Cost-sharing Incentive Programs for Source Water Protection: The Grand Riverâ€™s Rural Water Quality Program
Diane P. Dupont
Canadian provinces have become increasingly concerned with possible contamination of water from upstream agricultural activities. Many see watershed-based source protection, so called â€œsource-to-tapâ€ programs, as a means of improving water quality. A key factor in the success of these programs is the extent to which they provide incentives to farmers to undertake actions that ultimately result in a reduction of non-point source pollution. One type of program is cost-sharing whereby farmers are reimbursed for out-of-pocket expenses relating to best management practices which are expected to reduce runoff into water courses. Given increasing reliance on these types of programs, it is necessary from a public policy perspective to identify design features leading to the greatest likelihood of farmer participation. This paper examines Ontarioâ€™s Rural Water Quality Program for the Grand River using data from the first seven years of its operation, along with data from Agricultural Canadaâ€™s Farm Census, to model and estimate participation rates. Significantly positive determinants include: the maximum grant available and performance incentives, although both with diminishing returns. Projects with a one-time capital subsidy alone are much less likely to encourage participation than projects that combine a subsidy with a performance incentive.
cost-sharing; non-point source pollution; best management practices; economic incentives;
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