The section above shows that the international experience with cap and trade for non-point pollution control, to date, is not encouraging in terms of meeting environmental goals nor in terms of enabling farmers to operate a viable farm. Four possible reasons for this have been identified as a result of the preceding literature review.
1. Most cap and trade programmes do not place limits on the main source of non-point
pollution i.e. agriculture. To date almost all rely on voluntary involvement from farmers whereas the literature (e.g. Land and Water Forum, 2010) suggests that this is insufficient for attaining an environmental goal. To fully understand the potential for cap and trade for agricultural pollution control, investigations on implementations that set limits at both the watershed and the farm level need to be undertaken.
2. The second possible reason is that researchers to date have focused their attention on a
narrow set of issues that are commonly raised in the literature, such as institutional deterrents to trading. Literature outside of cap and trade suggests that there are other important factors that have an important bearing on the functioning of a cap and trade regime have been overlooked by using this approach. Appreciating that farmers are socially embedded, for example, means that farmers are understood to be located in a broad social and cultural context, which has regional, national and international components. Thus farmer responses to a cap and trade implementation cannot be understood without consideration of the context and, it is suggested, this aspect has been lacking in studies to date.
3. The methods used in water quality investigations to date have been in the nature of
evaluations, primarily concerned with attainment of the programme goal and using selected indicators (see, for example, Thurston, Smith, Genskow, Prokopy, & Hargrove, (2012)). In cap and trade, the textbook goal is to achieve the environmental goal at least cost to society (Tietenberg, 2003). Ex-post studies have concentrated on whether this goal has been
achieved26 and if not, why not. However, focusing on goal attainment has been shown to
restrict findings about unexpected effects (Scriven, 1967) and to encourage tunnel vision (Coryn, Noakes, Westine, & Schröter, 2011). In this study, a watershed is viewed as a system with nested sub-systems at the local and farm levels and one of the properties of systems is that outcomes are unpredictable (Berkes, Codling & Folke, 2003). Thus an investigation of all effects and outcomes, intended and unintended, is required in order to fully understand a cap and trade programme and its suitability for the control of non-point pollution.
4. Uncovering side effects requires an approach that is inclusive of areas where such effects
might potentially be perceptible. Farmers are the core decision maker and their decisions are made in the context of their farm system but the outcome of multiple decisions at the farm level may not be apparent until the researcher focuses on the local (community) or watershed level (Parrott & Meyer 2012). Thus an investigation of the outcomes of a cap and trade regime must take account of issues of spatial scale and time periods. Studies of cap and trade, to date, have not taken account of this.
The international experience, therefore, may not be a good indicator of the suitability of a cap and trade regime for fulfilling the needs of the NPS-FM. This question (of the suitability of cap and trade) would be more appropriately answered by an investigation of an implementation that sets limits at both the farm and watershed levels and uses a holistic (Rindfuss, Walsh, Mishra, Fox &
Dolcemascolo, 2004), systems-based approach to the investigation. There is some support in the literature for this view. Shortle (2012:43) calls for more research on trading where the agricultural sources are fully capped and Marsh (2014) and OECD (Organisation for Economic Cooperation and Development, 2012) suggest that more behavioural studies are needed to understand farmer trading responses. Marsh, Tucker, & Doole (2014) suggest that gains from trading may be less than theory would suggest, and AgFirst (2010) found that farmers in the Waikato (New Zealand) were concerned about the introduction of a cap and in need of more information on the on-farm effects of such policy settings.
26 see Tietenberg & Johnstone (2004) for an outline of how they recommend that an ex-post study of a cap and
It is apparent that a conventional single discipline approach to understanding cap and trade is insufficient (Slee, 2007; Darnhofer, Lindenthal, Bartel-Kratochvil, & Zollitsch, 2010). Sustainability and resilience approaches are cross or multi-disciplinary but unfortunately at this stage there are
limited tools available to study integrated social and environmental systems (Ness, Urbel-Piirsalu,
Anderberg, & Olsson, 2007; Walker & Salt, 2012) and few “…agreed upon criteria” for economic and
social contributors (Berkes & Folke, 1998:20). Some researchers (e.g. Irwin, 2001) have therefore encouraged their peers to search outside of the usual disciplines to find new and potentially more appropriate approaches to integrate the social and ecological. Niles & Lubell (2012:55) suggest policy
researchers turn to “…disciplinary interfaces” to find the theories and methods appropriate for the understanding of complex environmental problems.
Landscape is one such body of knowledge that is located at the interface of several disciplines and potentially offers an approach to understanding a cap and trade programme. In landscape analysis, human and biophysical components are connected across scales of time and space (Parrott & Meyer, 2012), the concept of systems is integral (Matthews & Selman, 2006), and the notion of change is central (Wood & Handley, 2001; Antrop, 2000). Further, the relationship of policy to landscape change has been well established in the literature (Hersperger & Burgi, 2009; Klijn, 2004). For example, Van Vliet, de Groot, Rietveld, & Verburg (2015) in a review of 218 case studies of landscape change in Europe, showed that institutional factors (which included policy measures) are one of the most important factors contributing to change. In the following chapter I therefore turn to the potential suitability of landscape and its metric (land-use) as a conceptual framework, for investigating the consequences of a cap and trade policy.