Abstract
This article explores farmers’ adoption of the Best Management Practices (BMPs) in Kentucky, and the factors affecting their choices of BMPs through a proposed Water Quality Trading (WQT) program. We introduce a two-step framework to estimate farmers’ current and future choices of BMPs using a bivariate probit model. The first step is to investigate the factors influencing farmers’ current usage of BMPs, and the second step is to estimate their willingness to implement BMPs given different levels of compensation offered through a survey. The results show that farmers who participate in the conservation programs are more likely to currently be using BMPs. Farmers’ previous experience with BMPs is one of the most important contributors affecting farmers’ future choices of BMPs. The results also find that increasing compensation will encourage farmers to implement the practices of animal fences and waste storage facilities. Finally, applying the coefficient results, we calculate the probabilities that farmers would likely use BMPs at different levels of compensation, and conclude that the emission credits in WQT markets are able to be supplied in Kentucky.
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