Economics Seminar - The Influence of Environmental Quality Incentives Program on Local Water Quality: Evidence from Monitoring Station Level Data

The Environmental Quality Incentives Program (EQIP) is one of the largest conservation programs in the U.S.. The EQIP is administered by the USDA Natural Resources Conservation Service (NRCS) to address natural resource concerns and deliver environmental benefits. The NRCS has obligated over $10 billion through EQIP cost-share contracts between the fiscal year 2005-2015. Funded by the EQIP program, over 260,000 participants have implemented conservation practices covering more than 81 million acres. Despite its enormous scale and importance, the effectiveness of EQIP has not been rigorously assessed and quantitatively evaluated. In this paper, we focus on evaluating the impact of EQIP payment on localwater quality. We use nearly 3 million monitoring station level water quality data linked with 704,015 geo-coded EQIP payment data to evaluate the effect of EQIP payment on eightwater quality indicators, including Nitrogen, Phosphorus, pH, Temperature, Dissolved Oxygen Deficit, Biochemical Oxygen Demand, Total Suspended Solids, and Fecal Coliform. We find that EQIP payment significantly reduces the Temperature, Dissolved Oxygen Deficit, Biochemical Oxygen Demand, and Nitrogen, and increases the pH and Fecal Coliform. We do not detect a significant effect of EQIP payment on other water quality indicators. Our paper provides the first comprehensive evaluation of the EQIP regarding its impacts on local water quality.