Nitrogen credit trading as an incentive for riparian buffer establishment on Pennsylvania farmland

Abstract

Agricultural nitrogen loading is a leading cause of eutrophication within the Chesapeake Bay. Agriculture in the Commonwealth of Pennsylvania is responsible for a large portion of the nitrogen load entering the bay. Vegetated riparian buffers are a common agroforestry practice used to intercept surface runoff and subsurface leaching of nutrients such as nitrogen from upland agricultural fields. Watershed-wide nutrient credit trading has been suggested as a mechanism for reducing nutrient pollution entering the Chesapeake Bay. The cost of producing nitrogen credits through the establishment of riparian buffers on Pennsylvania farmland was analyzed to determine if nitrogen credit trading could provide an incentive for buffer establishment. Forest buffers were shown to have marginally lower nitrogen credit production costs and payback periods than grass filter strips. Larger riparian buffers were shown to have higher credit production costs than smaller buffers due to increases in establishment costs outpacing increases in nitrogen credit trading revenue. Nitrogen credit trading was determined to be an inadequate incentive for agricultural riparian buffer establishment due to the high cost of producing nitrogen credits. Furthermore, nitrogen credit trading was shown to be less lucrative compared to the Conservation Reserve Enhancement Program, a common riparian buffer cost share program. However, increases in the market price of nitrogen credits or bundling nitrogen with other nutrient credits such as phosphorus could ultimately result in credit trading providing an adequate incentive for agricultural riparian buffer establishment. These results could be used to guide the framework for nutrient credit trading programs within other watersheds.