Harnessing market based mechanisms to improve water quality: Water quality trading policies in the river Alde, UK

Abstract

Nitrogen fertiliser in agriculture continues to be one of the largest contributors to water pollution driven by the global food demand. Consequently, policies designed to tackle nitrogen pollution tend to be focused on the farm level. Applying mitigation measures requires knowledge, local labour and financial investment to achieve desired goals. Influencing farming activity comes with challenges as policies result in economic losses. We propose Water Quality Trading (WQT) to minimize the cost of controlling water pollution and develop it for policy recommendations in the River Alde catchment in Suffolk. We apply WQT to three scenarios named Reference Pollution Target, Livestock Target Plan and Variation of Farming. Our findings demonstrate that WQT can reduce farmers nitrogen load by 8%, 7% and 18% respectively from the baseline of 6 mg/L. The scenario simulations show a net revenue increase of 6%, 5% and 18% respectively. Our study demonstrates the effectiveness of the WQT approach in reducing water pollution, promoting sustainable agriculture and meeting water management goals.

Keywords: Agriculture; Food security; Market-based model; Nitrogen pollution; Water policy.