Agricultural Beneficial Management Practices for Lake Winnipeg – Cost-benefit analysis using an ecological goods and services approach

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Thomsen, Joseph
Kulshreshtha, Suren
Lobb, David
Flaten, Don
MacDonald, K.Bruce
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The Thomsen Corporation
The objective of the research and analysis reported herein was to “Assess the costs and benefits of agricultural beneficial management practices (BMPs) for Lake Winnipeg in physical and economic terms, with an emphasis on the co-benefits in terms of ecological goods and services.” Lake Winnipeg is a large and key natural asset, whose watershed drains a major portion of the Canadian Prairies and part of the U.S. Great Plains. This includes almost all of the agricultural area of the Canadian Prairies. Due to a variety of factors, including increases in nutrient loading, Lake Winnipeg is experiencing increasing eutrophication. The assessment and estimation methods used were necessarily simple and straightforward. To estimate phosphorus (P) reduction potential of selected BMPs, observed levels of P exported from selected sub-regional watersheds were multiplied with measures of the performance of the BMPs relative to conventional practice. The selected study area includes the major sub-watersheds of the Manitoba portion of the Lake Winnipeg drainage basin, and comprises about 23 percent of Manitoba crop land area. (In conventional Census of Agriculture terms, the study area and surrounding regions include about 60 percent of Manitoba cropland and livestock). BMPs and their ecological goods and services (EGS) impacts and values were identified and estimated on the basis of evidence and information specific to Manitoba, Canadian Prairie, and other similar dryland agriculture, soil, and agroclimatic conditions. Economic and EGS impacts were evaluated using best available evidence from the literature and current Manitoba market prices and costs. Valuation and related methods were refined over several steps of the project. Several iterations of research revealed a significant lack of evidence as well as the data and information necessary to meet the valuation objectives of the project. Put simply, whereas the level of public awareness and concern for the current condition of Lake Winnipeg is high; and the available evidence solidly indicates that Lake Winnipeg is highly eutrophic, little to no quantitative evidence of the economic and EGS impact of the Lake’s condition was found. Main estimates are that the selected BMPs have the potential to reduce the annual export of P from Manitoba agriculture by approximately 10 percent, or just under 100 tonnes of the 1,200 tonnes of the P load to Lake Winnipeg that Manitoba agriculture is understood to currently account for. Cost-benefit ratios including EGS values or indicators for these BMPs range from 0.8 to 6.3. In other terms, relative to the estimated cost of treating outflow to the Red River by the City of Winnipeg of $164,697 per tonne of P removed, the cost of reducing P exports from agricultural sources in Manitoba using the BMPs ranges from $0 (net benefit) to $765,125 per tonne of P. Variability and uncertainty of the biophysical potential to reduce P exports to Lake Winnipeg from Manitoba agricultural sources is the greatest determinant of the viability of the BMPs from a cost benefit and EGS perspective. Best estimates of the physical capacity or potential of agricultural BMPs have a wide range, extending nearly an order of magnitude - from a reduction to an increase in P export. Unit costs and prices including EGS values are relatively small factors in comparison to the range of biophysical uncertainty and variability. Given the large size and key role of Lake Winnipeg and the Lake Winnipeg drainage area, a full and direct economic and EGS accounting and estimate of the value of the lake is warranted and strongly recommended. Amongst other things, it is recommended that this entail a coordinated effort with Manitoba government and related agencies and stakeholders. Information and data with which to do so is currently widely distributed amongst several different public and private agencies in Manitoba and other jurisdictions. Despite the key importance of Lake Winnipeg, research conducted for this project was not able to identify any initiative to draw the necessary quantitative information and data together in coordinated and systematic fashion. Cost-benefit analysis using an EGS approach could be improved by further investigation and development of quantitative evidence and supporting data of EGS associated with agricultural BMPs.
agricultural beneficial management practices, Lake Winnipeg, cost-benefit analysis, ecological goods and services approach