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The Benefits of Investing In Conservation……and the Costs of Not Investing
Developed by
Daniel MountjoyUSDA - Natural Resources Conservation Service
Laura Tourte, University of California Cooperative Extension
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Is your soil capital appreciating through soil building?
Soil is the Biological Capital of Production
Is your soil capital depreciating through erosion, compaction, or loss of organic matter?
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Investing in the soil makes good business sense…..…..And it protects water quality!
Maintaining Soil Quality = Increased Efficiency of Inputs = Water Quality Protection
= increased irrigation efficiency (lower pumping costs)= improved nutrient efficiency (lower fertilizer costs)= less wind and water erosion (lower clean-up costs)= increased water infiltration (less runoff & flooding) = improved soil tilth (reduced tillage operations)= deeper rooting depth and crop growth (higher yields)
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Soil forms at a rate of 2 to 5 tons per year per acre.
You can’t see soil erosion of less than 15 tons per acre per year.
But that is 3 to 5 times more than the natural rate of soil formation.
2 out of every 9 acres of irrigated farm land in California are losing soil faster than it can be formed.
How do you know if you are loosing soil capital?
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Internal vs. External Costs
Internalized Costs: Financial costs to the business
• Crop loss or decline in productivity• Increased cost of production inputs• Damage repair• Investments in land and property
Externalized Costs: Economic costs to society
• Repair and maintenance of public infrastructure• Impairment of water quality
(loss of beneficial use)• Loss of fisheries or wildlife habitat
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1. On farm damage and lost productivity
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2. Damage to Private Property Downstream
Runoff impacts Sediment impacts
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3. Damage to public property
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Sediment filled ditches and culverts increase flooding
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4. Non-monetary External Costs
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Summary of Economic Impacts of Erosion in North Monterey County
Annual CostsLong-term road impacts $ 160,000Road maintenance 24,000Public land impacts 10,350Loss of Wetlands 10,000Mosquito Abatement 6,270Harbor Dredging 1,750,000Drinking Water Quality 290,000TOTAL: $570,620Cost per Elkhorn farmer: $2,282
Recreational Value 2,000,000Flood Control 70,000 Commercial Fisheries ??
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Elkhorn Road turn lane damage from farm runoff $25,000
Invest in conservation rather than paying the costs of regulations, fines, and lawsuits
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Sediment Basin: $5,000
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Preventionvs.
Repair
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Vegetated Ditch Planting Investmentvs.
Annual Ditch Repair
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Consider the cost of maintenance
when comparing alternatives
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Costs
Additional Costs Year 1 Year 2-5
Installation, Operation & Maintenance
5,348 156
Reduced Returns (acreage removed)
570 570
Additional Returns
Year 1 Year 2-5
Yield Improvement
1,408 1,408
Reduced Costs (prevention and repair)
650 650
Benefits
Subtotal $5,918 $726 Subtotal $2,058 $2,058
Underground Outlet – Partial Budget Summary400 linear feet
Year 1 Year 2-5
Net Change in Income -$3,860 $1,332
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Estimating Costs and Potential Benefits Example
Underground Outlet - Representative ScenarioPartial Budget Summary - Graphic Format (see study table 1)
-6000
-4000
-2000
0
2000
4000
6000
8000
Potential Benefits Estimated Costs Net Income Change
Unit = 400 Linear Feet
$/U
nit Year 1
Years 2-5
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Estimating Costs and Potential Benefits Example
Non-Engineered Grassed Waterway - Representative ScenarioPartial Budget Summary - Graphic Format (see study table 1)
-800
-600
-400
-200
0
200
400
600
800
1000
1200
Potential Benefits Estimated Costs Net Income Change
Unit = 1,000 Linear Feet
$/U
nit Year 1
Years 2-5
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Estimating Costs and Potential Benefits Example
On-Farm Row Arrangement - Representative ScenarioPartial Budget Summary - Graphic Format (see study table 1)
0
500
1000
1500
2000
2500
3000
3500
4000
Potential Benefits Estimated Costs Net Income Change
Unit = 25 Acre Parcel
$/U
nit
Year 1
Years 2-5
Note:annual
practice –years 2-5
n/a
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Why Costs & Benefits May Differ…
Examples:
• Labor rates
• Equipment type and use
• Material type and cost
• Slope of land and erosion potential
• ‘Suite’ of on-farm conservation practices
• Number of storm events per year
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Non-Mach Labor Machine Labor Custom Work
Operation Hrs/
400 LF Cost/
400 LF Hrs/
400 LF Cost/
400 LF Hrs/
400 LF Cost/
400 LF Material Cost ($/400 LF) ‡
Total Cost ($/400 LF) ¶
Your Cost ($/400 LF)
Installation (Year 1): Layout & Mark Site 3.0 40 98 138 Trench (Backhoe or Trencher) 8 440 440 Install Pipeline 5.0 67 4,270 4,337 Fill In & Compact Site 8.0 167 77§ 245 Subtotal 107 167 440 4,445 5,160
Annual Operation & Maint. (Years 2-5): Uncover to Check, Berm & Re-Cover 8.0 107 107 Channel/Check Water – Sandbags 1.00 13 8 21 Clean Downspout Inlets .5 28 28 Subtotal 120 28 8 156
Interest on Operating Capital @ 7.4% 32
Total Costs Per Unit – Year 1 4,453 5,348 Total Costs Per Unit Per Year – Yrs 2-5 8 156 Total Costs Per Linear Foot – Year 1 11 13 Total Costs Per Linear Foot – Yrs 2-5 0* 0* † Costs are per 400 linear feet. ‡ Detail of material costs located in Table 3. Representative Material Costs. ¶ May not sum due to rounding. § Fuel, lube and repairs. * $0 = Cost is negligible when represented on a linear foot basis.
Table 2. Detail of Representative Installation, Operation & Maintenance Costs† Underground Outlet (400 Linear Feet) – Central Coast 2003
U.C. COOPERATIVE EXTENSION
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Conservation Practices Completed Studies
- Grassed Farm Roads- On-Farm Row Arrangement- Non-Engineered Grassed Waterway- Non-Engineered Water-Sediment Control Basin- Underground Outlet- Annually Planted Cover Crop- Annually Planted Grassed Filter Strip- Critical Area Planting- Perennial Hedgerow Planting
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Start out with small management changes, then build on successes.
‘one road at a time’
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Consider ‘softer’, lower cost practices
and management before investing in
‘structures’
Furrow Alignment
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Furrow Seeding
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Look for practices that have multiple benefitsfor farm management and productivity
Sediment Detention andTailwater recovery
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Erosion Control Insectary Plantings
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Look beyond the fence line and work with surrounding neighbors
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Working with neighbors in a Watershed
$80,000 lawsuit to repair erosion damage with pipeline
$2,800 Basin$1,700 Basin
$2,660 Basin$3,100 Basin
Total Cost to farmers to eliminate problem: $10,260
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• the farmer? • the landowner?• a partnership between landowner and tenant?• a local tax assessment district?• all taxpayers?• all of the above?
Sharing the CostsWho should pay for conservation investments?
Who should pay for external costs?
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