estimating a return on investment Liz Juchems and Jamie Benning Iowa Nutrient Reduction Strategy Voluntary sciencebased State goal of 45 reduction of Nitrogen N and Phosphorous P ID: 201007
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Slide1
Cover crop economics:estimating a return on investment
Liz Juchems and Jamie BenningSlide2
Iowa Nutrient Reduction StrategyVoluntary, science-based State goal of 45% reduction of Nitrogen (N) and Phosphorous (P)Point sources achieve maximum biological removal rate: 4% N and 16% PNon-point source goal 41% N and 29% PSlide3
Cover Crops in the NRSSlide4
Nutrient Reduction Potential
31% reduction in nitrate29% reduction in phosphorusSlide5
Example: Combination Scenarios that Achieve N and P Goal From Non-Point Sources
From Iowa Nutrient Reduction Strategy: Goals for Nonpoint Sources is 41% reduction on Nitrogen and 29% reduction on Phosphorus
Nitrate-N Reduction
Phosphorus Reduction
Initial Investment
Total Equal Annualized Cost
Statewide Average EAC Costs
Practice/Scenario
% (from baseline)
% (from baseline)
(million $)
(million $/
yr
)
($/acre)
MRTN Rate,
60% Acreage with Cover Crop,
27% of
ag
land treated with wetland and 60% of drained land has bioreactor
42
30
3,218
756
36
MRTN
Rate,
95% of acreage in
Cover
Crops,
34% of
ag
land in
heavily tile drained land treated with
wetland, and 5% land
retirement
42
50
1,222
1,214
58Slide6
Cost of Cover CropsApproximately $30+ per acre for seed, planting, and terminationCosts offset by cost-share initiallyCan we estimate the value cover crops bring to the land?Slide7
How do you account for cover crop value in your operation?Slide8
Estimating the Value of Cover CropsEstimates of soil loss reductionsOn-farm research sites comparing cover and no-cover treatmentsSlide9
RUSLE2Input field management practices and compare cover vs. no cover treatmentsObtain soil loss in tons/acre/yearSlide10
Soil ErosionMost sites in this study are no-till corn-soybean rotationsInitial calculations range from 20-40% erosion reductions for the cover crop sitesSlide11
Value EstimatesEstimating change in land value and lost nutrients Based on protecting the soil from erosionSlide12
Soil ComparisonTama CountyTama 120C Tama 120C2Loss of 4” to change erosion phase 616 tons of soil per acreSlide13
Nutrient ValueTopsoil is the most nutrient rich horizonHigher OM=higher nutrient content and valueSlide14
AssumptionsNutrient value of soil just in the OM fraction ranges from $2-$10 per ton of soilIn land value change calculations, cost of soil erosion averages $0.49 per tonTim SmithSlide15
Cover Crop ScenariosScenarioNo
cover erosion rateCover crop erosion rateDifferenceValue of retained soil by cover crop use12 tons/acre1 ton/acre1 ton/acre$6.06/acre23 tons/acre1.5 tons/acre1.5 tons/acre$9.09/acre3
5 tons/acre
2.5 tons/acre
2.5 tons/acre
$15.15/acreSlide16
How long does it take to observe a return on investment in terms of soil quality, erosion reduction, or other factors?Slide17
Project Funding and PartnersState Soil Conservation CommitteePartnersUSDA-ARS National Lab for Agriculture and the EnvironmentPractical Farmers of IowaSlide18
Jamie Benningbenning@iastate.eduLiz Juchemsejuchems@iastate.edu