69th SWCS International Annual Conference July 27-30, 2014 Lombard, IL

1. Economics of crop and land
management practices and water
quality impacts for four watersheds
located in Manitoba Canada
Economics of crop and land
management practices and water
quality impacts for four watersheds
located in Manitoba Canada
M. Khakbazan*, J. Vanrobaeys, L. Braul, J. Huang, H. Wilson, J. Elliott
Agriculture and Agri-Food Canada, Brandon Research Centre, Brandon, Manitoba, Canada
SWCS July 27-30, 2014
Lombard, Illinois, USA
CGH1

2. Slide 1
CGH1 Are we to include names on this slide?
Cliff Hamilton, 5/10/2011

3. Study Issue
• The water quality in the Lake Winnipeg has been
deteriorating due to, in part, excessive non-point
source nutrient contributions from agricultural
activities within the Red and Assiniboine rivers
drainage basin (953,000 Km2) (Salvano et al.,
2009, Jones et al., 2001).
• Land management practices and the type of
cropping system present within a catchment are
found to significantly affect the water quality of
aquatic ecosystems (Ye et al., 2009).

4. Objective of Watershed ProjectsObjective of Watershed Projects
• Evaluate both the environmental and
economic performance of BMPs for four
watersheds in Manitoba, Canada
• Water quality as a primary indicator
• Examine management practices aimed at
increasing economic benefits and reducing
environmental impacts in the agricultural
Production.

5. Study Area

6. South Tobacco Creek Watershed
Manitoba, Canada
South Tobacco Creek Watershed
Manitoba, Canada
150 km2 SW of Winnipeg

7. Study Area
• The four catchments in this study, the Boyne River, the La Salle
River, the Little Saskatchewan River, the South Tobacco Creek
watersheds are located in Manitoba, Canada within the Lake
Winnipeg Basin
• These watersheds contain varying topography and land use and
are located within the Assiniboine and Red River Basins.
Watershed La Salle Boyne L.
Saskatchewan
South Tobacco
Creek
Drainage Area
(Km2)
2,400 1,135 4,000 75
Land Use Cropland
(80%)
Cropland
(66%)
Cropland
(37%)
Cropland
(71%)
Forest (2%) Forest (12%) Forest (28%)
Pasture (9%) Pasture (15%) Pasture (14%)
Wetland (0.1%) Wetland (0.6%) Wetland (10%)

8. BMPs StudiedBMPs Studied
Conversion of Crop Land
to permanent Forage
Conversion of Crop Land
to permanent Forage
Stream
Restoration of
wetlands
Nutrient
management
100% conversion of cropland
Conversion of marginal
cropland
100% conversion of cropland
Conversion of marginal
cropland
Restoration of all wetlands in
cropland
Restoration of wetlands only in
marginal cropland
Conversion or Restoration
Over:
10 years or
20 years

9. BMPs StudiedBMPs Studied
Small
Reservoirs/Dams
Small
Reservoirs/Dams
Holding Pond
Downstream of Cattle
Over-Winter-Feeding
Area
Holding Pond
Downstream of Cattle
Over-Winter-Feeding
Area

10. Methods
• Enterprise budgeting
• Costs benefit analysis
• Compared discounted cash flows with and
without BMP.
• Used Net Present Value.
• 8% discount rate.
• Baseline and Scenario
• Costs estimation and Simulation Modeling

11. Total costs of restoration
Opportunity costs Nuisance Costs Restoration Costs
Construction
Costs
Administration
Costs
Private Costs to producers
Public Costs
(if a program)
Boxall et al.
Wetland or Small Dam Costs

12. Holding Pond Or Small Reservoirs/DamsHolding Pond Or Small Reservoirs/Dams
• Model description
– Input parameters
• Available land
• Previous land use
• Catchment area
• Number of livestock housed
• Days in livestock yard
• Liner and fencing options
• Required pond dimensions
• Holding pond capacity
– Cost parameters
• Capital costs; annual costs

13. Zering and Wohlgenant (2005)
0
0.5
1
1.5
2
2.5
3
3.5
0 100000 200000 300000 400000
CostperAUOrCostperM2ofcatchment
# of Livestock Or Area of Catchment
Construction CostConstruction Cost

14. Total Excavation Cost
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
0 100000 200000 300000 400000
TotalCostforHoldingPond
# of Livestock Or Area of Catchment
Construction CostConstruction Cost

15. Watershed 100%
cropland
conversion
cost per
year
($/ha/yr)*
Marginal
cropland
conversion
cost per
year
($/ha/yr)*
Boyne ‐153.02 ‐39.39
Little Sask. ‐106.91 ‐19.69
La Salle ‐152.21 ‐11.67
South
Tobacco
Creek (STC)
‐160
Results – Crop Land Conversion
For STC, land
conversion was a
Seven-year rotation
[Wheat-Canola-
Wheat-
Canola(Alfalfa)-
Alfalfa-Alfalfa-
Alfalfa] s

16. Conversion of Annual Cropland to ForageConversion of Annual Cropland to Forage
• Tillage costs decreased by about 42%, fuel costs
by 17% chemical costs by almost 50%, and total
average annual fertilizer costs by around 30% by
using N-fixing crops.
• However, the cost saving of including forage in
annual crop rotation was not enough to offset the
loss of net income from annual crops.
• Other benefits not included: Nitrogen fixation;
reduced chemical use and GHG benefits; reduced
soil erosion;…

17. Watershed Total
Opportunit
y cost/ha
of wetland
converted
($/ha)
Total
Opportunit
y cost/ha
of marginal
wetland
converted
($/ha)
Boyne ‐3,022 ‐1,106
Little Sask. ‐2,012 ‐633
La Salle ‐2,305 ‐1,708
South
Tobacco
Creek
‐2, 704
Results – Wetland Restoration
Wetland: Natural
(restored) or
constructed water
systems used to filter
run-off from cropland
or feedlots.

18. Results – Small Reservoirs/DamsResults – Small Reservoirs/Dams
• On- and off-farm costs and benefits
• Small dam: Constructed barrier in a stream that impounds
water.
• Dams cost ranges from $11,000-$64,000 depending on dam
size, with an average of $23,000.
• Reduces downstream erosion and flooding (0% to 100%
reduction in runoff peaks)
• Value of the dams’ flood reduction alone resulted in a
financial payback period of approximately 35 years or
shorter
• Potential gross income of irrigation could be $280 and
$624/ha for wheat and canola

19. EconomicsEconomics
• On- and off-farm costs and benefits
• Reduce movement of sediment and nutrients.
• Sediment: 73% reduction
• Nitrogen: 17% reduction
• Phosphorous: 11% reduction
• Nutrient reduction benefits ($3/ha); sediment reduction benefits
($1.85/ha) - 1,100 hectares of drainage area
• Significant other benefits such as wildlife, recreational, esthetic,
spiritual and quality of life values may exist. Wildlife value ($30/ha)
• Manitobans are willing to pay $294 per household per year over a
five-year period for wetlands and if 100% of wetlands are restored in
the province, the public is willing to pay $358 per household per year
over five years (Boxall)
• Improves land value.

20. Results – Holding PondsResults – Holding Ponds
• Smaller operations: average fixed costs of
$19/animal/year with annual average maintenance costs
of about $5/animal,
• Medium operations: average fixed costs of $5/animal/year
with annual maintenance costs of $2.5/animal,
• Large operations: fixed costs of $2.8/animal/year with
annual maintenance costs of $0.75/animal, assuming the
holding pond has a 25-year lifespan.
• Benefits: Reduction in N – 39%, P – 30%, TSS – 12%
• Benefits: Irrigation benefits not realized yet up to 10%
higher forage/alfalfa yields

21. Watershed Total nutrient
management reduced
fert. benefit on manured
land ($/ha)*
Boyne 378.21
Little Sask. 222.76
La Salle 267.55
Results- Nutrient Management

22. Development of Nutrient Export
Relationships
Development of Nutrient Export
Relationships
– Regression results (STC)
– Nutrient export was found to be related to nutrient
application rates, tillage and flow.
Pexport = -2.95 + 0.000013*Papplied + 4.27*Conservation Tillage + 0.013*Flow
(-4.40) (2.00) (5.00) (15.01)
• The replacement value of the nutrients that left the South Tobacco
Creek Watershed over ten years averaged to about $7/ha/year, or
average of $37,000 of nutrients leaving the entire watershed every
year.
• The replacement value does not include costs to society in terms of
environmental damage.

23. • Complete economic feasibility mapping for
selected BMPs showing where agricultural
land use and watershed characteristics suggest
certain BMPs will be cost effective, facilitating
the development of realistic scenarios in the
four watersheds.
• Use Decision Support System (DSS) to
identify “hot spots”
BMP TargetingBMP Targeting

24. “Best” vs. “Worst” Case Scenarios - BMP
required for a 30% TP reduction target

26. • The economic benefits of perennial forage rotation
failed to compensate for the opportunity costs from the
profit of continuing to plant annual crops.
• Similarly, the on-farm benefits of retention ponds and
wetland restoration were insufficient to justify their
capital costs although they provided significant off-
farm benefits through reductions in nutrients, sediment
and pathogen exports.
• Reduced fertilizer management on manured land
increased farm benefits.
“Conclusions

27. Acknowledgements
• AAFC - Red and Assiniboine and South Tobacco Creek
Watershed Projects - for providing financial support
• We also greatly acknowledge technical contributions
from Red and Assiniboine and South Tobacco Creek
watersheds management team.
• Deerwood Soil and Water Management Association for
collecting data

28. Thank You for listeningThank You for listening