Report Finds "Pay-for-Performance" Model on Wisconsin Farms Leads to Cost Savings for Contamination Runoff Reduced

Wednesday, November 4th, 2026 -- 8:01 AM

(Hope Kirwan, Wisconsin Public Radio) For decades, U.S. farmers have been adopting conservation practices like cover crops and no-till planting using financial help through the federal Environmental Quality Incentives Program, or EQIP.

But, according to Hope Kirwan with the Wisconsin Public Radio, a new study shows this may not be the most cost-effective way to stop runoff and improve water quality around working lands.

The report, from the University of Wisconsin-Madison and Environmental Policy Innovation Center, found that paying farmers based on the measured reduction of phosphorus contamination, what’s known as a “pay-for-performance” model, led to a 35 percent cost savings for every pound of contamination reduced.

Researchers used EQIP data on practices that were implemented by farms in Wisconsin and using a modeling software to estimate the amount of phosphorus the projects reduced.

“Where most agricultural conservation dollars go are ‘pay for practice’ types of outcomes, where a farmer can implement cover crops, and they know, no matter where they are at, kind of the menu price that they will receive for that,” said Jeff Hadachek, associate professor of agricultural and applied economics at the University of Wisconsin-Madison and an author of the report.

Hadachek and his coauthors compared the estimated EQIP payment rate to actual payments made per pound of phosphorus reduction under Wisconsin’s Water Quality Trading Market.

The state-regulated program allows municipal wastewater facilities or private companies that have excess phosphorus emissions, what are called “point sources” of contamination, to comply with state regulations by paying farmers and landowners, considered “nonpoint sources,” to reduce runoff in their local watershed.

The report found that EQIP paid an estimated $54.47 for every pound of phosphorus reduced, while the Water Quality Trading Market paid farmers an average of $35.18 per pound.

“What this would support is a move towards a system where environmental performance, at the very least, is measured better,” Hadachek said. “Rather than just spraying dollars around the landscape and assuming that they achieve environmental performance, this also generates an opportunity where dollars can be targeted at the most vulnerable soils.”

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