Thursday, August 3, 2017

What Does Soil and Water Quality Mean for the Economy?

                “Investments in environmental issues are job-killers!”
                “It’s going to hurt the economy!”
                These are common misconceptions about the effects of tackling water and soil quality issues. However, after researching this concept at University of Wisconsin – Stout for 8 weeks, Chris Ferguson Ph.D., Ryleigh Prochnow, and I discovered that improving the health of the environment can have a positive impact on the local economy.

                In 2015, The Red Cedar Water Quality Partnership created a plan to reduce the amount of phosphorus pollution into the water bodies of the Red Cedar Watershed. This plan has various goals to reduce phosphorus runoff aimed at farmers and residential properties, and these strategies are to ideally be implemented over a ten-year span. So the question that we wanted to answer is: how is this ten-year water quality strategy going to affect the local economy?
                In order to model the economies of Dunn and Barron Counties, we utilized a program called IMPLAN, which is an input-output software system. This modeling system allows for researchers to insert inputs that are expected to change the economy, and then IMPLAN provides us with the outputs. For example, we have materials and labor in to a construction projects that will reduce waste runoff, and those inputs branch out into 226 sectors of the economy.
Our cost estimates originate from the United States Department of Agriculture (USDA), the National Resource Conservation Service (NRCS), and the Wisconsin Department of Natural Resources (WDNR), and entered those estimates into IMPLAN. The NRCS estimates that yields, when switching from conventional tillage to no-till, will temporarily be below normal levels during the first three years and then go back to regular levels that were achieved with conventional tillage.
We also wanted to incorporate the value of soil in our economic impact, which is very uncommon in current and previous economic research. This was attempted by incorporating Francisco Arriaga’s research from UW-Madison. Arriaga determined that if we have one cubic ton of soil, and a certain percentage of it consists of Phosphorus, Nitrogen, Potassium, and organic matter, then we can assign current market values to those percentages and value how much the eroded soil is worth.
From our research, we can see that this implementation plan has the potential to grow the local economy by $38 million by 2025. The value of soil that would be saved is approximately $2 million, and jobs would increase by 449 jobs. From an individual’s perspective, whether the benefits outweigh the costs is unclear because of its variability; however, previous research indicates increased savings or no changes in costs in the long run for farmers in particular. What’s exciting about this research is that we have the potential to witness economic growth while attempting to solve a serious environmental issue. This completely goes against the widely held belief that environmental investments kill jobs and hinder growth.

Along the lines of growth, the LAKES REU Program has helped me grow in ways I could not have imagined. It has given me ambition to work towards my dream of getting a Ph.D. in Economics, and it has given me confidence in my ability to do so. Our mentors are so incredible that I’m finding it difficult to put in to words. They inspire us, make us laugh, and ask us the tough life questions that help us grow in our perspectives on life. I feel so grateful for the opportunity to work here in Menomonie with these wonderful professors, and for the experience of engaging in finding solutions to real-life problems. 

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