Paper Selected for Presentation at the 2001 AAEA-CAES Annual Meeting, August 5 – 8, Chicago, Illinois
Cost Effective Targeting of Land Retirement to Improve Water Quality:
A Multi-Watershed Analysis
Wanhong Yang1, Madhu Khanna2, Richard Farnsworth2 and Hayri Onal2
1. Assistant Professor, Program in Environmental Studies, Sir Wilfred Grenfell College,
Memorial University of Newfoundland, Corner Brook, NF, Canada A2H 6P9.
2. Associate Professors, Department of Agricultural and Consumer Economics, University of
Illinois at Urbana-Champaign.
All correspondence should be addressed to Wanhong Yang, Program in Environmental Studies,
Sir Wilfred Grenfell College, Memorial University of Newfoundland, Corner Brook, NF,
Canada A2H 6P9. Tel. No. 709-637-6200 Ext. 6423; Fax No. 709-639-8125; email:
wyang@swgc.mun.ca
Copyright 2001 by Yang, Khanna, Farnsworth and Onal. All rights reserved. Readers may make
verbatim copies of this document for non-commercial purposes by any means, provided that this
copyright notice appears on such copies.
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Cost Effective Targeting of Land Retirement to Improve Water Quality:
A Multi-Watershed Analysis
Abstract
An integrated watershed management framework that combines economic, hydrologic
and GIS modeling is developed to study cost effective land retirement in multiple watersheds to
achieve off-site sediment reduction goal. This integrated framework examines two alternative
standards – a uniform standard under which each watershed is required to achieve the same
sediment reduction goal and a non-uniform standard under which marginal cost of sediment
abatement is equal across watersheds. Furthermore, for each standard, costs of abatement under
two alternative rental instruments based on marginal cost of sediment abatement ($/ton) and
uniform payments per acre ($/acre) are examined. Then the cost effectiveness of the four policy
options (uniform standard with $/ton and $/acre instrument, non-uniform standard with $/ton and
$/acre instrument) is discussed. The integrated framework is