BMP CHALLENGE Update
August 8, 2006

in this issue
  • Trading Resources
  • Water Quality Credit Trading: Flexible, Profitable Incentives for Farmers Who Implement BMPs
  • Soil Test Helps Reduce Costs
  • BMP CHALLENGE Team to Help With Water Quality Credit Trading in Minnesota, Expand CHALLENGE to New States

  • Water Quality Credit Trading: Flexible, Profitable Incentives for Farmers Who Implement BMPs

    When farmers implement Best Management Practices, or BMPs, they deliver public benefits such as improved water quality. These BMPs can entail costs for farmers. For example, taking buffer areas – land adjacent to water resources – out of production can reduce sediment and nutrient loss into rivers and lakes.

    Water quality credit trading allows “point sources” of nutrients, such as municipal wastewater treatment plants, to compensate farmers for BMP costs and achieve the same improved water quality for less money than treatment equipment upgrades.

    Here’s an illustration of how trading can work:

    A growing suburban town in Minnesota has a problem. The town’s wastewater treatment plant is already emitting its maximum level of phosphorus into the lake the town sits on. No more housing can be built without expensive treatment plant upgrades, estimated to cost 25 million in taxpayer dollars.

    Farmers are growing corn along the lake and along streams that feed into the lake. By taking buffer areas out of production along these surface water resources, and by leaving residue from the previous crop on the ground to hold the soil in place, farmers can generate phosphorus reductions exceeding the town’s need for only a fraction of the cost, say $5 million.

    By carefully documenting these buffer and conservation tillage BMPs, farmers generate “credits” they can sell to the town. The town buys these credits from the farmers at a negotiated price, and demonstrates to regulators that these credits will deliver the required water quality improvements.

    In this example, taxpayers save money, the town can expand and farmers are compensated for practices that benefit everyone. One barrier to succeeding with this approach is the uncertainty for farmers. “Will the new best practices work on my farm? What if something goes wrong?” These are genuine concerns farmers can have when considering new approaches.

    The BMP CHALLENGE program offers a net income guarantee to corn farmers interested in generating trading credits for nutrient management and conservation tillage BMPs. Farmers keep a check or comparison strip on which they apply their traditional practices. The remainder of the field receives the BMP. If yield and income drops because of the new BMP, the farmer is compensated for the loss. The CHALLENGE is a great tool to help farmers get comfortable with BMPs and earn credits to sell, without income risk. To learn more about the program, contact Brian Brandt, American Farmland Trust- Agricultural Conservation Innovation Center at (614) 221-8610 or email to bbrandt@farmland.org.

    The BMP CHALLENGE is a collaboration between American Farmland Trust’s Agricultural Conservation Center, the IPM Institute of North America, Agren, IPM Works and Agflex. For more information about the collaboration, visit www.bmpchallenge.org.


    Soil Test Helps Reduce Costs

    As nitrogen costs continue to climb, it’s more important than ever for producers to apply the right amount. A simple soil test known as the Pre-Sidedress Nitrate Test (PSNT) can help and may even lead to lower nitrogen application rates.

    The test measures soil nitrate shortly before the corn crop’s greatest nitrogen demand in midsummer. According to one account, as many as a third of tested fields do not need additional nitrogen, cutting costs for those fields.

    Here’s how it works:

    1. The farmer decides to use the PSNT approach before the season starts.
    2. Before or at planting, the farmer will apply less nitrogen than usual – less than the crop will likely need.
    3. Soil samples are usually taken when the corn is 6 to 12 inches tall and are processed by an approved lab for testing.
    4. Any additional nitrogen need indicated by the test is applied to the corn crop as a sidedress to the soil immediately adjacent to the growing plants.

    The crop may already be a foot tall by the time of the application, so specialized application equipment must be readied beforehand. Any added nitrogen will immediately be taken up by the crop, with little opportunity for escape into the environment.

    The PSNT originated in Vermont and has since been used in other corn-producing states. The test goes by other names in some states, such as the Late Season Nitrate Test or the Late Spring Nitrate Test. Many states have specific recommendations for using the test, including using the test in conjunction with corn stalk-nitrate testing or with manure applications. Farmers should check with local Extension, crop advisors and/or experienced farmers before using this approach.

    The BMP CHALLENGE program is recruiting corn farmers who would like to try the PSNT approach during the 2007 growing season. The CHALLENGE will guarantee these farmers will not lose net income as they experiment with the PSNT to optimize nitrogen rates and reduce costs. For more information, contact Brian Brandt, American Farmland Trust- Agricultural Conservation Innovation Center at (614) 221-8610 or email to bbrandt@farmland.org.


    BMP CHALLENGE Team to Help With Water Quality Credit Trading in Minnesota, Expand CHALLENGE to New States

    The water in the Minnesota River Watershed in Minnesota has improved over the last few decades in part due to wastewater treatment facilities’ compliance with increasingly stringent regulations. These facilities face high costs for incremental gains – equipment needed to reduce nutrient emissions further would represent a substantial investment. Municipalities and others who operate these facilities are therefore looking at a lower cost option - paying farmers for their water quality improvement.

    The BMP CHALLENGE team has been awarded a grant from the USDA Natural Resources Conservation Service to develop and implement a training curriculum for farmers, state agencies and others.

    The project will train in-state technical support personnel to calculate economic benefits to farmers, estimate water quality improvements and verify and report implementation of conservation practices. Outreach will focus on Conservation Districts, crop consultants, Extension, agricultural organizations and other key influencers to drive farmer interest and inquiries to trained professionals.

    As part of the project, the BMP CHALLENGE will be made available in thirteen states. The CHALLENGE is a proven farmer-education model delivering a 24% nutrient use reduction in seven states over the past four years. The program uses a side-by-side comparison in the farmers’ fields to demonstrate BMP benefits. The farmer applies his or her conventional practice on a check, or comparison strip, vs. reduced nutrient or tillage Best Management Practice (BMP) on the balance of the field. If farmer net income declines as a result of the BMP, the program compensates the farmer for the loss.

    Thanks to the grant, the CHALLENGE will now be available to corn farmers in DE, IA, IL, IN, MD, MI, MN, NC, NE, OH, PA, VA, WI. For more information on this project, contact Thomas Green, Agflex, (608) 232-1528, or email to tom.green@agflex.com.


    Trading Resources

    Water quality credit trading is a new concept, with just a few programs operating to date. The Environmental Trading Network is a great source for information on existing programs and upcoming events including trading conferences.

    Getting Paid for Stewardship: An Agricultural Community Water Quality Trading Guide, is a new online resource for those working with ag producers on trading. The guide reviews each element of the trading process, from assessing trade potential through tracking and reporting nutrient and sediment reductions and trades. Find the guide on Conservation Technology Information Center’s website.

    Visit BMP CHALLENGE Partners...

    American Farmland Trust- Agricultural Conservation Innovation Center

    Agflex

    Agren

    IPM Institute of North America, Inc.



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