspectives. Agri-environmental valuation: work is underway to enhance the capacity to estimate the monetary value of positive or negative environmental impacts that arise from agricultural production. Provincial Governments Provinces also have in place decision support programs that provide research and educational material to producers and land owners regarding the conservation and sustainable use of water resources. Most of this information is in the form of specialized newsletters, brochures, reports and internet material. Many provinces also undertake field demonstrations which provide an opportunity for farmers to learn in a working setting about new practices or techniques associated with environmentally sustainable agriculture. In some provinces, peer advisory programs are available to help farmers understand the concept of environmental sustainability and to avoid penalties under environmental laws. If a nuisance or pollution complaint is directed against a farmer, a peer advisor (fellow farmer) visits the farm and suggests steps that the farmer can take to comply with pertinent guidelines, codes, or legislation. In this way, education is offered and the farmer is given the chance to comply voluntarily before regulatory agencies step in and order corrective measures. Non-Governmental Organizations In Canada, non-governmental organizations, such as producer associations and conservation societies, also help farmers to make better choices and encourage Tri-National Initiative: Policy Instruments Page 5 of 22

6 environmental stewardship by providing them with access to various decision support tools which can be tailored to a specific activity, issue and sector. Ducks Unlimited Canada (DUC) is a non-profit organization dedicated to conserving wetlands and associated North American waterfowl habitat. DUC manages a web-based service called Wetkit Agriculture, designed to streamline access to practical tools that can help Canadians better understand and manage wetlands and riparian areas. This site connects individuals to resources or tools on best management practices, case studies, funds and incentives, legislation, and other helpful agencies. WetKit helps users find the tools they need, and to access that tool quickly and easily, on the Internet or over the telephone. United States Education is one of the primary means of assistance available to farmers and ranchers in the United States. Producers must have up-to-date and accurate information to be able to make production and conservation decisions that are optimal for their land and operation. In the United States, information on conservation practices and water resources reaches producers through a variety of sources. One of the leading sources of information for producers is the Cooperative Extension Service (CES) system. More than 100 of the nation s universities and colleges contribute to the extension system. Extension means reaching out, and along with teaching and research these universities extend their resources, solving public needs with college or university resources through informal programs. These programs are largely administered through thousands of county and regional extension offices, which bring conservation expertise to the most local of levels. Both the universities and their local offices are supported by USDA s Cooperative State Research, Education, and Extension Service (CSREES), the federal partner in the CES. CSREES plays a key role in the extension mission by distributing annual Congressionally-appropriated funding to supplement state and county funds. CSREES affects how these formula funds are used through national program leadership to help identify timely national priorities and ways to address them. Other producer education entities abound at the Federal, State, and local levels. The Natural Resources Conservation Service (NRCS), USDA s conservation agency, has a field office in nearly every county in the country. In addition to the technical and financial assistance it is known for, NRCS provides extensive education assistance to producers. The same is true about Conservation Districts, local units of State government that work closely with NRCS to deliver information and assistance to producers. Many Conservation Districts employ conservation education coordinators who reach out to the producers and schools in their local communities. Non-governmental organizations, including conservation organizations (e.g., local watershed groups, the Chesapeake Bay Foundation) and producer organizations (e.g., Iowa Soybeans Association, The Fertilizer Institute, National Pork Producers Association), also play a critical role in providing producers with the knowledge they need to make informed decisions. The growth of the internet, and the increasing spread of internet access into rural America, has had a profound effect on the speed in which producers can access conservation information. Farmers and ranchers can now access technical and financial assistance information from their kitchen tables, and even apply for programs. Information websites, such as that maintained by the National Association of Conservation Districts ( help keep agricultural producers informed of natural resource issues relevant to their operations. Technical Assistance Mexico Technical assistance is used in the Integral Handling of Basins Strategy, to assist the transfer and adaptation of profitable technologies, and conversion to more profitable cultivars. This planning strategy for the environmental administration of territory allows a link between conservation and the sustainable use of natural capital. The technical assistance aims to: Give flexibility in the use and movement of waters so as to maximize benefits; Help producers meet changes in demand; Open the way to innovative ideas that strengthen the integral handling of water. The National Hydraulic Program (PNH) also provides support to agricultural users in modernizing their irrigation systems and consolidating users organizations in their effort to have sustainable use of water and aquifers. The success of technical assistance in Mexico is based on fulfilling four strategies in the implementation process: Technology. Provide technologies that are supported by good science, are profitable, and are friendly to the environment. Training. Develop initiatives that provide producers knowledge of alternative crops with better agro-ecological properties and that are competitive in local and foreign markets. Agro industry. Enhance rural economies by using agricultural contracts to support and develop local agribusiness. Marketing and information. Provide producers with information and analysis that enables them to be more competitive in agricultural markets. All technical assistance is provided in the context of a Basin as a natural territorial unit to articulate and administrate rural development. The Basin is seen as the ecological ground for the symbiosis of natural resources, hydraulic systems, roads, and urban and rural cities living together and supporting different economic activities, such as industry and agriculture. Tri-National Initiative: Policy Instruments Page 6 of 22

7 Canada Federal Government AAFC contributes to the development and delivery of technical assistance for the conservation of natural resources and to help address water constraints in agricultural areas. These services include providing information on conservation practices; conducting natural resources surveys and analyses; pilot projects; evaluation and transfer of new technologies; partnerships; field days; and on-farm demonstrations. Programs under the APF such as Environmental Farm Plans and Greencover are specifically geared towards providing technical assistance to farmers to help them make choices that encourage environmental stewardship. The National Water Supply Expansion Program (NWSEP) focuses on providing assistance to the agricultural community across Canada to help reduce the risk of water shortages, and to meet the water-related needs of the Canadian agricultural sector, through the planning and development of secure, healthy and reliable water resources. The Prairie Farm Rehabilitation Administration (PFRA) is part of AAFC that works with farmers, ranchers and producers in the most drought-prone areas of Canada to develop a viable agricultural industry and sustainable rural economy in the Canadian prairies. PFRA s main focus is to ensure the sustainable use of the Prairie's soil and water resources. PFRA delivers ongoing programs and short-term initiatives offered from a network of district and regional offices and special demonstration and diversification Centres for the most part located in the three Prairie provinces of Canada. PFRA provides numerous technical services to its clients including agrology advisory services, land and water conservation plans, demonstrations, workshops and training, and the transfer of best management technologies for land and water. Provincial Governments The Alberta Environmentally Sustainable Agriculture Program (AESA) is a long-term, provincially funded program to facilitate the continued development and adoption of management practices and technologies that make agricultural production and processing more environmentally sustainable. The AESA Program supports the transfer of new technology and information for minimizing environmental impacts to farmers, ranchers and processors, and the monitoring of soil and water quality to track the industry s effects on resources Non-Government Organizations NGOs such as producer associations and conservation organizations play an important role in the delivery of technical assistance to farmers as they plan and operate their businesses. There are numerous organizations in Canada that provide farmers with technical services to conserve their soil and water resources, and often times have extensive lists of other agricultural outreach programs available in their area. The Cows and Fish program, for example, operates as a collaborative partnership between several producer organizations, conservation associations and federal and provincial governments. The aim of the Cows and Fish program is to promote the improvement of riparian areas and their ecological processes and functions, through voluntary, proactive community-based action that uses education and awareness about management options for livestock producers and their communities. Cows and Fish provides assistance, technical support and information on the value and benefits of riparian areas and riparian management, while communities and individuals proactively address riparian issues and share what they have learned about what works for riparian management in their area. United States Technical assistance provides landowners and managers with a science-based set of services and technical tools to assist in implementing water conservation on private lands. Roughly 50 percent of the land in the United States is privately owned agricultural land. Because conservation on private lands in the U.S. largely depends on the voluntary actions of landowners, providing these producers with the appropriate technical assistance to facilitate knowledgebased decisions is critical. Within the United States, technical assistance takes place on many levels with multiple partnerships that stretch across both government and nongovernmental entities. Historically, the United States has funded technical assistance with very little financial assistance as an attached incentive. This is changing, however, where producers now seek and often require some financial assistance to implement water conservation either because of regulation compliance or initial investment costs. Federal Programs In the United States, technical assistance is provided by a broad public-private partnership. The federal government s efforts are led by the Natural Resources Conservation Service (NRCS), which provides local, sitespecific assistance through its nearly 3,000 field offices. NRCS provides its technical assistance in cooperation with Conservation Districts, local units of State governments created to coordinate assistance from all available sources -- public and private, local, state and federal -- in an effort to develop locally-driven solutions to natural resource concerns. The NRCS is authorized to use a broad range of programs to encourage the voluntary conservation of natural resources on private lands. Through this portfolio of programs, the Agency provides information, technical assistance, and financial incentives to individuals, groups, tribes, communities, and units of government. Conservation planning is a process that provides a firm foundation to access resource problems, evaluate treatment alternatives, and match a client s needs to available financial assistance Tri-National Initiative: Policy Instruments Page 7 of 22

8 and other voluntary conservation incentives. This process provides the framework for conservation decision-making by landowners and managers. The Conservation Technical Assistance Program (CTA) is the single largest and longest standing of the United States primary sources for providing producers with conservation planning expertise and specialized technical assistance. The CTA Program, which is implemented by the NRCS, provides technical assistance supported by sciencebased technology and tools to help people conserve, maintain, and improve their natural resources. The CTA Program provides the technical capability, including direct conservation planning, design, and implementation assistance, that helps people plan and apply conservation on the land. Another NRCS program that provides technical assistance is the Rural Conservation and Development Program (RC&D). The purpose of the RC&D program is to encourage and improve the capability of volunteer local elected and civic leaders in designated RC&D areas to plan and carry out projects for resource conservation and community development. Program objectives focus on quality of life improvements achieved through natural resources conservation and community development. Such activities lead to sustainable communities, prudent land use, and the sound management and conservation of natural resources. All financial assistance programs have an element of technical assistance included in their funding. Prior to the 1996 Farm Bill, much of the technical assistance dollars came only in the form of discretionary funding. This allowed for increased flexibility and use because funding did not have a deadline under which it had to be spent (no-year funds). After the 1996 Farm Bill, increased technical assistance funding came from the Commodity Credit Corporation (CCC) which attached yearly deadlines that funds had to be used by the end of the fiscal year (annual funds) or be returned to the U.S. Treasury. This timeline creates issues when the contiguous financial assistance is in the form of multi-year contracts. Moreover, once a contract expires, technical assistance through the respective financial assistance program is no longer available, causing the technical assistance funding burden to fall on the CTA Program. This issue is highlighted through the use of Technical Service Providers (TSP). The 2002 Farm Bill expands the availability of technical assistance to producers by encouraging other non-usda potential providers of technical assistance (TSPs) to assist in the delivery of technical services to implement Farm Bill programs. Approximately $45 million in technical assistance funds were used for TSPs in fiscal year Though TSPs are contracted to provide technical assistance on multi-year Farm Bill conservation program contracts, only the present year technical assistance funding can be used to pay for these TSP services. One example of a Farm Bill program that presents a technical assistance issue is the Conservation Security Program (CSP). Congress has limited the funding available for technical assistance to develop and implement CSP to 15 percent of annual expenditures. This limit constrains the amount of conservation planning and administrative time that NRCS and TSPs can work with agricultural operators to develop and execute CSP contracts. Technical assistance funding is further limited if the funding is not released until financial assistance payments are made to landowners and managers. These limitations have caused the Agency to consider more efficient and streamlined procedures at the field level for CSP implementation. One example of this is the Self-Assessment Workbook. The Workbook allows producers to self-assess their operation prior to application for the program. This minimizes some of the initial customer interaction and application time, affording the field staff additional time for conservation planning to those who are currently eligible for the program. Other streamlining and efficiency driven actions are occurring in other programs as technical assistance demands increase. This is a trend that is expected to continue into the future. Cooperative Conservation In addition to federally funded programs, multiple partnerships and locally led conservation groups make conservation on private lands possible. This cooperative conservation effort includes agribusinesses, agriculture and environmental groups, communities, conservation districts, conservation organizations, landowners, volunteers, professional societies, RC&D Councils, state and federal agencies, tribes, and land-grant universities. With the inclusion of such diverse interests, technical assistance is a broad sweeping culmination of knowledge and tools. The funding for these different entities comes from a combination of federal, state and private funds. The cooperative conservation concept facilitates science-based initiatives to protect water quality using grassroot efforts. Most of the technical assistance involved with these organizations is in the form of conservation and watershed planning. Volunteers and technical experts work directly with private landowners to plan and produce practical solutions for water quality improvement. Similar to federal programs, these partnerships are all voluntary and participation is not required by producers. One advantage of these private partnerships is their distinction from the government. Producers, at times, feel more comfortable working with locally led efforts versus government officials for fear of possible regulatory oversight. Historically, water quality conservation technical assistance was primarily conducted by federal employees carrying the bulk of the workload. During the 1970s a shift began in which the federal workforce began to decline and the state and local workforce was on the rise. Conservation Districts and other State and local agriculture conservation entities have mitigated the decline in the number of federal conservationists providing technical assistance. Emphasis will need to continue to be placed on State and local Tri-National Initiative: Policy Instruments Page 8 of 22

9 leadership to assist landowners and managers in protecting and conserving water resources. Financial incentives Mexico Mexico has several programs that offer financial incentives for promoting beneficial changes in agricultural practices. The Field Alliance contains four programs managed by States or municipalities, and one of them offers financial incentives for technological improvements in the use of water. In this program, the National Commission of Water (CONAGUA) or SAGARPA contribute up to 50% of the cost of introducing better management practices; program beneficiaries contribute the rest. The Program of Adaptation of Rights to Water Use has the objective of sustaining the development of water resources in areas with conflicts, due to over titled rights. Compensation is offered for the voluntary renouncement of water rights, allowing for the stabilization of supply and more efficient use of water. Through a planning process under a Unique Permission of Seedling and a Conversion program, Mexico encourages producers to grow crops that use less water and also increase net returns by offering direct payments that cover part of the net cost of investment for the first three years. Between 2001 and 2005, Mexico converted more than 890 thousand hectares controlled by more than 120 thousand producers, with an estimated Government investment of 50 million dollars. This has resulted in improved earnings to farmers, reduced erosion, and the introduction of new agricultural enterprises in some areas such as cattle grazing. Economic gains have been made despite reduced production of crops with less favorable agro-environmental characteristics. Mexico has a system of fees that users have to pay for the use of certain public goods. Discharge of water that exceeds allowable maximum limits of controlled pollutants outlined in the Federal Law of Rights (administered jointly by SHCP-CONAGUA), is charged a fee under this law. Discounts are offered for discharges that are of better quality than specified by the Law. In the case of irrigated agriculture, the fee is waived if the return flow is returned to its original source, and the quality is certified to be below the limits established by law. To give income options to forest owners and to reduce the risk of land use change, in 2003 SEMARNAT through CONAFOR established the Program of Payment for Hydrological Environmental Services. Owners of forest plantations are compensated (direct payment) for the conservation of vegetation within a watershed which provide water and filtration services. The resources are obtained by environmental rights or contamination payments specified in the Federal Law of Rights and complemented through the authorization of the annual budget. Canada Financial incentives are used at the federal and provincial level in Canada to encourage farmers and land owners to adopt more sustainable land use and management practices. These incentives are used to help offset the costs of adopting a technology, to remove degraded land from production, or to adopt a beneficial management practice. Federal and provincial governments often share the costs of delivering programs as a result of shared jurisdiction over several issues relative to agriculture and the environment. Under the APF, implementation agreements were signed with the provinces to help share the costs between the federal government and the provinces on a wide range of programs including those aimed at protecting the environment. Each province is obligated under these agreements to work towards environmental management goals for air, soil, water and biodiversity. Each province has agreed to work towards completing a basic agrienvironmental scan covering all farms and agricultural lands to identify farms and/or agricultural regions posing significant risk to the environment, and to complete an environmental farm plan for all farms where agricultural activity is found to pose significant risk to the environment. Producers who develop EFPs may be eligible for technical and financial assistance to implement their on-farm action plans through the National Farm Stewardship Program and the Greencover Canada Program. The National Farm Stewardship Program (NFSP) will accelerate the adoption of beneficial management practices (BMPs) on Canadian farms and agricultural landscapes. This outcome will be achieved through the provision of cost-shared incentives to producers for the implementation of BMPs that address on-farm environmental risks in the areas of nutrient management, pest management, land and water management, odour management and biodiversity. For example, BMPs related to water quality include Riparian Area Management, Grazing Management Planning and Relocation of Livestock Confinement and Horticultural Facilities. The Greencover Canada program is a five-year initiative aimed at helping producers improve grasslandmanagement practices, reduce greenhouse-gas emissions, enhance biodiversity and wildlife habitat and protect water quality which includes converting environmentally sensitive land near watercourses to perennial cover. The land conversion component of Greencover also provides farmers with advice and financial incentives. United States While education and technical assistance provide agricultural producers with the knowledge and information tools to make sound conservation decisions, financial assistance is a critical tool used to help turn those decisions into water quality improvements. In the U.S., public tax Tri-National Initiative: Policy Instruments Page 9 of 22

10 dollars provide financial assistance to producers for taking steps to conserve water and to improve water quality. The United States has a long history of providing financial assistance to help farmers and ranchers conserve natural resources. Following is a historic view of some of the first Federal financial assistance programs: Agricultural Conservation Program (ACP) the dominant Federal agricultural conservation program for decades, ACP was established in 1936 and provided funding to producers to address soil loss and agricultural contributions to water pollution from both runoff and direct discharge. Great Plains Conservation Program (GPCP) established in 1956 in 17 western States to help producers address conservation issues on rangeland and cropland. PL-566 The Watershed Protection and Flood Prevention Act of 1954 established this program to enable the Federal government to work with States and local units of government on watershed protection and flood prevention activities. Rural Clean Water Program (RCWP) Authorized by the U.S. Congress in 1977, RCWP was a 15- year federally sponsored nonpoint pollution control program designed to address agricultural pollution problems in watersheds across the country. Twenty-one experimental projects were funded through the RCWP. Landowner participation was voluntary, with cost share funds and technical assistance offered as incentives for implementation of conservation practices designed to reduce nonpoint source pollution. The amount of financial assistance both from government and non-government sources has increased substantially over the past few decades. Succeeding Farm Bills have authorized increasing numbers of programs and funding amounts that producers may use to improve water quality on their land. For example, the most recent Farm Bill (2002) authorized over $17 billion in spending on private lands conservation programs over five years (not all of it water quality related). Some State and local agencies have similarly boosted both programs and funding, often to help producers comply with State or local water quality regulations. A number of non-governmental organizations also offer financial assistance to landowners, often in the form of grants. All of these programs are voluntary; producers choose whether or not they would like to participate. The types of financial assistance available to producers to address water quality issues take the form of a diverse portfolio: Cost-share payments Many financial assistance programs provide payments to producers to help them implement conservation practices and systems on their land. The largest Federal cost-share program, the Environmental Quality Incentives Program (EQIP), provided approximately $800 million to over 50,000 producers in Between 1997 and 2002, about 34% of EQIP funds were spent on water quality and water conservation. Examples of water quality practices generally used as part of a system of practices include grassed waterways, no-till cropping systems, riparian buffers, and animal waste storage facilities. In order to qualify for cost-share assistance, the conservation practices must be installed according to technical standards, which are generally performance-based. Cost-share programs usually require participants to sign multi-year contracts, under which producers are legally obligated to maintain cost-shared practices of a specified amount of time. Cost-share programs rarely provide 100 percent of the cost of implementation, both to leverage program funds and to ensure that the producer has a stake in the practice and its maintenance. Providing higher cost-share rates to limited-resource and beginning producers has become common practice at the Federal level. Federal cost-share programs often work in concert with State or local programs. For example, in the State of Maryland, the Agricultural Water Quality Cost-Share Program provides producers with financial assistance for the implementation of 29 eligible conservation practices designed to improve water quality. Federal programs such as EQIP may fund conservation practices not eligible under the State program. Despite the recent historic increases in available funding for cost-shared practices included in the 2002 Farm Bill, both Federal and State programs suffer from application backlogs, an indication of their popularity with producers. Incentive payments Producers may also receive payments through EQIP as an incentive to carry out some water quality improvement activity. These payments may be coupled with cost-share payments to encourage producer participation. Unlike cost-share payments, which are generally calculated as a percentage of total cost of a practice, incentive payments are generally provided as a flat rate per unit, such as an acre. In some cases, incentive payments may help offset a producer s risk when they agree to implement a BMP. An example of this is providing an incentive payment to help offset any yield reduction as a producer converts to a no-till cropping system. Stewardship payments Historically, financial assistance has been provided to producers to address problems or mitigate water quality issues. An emerging trend, however, is an increased interest in stewardship payments, providing assistance to producers for their historic and continuing commitment to natural resources conservation. The 2002 Farm Bill authorized the new Conservation Security Program (CSP), which provides qualifying producers with stewardship payments plus additional financial assistance for enhanced conservation activities. One reason for widespread stakeholder interest in Tri-National Initiative: Policy Instruments Page 10 of 22