Resilient Provision of Ecosystem Services from Agricultural Landscapes: Trade-offs Involving Means and Variances of Water Quality Improvements

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Rabotyagov, Sergey
Valcu, Adriana
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Center for Agricultural and Rural DevelopmentEconomics
Many ecosystem services are rival and important tradeoffs exist in their production process, while some jointness in production (synergies) are also postulated to exist. We assess the strength of tradeoffs and synergies involved in reducing agriculture-generated watershed nutrient loads with different levels of resilience. We define resilience as the simulated probability of attaining the desired level of nutrient load. We spatially optimize the selection of least-cost patterns of agricultural conservation practices or both the expected performance of the conservation actions and its variance. The modeling framework is applied to the Boone River Watershed in Iowa. The empirical results confirm that securing nutrient loads with a higher level of resilience is costly. However, the marginal cost is not necessarily increasing: focusing on larger nutrient reductions allows one to obtain resilience at a smaller additional cost than if one is seeking only modest nutrient reductions. In our model, this is due to the ability of perennial grassland to buffer against exogenous shocks and to drastically reduce variability in nutrient loads. In extending the model to two nutrients, nitrogen and phosphorus, we find that the main tradeoff dimension is between cost of conservation investments and ecosystem service objectives, as opposed to pronounced mean-variance tradeoffs or strong tradeoffs between the two nutrient objectives. While some meaningful tradeoffs exist between nutrient objectives, our findings highlight the presence of relative synergies in agricultural conservation investments aimed at nutrient reductions. However, while relative synergies exist, controlling risk of nutrient loads is once again shown to have high opportunity costs, and resilience comes at a significant premium.
This is a manuscript of a proceeding published as Rabotyagov, Sergey S., Adriana M. Valcu-Lisman, and Catherine L. Kling. "Resilient provision of ecosystem services from agricultural landscapes: trade-offs involving means and variances of water quality improvements." American Journal of Agricultural Economics 98, no. 5 (2016): 1295-1313. doi:10.1093/ajae/aaw068. Posted with permission.