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Environmental benefits estimation and assessment of conservation practices: A novel approach

Abstract

R. Parvez, N. K. Chowdhury, L. L. Janssen, A. J. Smart, R. G. Stover, B. D.Madurapperuma, D. Ripplingerg

This paper estimates the economic and environmental benefits of implemented conservation practices on sediment reduction at the Bad River basin in westcentralSouth Dakota. The economic analysis includes estimation of benefit cost ratio (BCR), annual rate of return and net present value (NPV) due to adoption of best management practices (BMPs). The geographic component includes a novel index “ability to produce clean water” (APCW) that discuss how sustainable farm management practices help reduce sediment discharge. The key findings suggest that benefit value of sediment reduction average $2.32 per ton expressed in constant (year = 2000) dollars and the benefit value of $21,518,823.60 is greater as compared to total project cost of $7,823,000 and benefit value of $28,628,046 is higher than that of total project cost of $7,823,000 both in scenario I and II respectively. Also, the ratio of benefits to costs is 2.75 and the average annual rate of return is 6.4% (scenario I) and the ratio of benefits to cost is 3.65 and the average annual rate of return is8.4% (scenario II). The benefit estimated in both scenarios exceeds total project costs; NPV has a value of greater than zero and BCR isgreater than one. In this paper, we focused on estimation of economic benefit and environmental impact due to adoption of conservation practices. We leave it to future research to develop a model of the drivers or determinants of sediment flow. Also, the inclusion of another watershed scenario without conservation management practices to compare for a difference-in-differences type analysis would be worthwhile. This would significantly expands the research to identify underlying causes of watershed sedimentation. Nevertheless, our estimation does show the importance of including both geographic and economic component to discuss conservation practices impact on sediment reduction at a watershed scale.

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