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The Higher ED Blog: Why economic developers need to help farmers protect water supplies

Michelle Madden / August 22, 2016

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The Higher ED Blog: Why economic developers need to help farmers protect water supplies

Water: a compound so essential to humans that we can barely live a week without it. If water is so essential to life, then it is also essential to economic development; we don’t always make that connection so explicitly, but it’s an important one to make. Water contributes an estimated $7.5 to $23 billion to the Canadian economy annually. It is the lifeblood of many industries, including energy, manufacturing, and agriculture (three of the five biggest water users in Canada). Ensuring an adequate and safe supply of water is therefore critical for both humans and economies.

Agriculture is a major user of water but the industry is, ironically, negatively impacting water sources. It is a major contributor to water contamination and it consumes more water than other industries (80% is not returned to the water source). In order to ensure the long term sustainability of agriculture, and protect water sources, it is important for the industry to manage its water use. Unfortunately, it can be difficult to change environmental practices (see the Tragedy of the Commons theory) but some governments and economic development organizations think the challenge is worthwhile.

Eva Bogdan explored agricultural use of water and its importance to economic development while completing the University of Waterloo’s Certificate in Economic Development in 2012.

Value of water stewardship for farmers and economic developers

What is water stewardship? As the WWF describes it, “Water stewardship is about business understanding the risks they face from water scarcity and pollution, and taking action to help ensure water is managed sustainably as a shared, public resource”. This definition focuses on making businesses aware of the direct risks to their own operations, but from a government and economic development perspective, the potential benefits of encouraging stewardship go far beyond that. Other industries, residents, and the local environment all stand to gain.

If the benefits are so universal, then why isn’t water stewardship broadly practiced? The main barrier is that change costs money and farmers have limited revenues to work with. Unless water scarcity is an imminent threat, farmers will be less inclined to invest in something with limited or unclear returns.

Incentives

Since one of the core roles of government is to protect the common interests of its constituents, they sometimes bridge the gap between market forces and desired outcomes with incentives. Eva’s paper outlined the following four approaches to paying farmers for water stewardship. These approaches often include water protection objectives, but may target other environmental issues as well.

Annual acreage payments for specified practices

This approach, as the name suggests, provides financial payments to agricultural producers who adopt management practices that meet environmental objectives (like protecting water supplies or reducing greenhouse gas emissions).It can be government or community-led, but usually has collaborators from both.

An example of this type of program is ALUS (Alternative Land Use Services), which now operates in six provinces across Canada. The grassroots program helps farmers design and implement new farming practices on select plots of land, and pays them market value for the service. The program gets funding from municipalities, foundations, and other sources.

Tax Credits

A less direct approach is to reduce taxes for landowners who apply stewardship practices. The Manitoba and Saskatchewan governments wanted to protect river banks and lakeshores (riparian zone) and built the Riparian Tax Credit program to reward farmers who maintained a farming and livestock-free buffer zone within 100 feet of rivers and lakes. This was a voluntary program that successfully enrolled one third of the eligible acres.

Beneficial Management Practice (BMP) insurance

Another approach is offering insurance on new management practices. This kind of program involves implementing a new practice on a check strip and compensating the farmer only in the event of any losses. It is an effective way to encourage farmers to adopt these practices without the risk of losing profits.

Water Quality Trading

The final approach deals directly with water: water quality trading. Like carbon trading, polluters must purchase credits earned by farmers who implement beneficial management practices that reduce water contamination. In Minnesota, sugar beet growers wanted to increase their processing capacity but were restricted by phosphorous discharge limits. As a result, the Southern Minnesota Beet Sugar Cooperative implemented a phosphorous trading program. It has successfully managed phosphorous discharges while increasing sugar beet yield and revenues.

Making it work

Eva provides a few guidelines in her paper that can help increase the success of a stewardship incentive program.  First, it needs to be locally based. The history and culture of a region (its social norms, legal frameworks, institutional environment, and policies) needs to be considered and accommodated. There is no one-size-fits-all. Second, it can’t be done alone. Strong partnerships with relevant organizations and governments are critical, and there needs to be demand from the farmers (though that demand could be regulatory). Third, a strong strategy needs to be in place. The environmental goals should be clear and achievable, the program structure should be simple, and the outcomes should be measurable and science-based for clear evaluation. Since funding is always a challenge, there may need to be creative financing.

In the long term, governments and organizations concerned about environmental stewardship should increase delivery of, and access to, farm conservation training programs, workshops and seminars. Farmers who receive education on these topics are far more likely to adopt environmentally sustainable agricultural practices.

 

About the authors

Michelle Madden is the editor of Higher ED. She is also the Outreach Manager for the Economic Development Program and a graduate of the LED master’s program.  She has authored many Higher ED articles sharing information relevant to economic development practitioners, and has written several on behalf of students. She has published several of her own blogs on economicdevelopment.org as well. Follow her on Twitter at @michelle_mad.

Eva Bogdan is currently studying the social dimensions of flood management as part of her PhD research at the University of Alberta. Eva has been studying and practicing natural resource management for 15 years (for more information visit www.evabogdan.com).

About the series

Higher ED: Insights for the Next Economy is a platform for students, guest speakers, staff and faculty of the University of Waterloo’s professional and graduate economic development programs to share knowledge with the field at large. The series takes works destined for an academic audience and reworks them into a fresh, easy-to-digest blog article.

Established in 1988, the Local Economic Development program is the only master’s program in Canada devoted solely to local economic development. It offers a balance between theory and practice by combining coursework, a major research paper, an internship, and weekly seminars featuring guest speakers. Students are prepared for careers in local, community, or regional economic development.

The Economic Development Program is a nationally-accredited provider of professional training. It delivers certification programs and seminars that offer a deep understanding of the Canadian context in a convenient block format. Peer learning is combined with informative lectures and practical case studies to provide dynamic instruction that is beneficial for junior and senior-level practitioners.

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