- We considered a full range of practices that could be applied in Illinois to reduce nitrate-nitrogen losses from agricultural fields. We used the Iowa Nutrient Reduction Strategy literature review (Iowa, 2013) and the Lake Bloomington study (David et al., 2008) as the basis for understanding what might work well in Illinois and then made modifications based on Illinois conditions. Practices are divided into three groups: in-field, edge-of-field, and land use change (Table 3.11). We took the per acre costs presented in Appendix A and estimated the overall costs in dollars per pound reduced if the practice or scenario was fully implemented in the state. At this stage, the results cannot be added together because one practice may affect the removal effectiveness of another.
In-Field Practices
Our analysis suggested that producers in most of the state apply nitrogen fertilizer at rates similar to the MRTN calculator recommendation. However, it is likely that not all producers are following this guideline, so we assumed 10 percent are well above the MRTN and that reducing their nitrogen rate to the MRTN would result in a 10 percent reduction in nitrate-nitrogen losses per acre (reduction percent from Iowa, 2013). When applied to corn acres in the state, this would reduce the overall nitrate-nitrogen load by 2.3 million lb yr-1, or 0.6 percent of the baseline. This isn’t a large reduction, but the cost is negative, meaning that producers would save money.
The impact of nitrification inhibitors was estimated at 4.3 million lb yr-1 of reduced nitrate-nitrogen loss- es. Assumptions included: using an inhibitor for fall-applied nitrogen will result in a 10 percent per acre reduction in loss (Iowa, 2013); 50 percent of the nitrogen in the northern two-thirds of Illinois (MLRAs 1, 2, 4, 6, and 7) is applied in the fall; and 50 percent of that nitrogen currently includes an inhibitor. These assumptions came from analysis of fertilizer sales information, surveys, and discussions with industry representatives. The related cost is $2.33/lb removed.
We made two estimates for changing fertilizer timing. The first was that no nitrogen was applied to tile-drained acres in the fall. Based on results from Clover (2005) and Gentry et al. (2014), we used a 20 percent reduction in nitrate-nitrogen losses in central Illinois and a 15 percent reduction in northern Illinois. Central Illinois has warmer temperatures and typically has greater tile flow in winter and early spring, leading to potentially greater losses from fall-applied nitrogen. Iowa (2013) estimated a 6 percent reduction using data from both Iowa and its surrounding states, but they have lower temperatures and less precipitation in their tile-drained region than Illinois. These assumptions led to a 26 million lb yr-1 reduction, or 6.4 percent of the baseline. We also estimated a split application of 50 percent fall and 50 percent spring for a given field. Because there are no measurements for this nitrogen system, we assumed it would be half as effective at reducing nitrate-nitrogen losses as moving all fertilizer nitrogen currently applied in the fall to the spring. Therefore, the estimated reduction in load was 13 million lb yr-1. Although there are no data available on the potential nitrate-nitrogen response in tile drains, we did make an estimate for a fertilizer system that includes three applications: some in the fall with an inhibitor (40 percent), at planting as a carrier for herbicides or a starter fertilizer (10 percent), and in mid-June as side- dressing (50 percent). The Clover (2005) data did show a 20 percent reduction in nitrate-nitrogen losses from tile drains when spring and side-dressing applications were compared. Therefore, given the three-way split, we have included an estimate similar to the reduction from the fall-to-spring timing change. Costs for timing changes ranged from $3.17 to $6.22/lb removed.
The cost estimate for switching from fall to spring was $18/acre (see Appendix B below for a complete presentation of how this cost was determined). This would be a substantial increase (12 percent) in fertilizer costs that totaled $148/acre in 2014 for central Illinois high-productivity farmland. An Illinois State University report from a project funded by the IDOA Fertilizer Research and Education Council estimated the costs of switching from fall to spring for all farmers at $0.1-1.5 billion/yr (O’Rourke and Winter, 2009). Given a typical planting year of 12 million corn acres, these costs would range from $9.79 to $120.33/acre. The $18/acre estimated here is within that range. Much of the higher end of the O’Rourke and Winter (2009) costs are based on reduced corn yields due to delayed planting by as much as 14 days. These costs are indeed quite high and would be avoided by farmers. We assumed that the additional fertilizer transport, storage, and application capacity needed would be built over time such that delayed planting losses would be minimal. The analysis and projections here assume that the change from fall to spring nitrogen fertilization would not be regulated or implemented immediately but would be voluntary so that a reduction in fall application would occur gradually across many years.
The other major in-field management change considered was the use of cover crops. There have been many studies on the effectiveness of cover crops but fewer on the impacts on tiled-drained fields specifically. Iowa (2013) calculated a 31 percent reduction in nitrate-nitrogen losses from a rye cover crop and 28 percent from oat. We therefore assumed a 30 percent reduction in nitrate-nitrogen losses using a generic grass cover crop. When applied to all tile-drained acres in Illinois, a cover crop led to the largest nitrate-nitrogen reduction of any practice: 84 million lb yr-1, or 20.5 percent of the baseline. When applied to all non-tiled acres, the reduction was 32 million lb yr-1. The costs for cover crops were quite different between tile-drained ($3.21/lb removed) and non-drained lands ($10.62/lb removed) because nitrate-nitrogen loss per acre is so much greater on the tile-drained lands, reducing costs per pound. This calculation does not mean that cover crops take up more nitrogen on tile-drained fields, only that the leaching losses are larger, and, therefore, the reduction is greater, reducing the cost per pound.
Edge-of-Field Practices
We estimated the effectiveness of three edge-of-field practices: bioreactors, wetlands, and buffers. Bioreactors are trenches filled with wood chips that are located on the edge of fields and intercept tile flow. Iowa (2013) estimated their effectiveness at a 43 percent reduction in nitrate-nitrogen loss from a field. There are few estimates of bioreactor effectiveness in Illinois. Much of the modeled effectiveness (and needed retention times) has been based on a water temperature of 20°C reported by Chun et al. (2010) for a short-term field test conducted near Decatur, Illinois on June 25 and 30, 2007. Tile water in Illinois is typically much colder than that during the typical flow period of January to early July, with temperatures at only about 5-10°C during much of the winter and spring flow periods. These lower temperatures would greatly reduce removal rates (Christianson et al., 2012). In addition, bioreactors may have larger rates of removal during the first year or two following installation as some of the fresh wood chip material degrades rapidly. Most measurements reported to date were taken during only the first year or two following installation. Therefore, we used a conservative value of 25 percent removal and assumed that 50 percent of all tile-drained land received a bioreactor, reducing nitrate-nitrogen loads by 35 million lb yr-1, or 8.5 percent of the baseline. Bioreactors have a large upfront cost, but this is one of the lower cost practices we evaluated at $2.21/lb of nitrate-nitrogen.
For constructed wetlands, we assumed a 50 percent reduction in nitrate-nitrogen losses, whereas Iowa (2013) assumed a 52 percent reduction. Our constructed wetlands are typically put at the end of individual tile lines at a wetland area/drainage ratio of 5 percent and are smaller in size (0.5-2 acres). The wetlands in Iowa are typically many acres in size and are fed by drainage areas of 1,000-2,000 acres. They intercept tile mains we do not typically have in Illinois. Kovacic et al. (2000) conducted the most complete constructed wetland study in Illinois and measured a 37 percent reduction in tile nitrate-nitrogen loads to the river. When they included seepage reductions, the overall estimate increased to 45 percent. Groh et al. (2015) evaluated the same wetlands studied by Kovacic et al. (2000) 18 and 19 years after construction. The wetlands were still working well and had an estimated total nitrate removal of 62 percent. Kovacic et al. (2006) studied two constructed wetlands near Bloomington, Illinois that received both surface runoff and tile flow as inputs. They measured a 36 percent reduction in nitrate export from these wetlands. We assumed that wetlands were placed on 35 percent of tile-drained acres. This would lead to a 49 million lb yr-1 reduction, or 11.9 percent of the baseline, at a cost of $4.05/lb removed.
Buffers along agricultural ditches and streams can reduce nitrate-nitrogen losses by increasing plant uptake and denitrification in the water that seeps through them. In tile-drained landscapes, much of the drainage water bypasses buffers, and estimating the water that does flow through them is difficult. In the non-tile-drained regions of the state, buffers can be effective at reducing nitrate-nitrogen losses to streams, although the current stream loads are much lower than in tile-drained regions. To estimate the potential reductions from planting grass riparian buffers along streams, we first conducted a GIS analysis to identify stream segments with existing buffers (defined as vegetation other than a row crop within 100 ft of the stream). Approximately 64 percent of the state’s agricultural stream miles do not have buffers, and, therefore, nitrate-nitrogen loads could be reduced if buffers were planted. Iowa (2013) used state-specific studies and a complex analysis to determine the amount of water and nitrate-nitrogen that would pass through buffers. This analysis was beyond the data available for Illinois. To estimate nitrate-nitrogen removal by buffers, we used Iowa’s (2013) ratio for total phosphorus to nitrate-nitrogen removed and our total phosphorus estimate for Illinois (see below). If buffers were installed on all agricultural streams currently without buffers, we estimate that nitrate-nitrogen would be reduced by 36 million lb yr-1 statewide, or 8.7 percent of the baseline, at a cost of $1.63/lb. This is a crude estimate, but we believe it is the correct magnitude, although it is likely to vary throughout the state due to differences in soils and lateral flow paths.
One edge-of-field practice we did not include in our cost estimates is drainage water management (DWM). This practice involves raising the outlet of the tile system with a control structure to as little as 6 in below the soil surface during periods when the field does not need to be worked, such as winter and early spring (Frankenberger et al., 2006; Skaggs et al., 2012). This practice works best on flat fields (less than 0.5 percent slope) with new patterned tile systems but can be retrofitted on existing systems. Research has shown that reductions in nitrate-nitrogen loss can be as much as 82 percent and are nearly the same as the water reduction that occurs as a result of raising the tile outlet (Skaggs et al., 2012). In Illinois, Cooke and Verma (2012) found that DWM reduced nitrate-nitrogen by 37-79 percent, which is similar to reductions measured by Woli et al. (2010). However, most of these studies have been on small fields, often just a few acres, and there is little understanding of what happens to the water and nitrates held back. Nearly all studies have shown that most of the water does not drain out when the tile outlet is lowered. If the water and nitrate-nitrogen move through lateral seepage due to the tile being raised to a nearby ditch or tile system, then the effectiveness at the watershed scale would be greatly reduced. A recent study by Sunohara et al. (2014) showed that DWM could increase seepage both laterally and into groundwater, which could limit its effectiveness. However, the authors also indicated more research was needed because their study was conducted only during the growing season rather than during winter and early spring, when we really expect this practice to be utilized. Given these uncertainties, we did not include DWM in any scenario. However, this is a practice that could perform well on some fields and could be used to reduce both nitrate and total phosphorus losses from tile-drained field
Two other practices that were not included but could fit some fields and watersheds are two-stage ditches (Roley et al., 2012) and saturated lateral buffers (Jaynes and Isenhart, 2014). Two-stage ditches modify the typical trapezoidal channel so that floodplains are constructed alongside the stream channel. During high flow, water spreads onto the floodplains, decreasing its velocity (Roley et al., 2012). Removal of denitrification is increased, but overall nitrate removal has been found to be quite limited at high flows. Saturated lateral buffers, which are currently being evaluated at several Illinois locations, allow a fraction of tile flow to be routed through a riparian buffer. Published results on these practices are limited, but they could be utilized to reduce nitrate losses where appropriate.
Land-Use Changes
Two estimates were made for land-use changes. The first looked at the impact of planting perennial crops on land converted to row crops from pasture between 1987 and 2007, which totaled 1.1 million acres according to NASS Census of Agriculture data. We estimated that this conversation would result in a 90 percent reduction in nitrate-nitrogen losses based on results from Iowa (2013) and recent work with biofuels on the University of Illinois South Farms (Smith et al., 2013). The estimated nitrate-nitrogen reduction would be 10 million lb yr-1, a 2.6 percent reduction from the baseline, at a cost of $9.34/lb.
As an additional estimate, we calculated the reduction in nitrate-nitrogen if 10 percent of corn/soybean tile-drained land were converted to perennials, again assuming a 90 percent reduction per acre. This 1 million-acre change would lead to a 25 million lb yr-1 reduction from the state, or 6.1 percent of the baseline, at a cost of $3.18/lb. This cost is much less than the other land-use changes described above because the land is 100 percent tile-drained, leading to much larger reductions per acre.
Table 3.11. Example statewide results for nitrate-nitrogen reductions, with shading to represent in-field, edge-of-field, land use, and point source practices or scenarios.
Practice/scenario | Nitrate-N reduction per acre (percent) | Nitrate-N reduced (million lb) | Nitrate-N reduction from baseline (percent) | Cost ($/lb removed) |
Reducing N rate from background to MRTN on 10 percent of acres | 10 | 2.3 | 0.6 | -4.25 |
Nitrification inhibitor with all fall-applied fertilizer on tile-drained corn acres | 10 | 4.3 | 1 | 2.33 |
Split application of 50 percent fall and 50 percent spring on tile-drained corn acres | 7.5-10 | 13 | 3.1 | 6.22 |
Spring-only application on tile-drained corn acres | 15-20 | 26 | 6.4 | 3.17 |
Split application of 40 percent fall, 10 percent pre-plant, and 50 percent side dress | 15-20 | 26 | 6.4 | |
Cover crops on all corn/soybean tile-drained acres | 30 | 84 | 20.5 | 3.21 |
Cover crops on all corn/soybean non-tiled acres | 30 | 33 | 7.9 | 11.02 |
Bioreactors on 50 percent of tile-drained land | 25 | 35 | 8.5 | 2.21 |
Wetlands on 35 percent of tile-drained land | 50 | 49 | 11.9 | 4.05 |
Buffers on all applicable crop land (reduction only for water that interacts with active area) | 90 | 36 | 8.7 | 1.63 |
Perennial/energy crops equal to pasture/hay acreage from 1987 | 90 | 10 | 2.6 | 9.34 |
Perennial/energy crops on 10 percent of tile-drained land | 90 | 25 | 6.1 | 3.18 |
Point source reduction to 10 mg/L | | 14 | 3.4 | 3.3 |
Appendix B: Non-Point Source Cost Estimates
This section provides cost estimates for each practice to reduce nitrate-nitrogen and total phosphorus losses from agricultural fields introduced in chapter 3. Cost estimates are provided in annual dollars per acre.
The following subsections provide detail on methods used to estimate the cost of each practice. Before proceeding, however, there are five issues to consider.
First, the method used in generating cost estimates is a partial budgeting approach. In this approach, a base case representing general agricultural practices is specified. Then, a nutrient reduction practice is specified. Changes in costs from the current practice and the reduction practice are then estimated. Hence, cost estimates represent a change from the current general practice.
Second, some of the following practices have initial investments. These investments are made in the first year, with the benefits of the investment accruing over many years. In these cases, the initial investment cost is amortized over the life of the investment using an annualized equivalence approach. A discount factor of 6 percent is used in calculating annualized investment costs. A 20-year life was assumed for most practices.
Third, some practice changes may impact yields. For example, some of the proposed changes would shift nitrogen applications from fall to spring, while others split applications of nitrogen over more than one application period. Research on these practices is ongoing, with some results indicating they increase yields or reduce nutrient applications. In determining whether to include a yield change for a practice, we consulted the Illinois Agronomy Handbook (University of Illinois, 2012a), particularly the Managing Nitrogen chapter. The Illinois Agronomy Handbook is treated as a guide to standard agronomic practices in Illinois. We included a yield change for a practice if the handbook indicated one was warranted. Some of the newer timing and split application strategies may prove beneficial. As of yet, however, they are not standard, most likely for economic and agronomic reasons. In addition, research-based results do not necessarily translate to general situations, as general practices differ from those in the research setting.
Fourth, costs need to be viewed in context of the earning potential of farmland. This can be determined by looking at per acre net returns to farmers where the farmland is rented at average cash rent (University of Illinois, 2014b). Net returns to central Illinois farmers in 2000-2006 averaged $56/acre. Returns for 2007- 2013 were higher, averaging $195/acre. Because returns were above historical averages, 2007-2013 will likely be remembered as a high-profit period. Current projections place estimated returns over the next five years around $55/acre, with the potential for 2014 and 2015 to be much lower. Using this number as a guideline, a practice that costs $10 represents an 18 percent reduction in returns to the farmer. On a percentage basis, many of the following strategies represent a significant reduction in agricultural returns.
Fifth, whether to adopt these practices will depend on more than cost alone. Two additional factors are particularly critical: high investment costs and timing. The incentive to implement some practices may be reduced by initial investment costs, which may require debt capital and increase a farmer’s risk exposure. Additionally, many of the strategies would move field operations to the spring and after the planting period. There are a limited number of days suitable for field work during these periods. Placing more field operations in the spring has the potential to reduce profits. These concerns are listed below as caveats to each practice.
Table B1 includes the costs of each practice as well as the concerns that may impede adoption. The following subsections describe each of the practices in more detail.
Reducing Tillage
The base practice includes a heavy tillage pass. The alternative is to eliminate that tillage pass. However, this alternative would still include tillage and is not a no-till system. The cost of this strategy is the reduction of one tillage pass. The cost of the tillage pass was taken from Machine Cost Estimates: Field Operations (University of Illinois, 2012b). The particular implement included in the cost is a horizontal disk, drag, rolling basket. The cost is -$17/acre, indicating a savings.
Caveats: Many farmers undertake a tillage pass when they grow corn several years in a row. There is reason to believe that breaking up residue aids in stalk decomposition, potentially leading to higher corn yields the following year. A yield reduction would reduce the expected savings of this practice.
Eliminating Phosphorus Applications
The base strategy assumes the soil has high levels of phosphorus obtained through a combination of naturally high phosphorus levels, commercial application of fertilizers, and manure applications. Not all soils meet these conditions. The nutrient reduction scenario eliminates phosphorus applications for six years to bring down the soil test levels.
In pricing this scenario, we assumed that 170 lb of diammonium phosphate (DAP), a fertilizer with 18 percent nitrogen, 46 percent phosphorus, and 0 percent potassium, will sustain adequate phosphorus levels for several rotations. The 170 lb application rate represents a maintenance level of fertilizer application and is equal to 34 lb P/acre/yr. It is typically applied at this rate every other year. This compares well to the 11-13 lb/yr application previously estimated for the state (Table 3.9). A DAP fertilizer price of $540/ton was used to calculate the cost. A credit was given for nitrogen in DAP as the nitrogen will likely have to be replaced by some other commercial source. The credit was based on a $680/ton anhydrous ammonia price. Given the credit, the elimination of phosphorus fertilizers in one year will result in a cost savings of $34/yr.
Given this savings, we calculated the present value of eliminating three applications of phosphorus fertilizer, which would typically be applied over a six-year period. The annualized yearly value during a 20- year period was then calculated. A 6 percent discount factor was used in calculating both the present value and the annualized cost. The annual yearly cost for reducing phosphorus fertilizer is -$7.50/yr, indicating that this practice reduces costs.
Installing Stream Buffers
This practice takes acres out of production to provide a buffer near streams and other waterbodies. The base practice is an acre in production. The nutrient reduction practice takes the acre out of production and plants grass on that acre.
The buffer eliminates all income potential from the acre. The cost of this will be represented by the cash rent from the acre. Implementing the practice will require farmers to plant grass, a one-time investment cost. In addition, the buffer acre will require maintenance. The total cost of the buffer includes:
- The cash rent value of the farmland given up. The average cash rent in central Illinois, a likely target area for buffers, is $280/acre. This number could be adjusted for other areas of the state. For example, in southern Illinois, the cash rent value would be much less (University of Illinois, 2013).
- The cost of planting grass. This is a cost of $50/acre, including seed and tillage. Amortized over a 20-year life using a 6 percent interest rate, the cost is $4.36/acre.
- Annual maintenance costs, which is $10/acre/yr.
The total cost is $294/acre.
Caveats: Taking farmland out of production may have negative impacts on farmland prices as tillable acres typically sell at higher values than non-tillable acres. These costs were not included in the estimates.
Reducing Nitrogen Rates
The base case assumes that 10 percent of producers over-apply nitrogen. The nutrient reduction practice would reduce nitrogen applications by 20 lb/acre (to the Maximum Return to Nitrogen rate), resulting in an $8/yr savings.
Adding Nitrification Inhibitors
This practice adds a nitrification inhibitor to all fall-applied fertilizer. The cost of this practice was conservatively estimated at $7/acre because it is likely that the use of a nitrogen inhibitor will result in a reduction in nitrogen applications. The use of a nitrogen inhibitor is a relatively standard practice for fall-applied nitrogen in Illinois.
Splitting Nitrogen Fertilizer Applications
The base case for this practice is fall-applied nitrogen. The nitrogen reduction strategy is to split nitrogen application in half between fall and spring. Under both the base and nutrient reduction practices, a total of 160 lb of actual nitrogen is applied and the nitrogen application in the fall is applied as anhydrous ammonia. Under the reduction practice, however, the spring application is divided, with one-half anhydrous ammonia and the other a 28 percent nitrogen solution. The nitrogen solution is used to speed up application. Under the nitrogen reduction practice, the following costs are incurred:
- $6.10/acre for an additional anhydrous ammonia pass on half the acres. An anhydrous ammonia pass costs $12.20/acre (University of Illinois, 2012b). Since this pass is on half the acres, this cost equals $6.10/acre.
- $4.55/acre for an additional nitrogen solution pass on half the acres. A nitrogen solution pass costs $9.10/acre (University of Illinois, 2012b). Since this is on half the acres, this cost equals $4.55/acre.
- $6.40/acre for nitrogen solutions. These solutions averaged $.16/lb higher in active nitrogen in 2010-2012. The cost is $.16 per acre multiplied by 40 lb of active nitrogen.
The total cost of this practice is $17/acre.
Caveats: This practice adds another operation pass in the spring, when there are a limited number of available days. Slightly less than half of all days during this time are typically suitable for field work. Adding a field operation could potentially delay planting, which could lower yields. The costs and additional risks associated with delayed planting were not included in our estimate. The risk of delayed planting could limit adoption of this practice.
Moving Nitrogen Fertilizer Applications
The base practice is fall application of nitrogen. The reduction practice moves this application to the spring. In both cases, we assumed that 160 lb of nitrogen will be applied. This will have two impacts on costs. First, due to timing concerns, half of the spring application will be switched from anhydrous ammonia to nitrogen solutions. Second, switching all tile-drained soils to a spring application will result in the need for an additional nitrogen application and storage infrastructure to ensure fertilizers are applied in a timely manner. This will increase costs, which will be reflected in higher nitrogen and application costs. This reduction practice will result in the following cost changes:
- A $12.80/acre increase due to the shift towards nitrogen solutions. We assumed that half of applications will be 28 percent nitrogen solutions. The additional cost of liquid nitrogen over anhydrous ammonia averaged out at $.16/lb of actual nitrogen in 2010-2013.
- A $1.60/acre increase due to the higher price of anhydrous ammonia in the spring. Prices are on average $.02 higher in spring.
- A $2.70/acre increase due to the need for more nitrogen infrastructure. We estimate that this will increase the cost of nitrogen by $20/ton, or about $.017/lb of actual nitrogen.
- A $.80/acre increase due to additional equipment needs. Based on work-day probability analysis, this practice would reduce the number of acres a machine can cover by 20 percent.
The total cost of this practice is $18/acre.
Caveats: Moving fertilizer applications will result in timing concerns, particularly ones related to late planting. The additional costs associated with late planting were not included in the above analysis. Timing concerns could prove to be a hindrance to the adoption of this practice.
Planting Cover Crops
The base case is no cover crops, and the reduction practice would add cover crops. Pricing was based on the aerial application of rye seeds onto fields with standing corn. The cover crop is then chemically killed in the spring. However, the cost of the herbicide application was not included as an herbicide application or tillage pass would also occur under the base case. However, a $5/acre partial spray was included to cover any additional problems. Costs for this strategy are:
- $16/acre for aerial seed application
- $8/acre for seeds ($16/bushel at half a bushel per acre)
- $5/acre for partial spray
The total cost for this practice is $29/acre.
Caveats: Cover crops may introduce additional management problems, particularly in adverse years. Establishing cover crops may be difficult in years with dry summers and falls and may lead to a reduction in crop yields. Cover crop planting operations may also introduce logistical issues on farms. As indicated earlier, these impacts were not included in our cost estimates.
Building Bioreactors
This base practice is no bioreactor. The reduction practice is the construction of a bioreactor at the end of the tile line. Cost estimates for the practice were taken from Christianson et al. (2013). The costs for this strategy are:
- $133/acre in investment costs. This is the cost on an annual basis using a 6 percent discounted rate and a 20-year life. The annualized cost is $12/acr
- $5/acre in annual maintenance costs.
The total cost for this practice is $17/acre.
Caveats: A bioreactor is a significant investment that likely requires debt capital, thereby increasing the risk to farmers. In addition, there are no cash flows from bioreactors to provide funds for payback on capital. And the large-scale construction of bioreactors could increase investment costs by creating more demand pressure.
Constructing Wetlands
The base practice is no wetlands. The reduction practice is the construction of 5 acres of wetland for every 100 acres of production. Wetland designs were taken from Christianson et al. (2013). The primary cost of wetlands is farmland taken out of production. Costs are:
- $1,095.04/acre of wetland, or $57.63/yr. A farmland value of $12,500/acre was used in pricing. In addition, $60/acre for designing the wetland was included. The 5 percent of farmland taken out of production is charged against the 95 percent of farmland remaining in production. The $12,560 investment cost was amortized over a 20-year period at a 6 percent interest rate.
- $3/acre in maintenance costs.
The total cost of this practice is $60.63/acre
Caveats: This practice represents a large decrease in income-generating potential. Adoption of this practice will be slow due to the costs of wetlands. Also, there may be property value reductions beyond those included here.
Moving to Perennial Crops
This base practice is corn and soybean production in a 50 percent corn/50 percent soybean rotation. The reduction practice is moving to a perennial crop, in this case, alfalfa. This cost change equals returns from corn and soybean production minus returns from alfalfa production.
Corn and soybean returns were taken from 2014 Illinois Crop Budgets (University of Illinois, 2014a) for high-productivity farmland. Operator and farmland returns equal $309 for corn and $265 for soybeans. These were averaged to arrive at a $287/acre return. Returns for alfalfa production were modeled from the 2013 Iowa budgets. The following changes were made:
- Land charges were taken out of the Iowa budgets to be consistent with Illinois budgets.
- The hay stand life was increased from 4 to 5 years, which increases alfalfa profitability.
- Alfalfa yield was increased to 5 tons/acre, which increases alfalfa profitability.
These changes result in $201/acre in alfalfa production. The total cost of this practice is $86/acre (a $287/ acre return from corn/soybean rotation minus a $201/acre return for hay).
Caveat: Large scale movement to perennial crop production would require dramatic changes in agricultural structure. In particular, alfalfa and most other forages are fed to ruminant livestock (predominately in beef or dairy production). Increases in alfalfa acres would require an increase in ruminant livestock. Without this change, hay prices likely would decline, leading to a higher cost for this practice.
Table B1. Costs of agricultural practices and other economic concerns.
Practice | Cost ($/acre) | Other economic concerns |
Reduced tillage | -17 | Potential yield reductions |
P rate reduction | -7.50 | |
Stream buffer | 294 | Cost is per acre of buffer; negative impacts on farmland |
N rates reduced from background to MRTN | -8 | |
N inhibitor with fall-only fertilizer application | 7 | |
Split N fertilizer application on tile- drained soils (50 percent fall and 50 percent spring) | 17 | |
Spring-only N fertilizer application on tile-drained acres | 18 | Timeliness |
Cover crops | | Planting difficulty; potential impact on yields |
Bioreactors | 17 | Large investment costs; increasing costs with large adoption |
Wetlands | 61 | Large investment costs |
Perennial crops | 86 | Lower forage prices due to large shifts |
