Farmers in Pennsylvania, Maryland and Virginia could earn additional revenue if Congress passes legislation to create an interstate nutrient trading program to serve as a cost-effective solution to restoring the health of the Chesapeake Bay.

The World Resources Institute (WRI) analyzed nine farm scenarios across the three states and found that farmers participating in a bay-wide trading program could potentially increase their profits by an average of $11,000/year with a credit price of $20/lb. of nitrogen – a 55% return on their investment in nutrient reduction practices.

AWRI-created Farm Profit Calculator tool takes into account capital, maintenance, land rental, and transaction costs that farmers face when investing and maintaining such practices. “By investing in cover crops, riparian buffers, and other nutrient-reduction practices, farmers in the Chesapeake Bay area could earn substantial profits from participating in nutrient trading,” says John Talberth, a senior economist at WRI and lead author of the reports.

Under a trading program, farmers who reduce nutrient production from their farms could sell credits to other sources of nutrient production, such as wastewater treatment plants. But first, farmers must meet baseline requirements for their farm’s portion of the state’s Chesapeake Bay clean-up goal. Once that is met, they may invest in additional pollution-reducing measures and trading credits.

“Many but not all farms will profit from trading, since profitability depends on the type and location of the farm and the availability of state payments to share the cost of baseline practices, among other factors,” says Cy Jones, WRI’s water quality team leader and co-author of the reports. “It’s clear from our analysis that trading is not only a cost-effective investment for some farmers, but also a cost-saving mechanism to clean up the Chesapeake Bay.”

“How Nutrient Trading Could Benefit Pennsylvania Farms,” available online at www.wri.org/Pennsylvania, serves as the last report in the three-part series. The series also includes reports entitled, “How Baywide Nutrient Trading Could Benefit Maryland Farms,” and “How Baywide Nutrient Trading Could Benefit Virginia Farms.” These reports are available at pdf.wri.org/Maryland and www.wri.org/Virginia/.