Fact Sheet 774

Society’s Economic BenefitsThe environmental benefits of riparian

buffers, such as improvements in water qual-ity, fish and wildlife habitat, and recreation,have been documented. To assess the eco-nomic benefits or values of riparian buffers,h o w e v e r, society must decide how willing it isto pay for the environmental improvements.

D e t e rmining the exact value of thesei m p rovements is difficult. The enviro n m e n t a lbenefits of each buffer zone depend onwhether grass or trees are planted, how widethe buffer is, the land use of adjacent pro p e rt y,and the conditions that exist both up- andd o w n s t ream from the buff e r. In addition,some benefits are immediately evident, otherstake time. For example, it may take years oreven decades for aquatic habitats and stre a mf o rmation to improve and for the public to bea w a re of the benefits these changes bring. Thiscomplicates how environmental effects andthus economic benefits are calculated.

If improved water quality enhances goodsand services that are bought or sold in themarketplace, economists can assign a value tothis improvement. For example, if trout re t u rnto a stream and the landowner is then able tosell fishing rights, the income from the salere p resents a direct economic benefit, whichcan be calculated. If adopting a buffer re s u l t sin topsoil retention and higher crop yields fora farm, the added production and income isan economic benefit.

When a Landowner Adopts a Riparian Buffer—Benefits and Costs

Economists can also assess the value of thei n c rease in re c reational opportunities ins t reams, tributaries, and the Chesapeake Bay.They use valuation methods based on theamount of money people are willing to spendto take advantage of the improved re c re a t i o n .In addition, economists can calculate thehealth benefits improved water quality brings,in terms of lives saved, health costs re d u c e d ,or sick days avoided. It can be harder to assigna value to other benefits of improved waterquality that are not bought or sold.

We do not yet have exact figures for howmuch society will benefit economically fro mthe creation of riparian buffers. Other studiesof improved water quality, however, can giveus an idea of what the potential benefits are .A c c o rding to USDA economists, the 40 to 45million acres of cropland re t i red under theC o n s e rvation Reserve Program (CRP), at anannual cost of $1 billion, have generated $3.5to $4.5 billion, annually, in water quality ben-efits. Reduced erosion; increased re c re a t i o n a lfishing; and improvements in ease of naviga-tion, water storage and treatment, and floodc o n t rol are among the benefits. Ribaudo et al.hypothesize that the dollar value of benefitswould be higher if more environmentally sen-sitive land had been targeted.

The Chesapeake Bay’s Riparian Forest Buff e rPanel Technical Team re p o rts that establishedriparian forest buffers can remove 21 poundsof nitrogen per acre at $.30 per pound andabout 4 pounds of phosphorus per acre at$1.65 per pound, annually. The InterstateCommission for the Potomac River Basin(ICPRB) estimates that urban re t rofitting ofbest management practices (BMPs) to re m o v e20 percent of the current nutrient ru n o ff willcost approximately $200 per acre, or$643,172,600 for the Bay basin, a much larg e rprice tag. The ICPRB also estimates the costs ofreducing ru n o ff from highly erodible agricul-tural land to be $130 per acre. According tothe buffer panel, establishing forest buffers inM a ryland could cost $617,000 per year ino rder to achieve the 40-percent reduction ofnutrients by the year 2000; comparable stru c-tural engineered approaches cost $3.7 millionper year. In this case structural engineeringa p p roaches are those that re q u i re major con-

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s t ruction and engineering design such ass t o rmwater retention ponds.

Even without the exact societal benefits orwillingness to pay for these riparianb u ffer–generated improvements, policy makershave concluded that on a societal scale theoverall benefits are greater than the cost.H o w e v e r, from an individual landowner’s perspective, benefits may not always clearlyoutweigh costs.

Landowner BenefitsEstablishing a streamside buffer will re s u l t

in decreased soil erosion from the adjacentfield and will assist in maintaining stables t reambanks. In addition, landowners canbenefit from the aesthetic value of the trees orgrass and may see increases in pro p e rty values.Other benefits can include payments fro mg o v e rnment programs, such as the cost-shareand annual incentive and rental payments. Insome cases, buffers can provide income fro mt ree, grass, and orc h a rd crop harvesting; hunt-ing and fishing; hunting and fishing leases;and medicinal herbs. Under certain govern-ment programs, however, participatinglandowners cannot derive any income fromthe buffer during their years of participation.

Many growers who hunt derive addedbenefit from attracting wildlife, in additionto any possible leasing opportunities. (Leasesfor deer and upland game hunting costbetween $5 and $20 per acre.) The economicreturns depend on the type of vegetationplanted as well as on whether or not a par-ticular program permits harvest opportuni-ties.

Under one program, USDA-CREP (U.S.D e p a rtment of Agriculture — C o n s e rv a t i o nR e s e rve Enhancement Program), landownerswho decide to plant riparian buffers are eligi-ble for an annual rental payment for thelength of the selected contract, which isbetween 10 and 15 years. The payment isbased on the county’s rental rate levels wherethe land is located and the types of soil foundin the riparian area. In addition, the landown-er receives an annual incentive payment equal

to 70 percent of the rental rate, for plantingt rees, and 50 percent of the rental rate, forplanting grasses next to waterways such ass t reams, wetlands, and drainage ditches.

Besides the rental and incentive payments,a landowner can receive up to 100 percent inc o s t - s h a re payments to establish fore s t e db u ffers and up to 95 percent to establish grassb u ffers, through a cooperative agreement ofUSDA, the U.S. Fish and Wildlife Service, theM a ryland Department of Agriculture, theChesapeake Bay Foundation, and DucksUnlimited. In addition to these payments,landowners also have the option of putting ap e rmanent easement on the land and re c e i v-ing a lump-sum payment based on number of acres and the county where the land islocated. In this case, the riparian area wouldhave to remain in a vegetated buffer fore v e rwith the landowner having limited rights forh a rvesting the timber or grass.

Planting and MaintenanceCosts

Forest BufferD i rect planting costs depend on the size

and type of buff e r. A forest buffer costsbetween $218–$729 per acre to plant andmaintain. Establishment costs can be bro k e ndown into site preparation, the plants,planting, replanting, and maintenance.Planting costs depend on geographic location,number of acres planted, number of tre e splanted per acre, species of trees, and whetheror not the trees are from bare root or contain-er stock. Trees can be planted either bymachine or by hand. Machine-planted treesoften have a higher survival rate. Machineplanting can be less expensive and the prop-erty owner avoids having to hire laborers,who may or may not be available.

Planting costs shown in Table 1, “Tre eB u ffer Costs,” are based on a range of $0.11 to$0.40 per tree for hand planting and $0.14 to$0.30 per tree for machine planting. The costof the plant material—the seedlings—arebased on the Maryland Department of Natural

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R e s o u rces Tree Nursery Rates of $0.11 to $0.50per seedling. Depending on the adjacent land-use, the optimal site preparation may includeb roadcast application of an herbicide or mow-ing and a band application of pre- and post-e m e rgent herbicides. Herbicide costs are basedon a range of chemicals and assume thatapplication followed label re c o m m e n d a t i o n s .The costs of replanting will depend on the sur-vival rate of the trees. We assume a surv i v a lrate of 80 percent. Thus, 20 percent of thet rees (110 trees) need to be replanted by handat a rate of $0.40 per tree. The seedling cost ofthe replanted trees ranges between $12 and$55 per acre.

In many areas of Maryland, tree shelters arealso being recommended to ensure the sur-vival of the buff e r ’s high-value trees. Becauseof vole damage, many foresters are re c o m-mending tree shelters for all trees planted onp a s t u reland. Tree shelter costs are based on thelength of the shelters: 4-foot shelters cost$1.89 each and 5-foot shelters cost $2.29 each.In addition, stakes cost between $0.31 and$0.40 each. Labor costs to install shelters range from $0.50 to $0.75 per shelter.Although CREP does not offer cost sharing fort ree shelters, it is available through anotherUSDA program. The Farm Service Agency

o ffice can assist landowners in submitting aseparate application to receive this money.

Grass BufferGrass buffers tend to cost less than tre e

b u ffers to plant and maintain. See Table 2,“Grass Buffer Costs.” For warm and cool sea-son grasses, costs for site preparation, seeds,planting, fert i l i z e r, and maintenance need tobe considered. Seed costs vary depending onthe seed mixture used. We found that the costof seeds varies annually because of fluctuatinga v a i l a b i l i t y. Planting costs depend on thenumber of acres planted and the distance theplanting drill must travel. Some of the lowcosts here reflect that some landowners willengage in the buffer planting themselves. Thehigher numbers reflect the cost of hiring acontractor to provide the machinery and dothe planting.

Costs will be higher for establishing buff e r sin an area where animals have been pasture d .If animals have had previous access to as t ream, a fence, a crossing, and/or an altern a-tive watering source are needed. See Table 3,“Costs of Keeping Animals Away from aS t ream.” Electric fences cost from $2.15 to$2.60 per foot to erect. The cost of an altern a-tive watering source depends on the type ofgenerator necessary for pumping the waterand the distance the water has to travelbetween the water source and the wateringt rough. Similarly, a gravity system usuallycosts between $2,000 and $4,000, but somelandowners have spent $7,000, to pay for

Table 1. Tree Buffer Costs (436–550 trees)

Per acre

Plant by machine $75–130

Plant by hand $60–174

Plant material $60–275

Site preparation

(herbicides for grass control)

Band $30–50

Broadcast $80–120

Replanting $56–100

Maintenance

Herbicides $30–60

Mowing $12–60

Total $218–729

Table 2. Grass Buffer Costs

Per acre

Planting $10–50

Seeds $100–225

Site preparation $18–40

Fertilizer/lime $30–50

Maintenance

Mowing or herbicide $10–60

Total $168–400

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i n c reased costs of pumping water a long dis-tance or up a steep slope. Although a typicalsolar unit costs between $4,000 and $6,000,some growers buy units that cost as much as$10,000. Stone and concrete stream cro s s i n g s ,the most common type, typically cost fro m$2,000 to $4,000. Some growers, however,have chosen to use culverts and/or bridges top rovide a crossing for their animals. Under theUSDA-CREP program, marginal pastureland iseligible for tree buffer establishment only, notgrass.

Transaction Costs Beyond these direct costs of establishment

and maintenance is the investment of time,which is rarely factored into a project cost estimate. Participants find that the paperw o r kfor signing up for and participating in thec o s t - s h a re and/or incentive programs is timeconsuming. Program coordinators and fields t a ff estimate that a typical CREP pro g r a m

request in Maryland takes 3 hours of al a n d o w n e r ’s time, even with field staff help.A c c o rding to participants’ re p o rts, completingthe paperwork can take anywhere from 2 to 8hours. In addition, landowners who part i c i-pate in the site visit, the buffer design, andplanting could invest another 15 hours in thep rocess, depending on the number of acre sinvolved. This cost can be significant, depend-ing on the value a landowner places on his orher time.

P rogram re q u i rements may also be inflexible. A participant usually has to take p a rt in more than one program or to piggy-back programs to cover all costs. A number ofd i ff e rent agencies run these programs, withlimited coordination, and each agency has d i ff e rent rules. Often, cost-share payments arenot made at the same time monetary expendi-t u res occur; landowners may have to wait forup to a year for reimbursement. As a re s u l t ,p a p e rwork and other perceived difficulties may keep a landowner from becominginvolved in the pro g r a m s .

Opportunity CostsAn individual incurs opportunity costs for

all the opportunities (options B through Z, forinstance) lost because option A was chosen.The loss of earnings from crops that couldhave been grown in place of the buffer is ano p p o rtunity cost. Landowners can calculateo p p o rtunity costs by considering other possi-ble uses for the land where the buffer is being

Table 3. Costs of Keeping Animals Away from a stream

Fencing $2.15–2.60 (per ft)

(High tensile—3 strand)

Alternative watering source

Solar $4,000–10,000

Gravity $2,000–7,000

Stream crossing

Stone $2,000–6,000

Culverts/bridges $4,000–10,000

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planted. Opportunity costs include the netchanges in current and future income that willresult from establishing the buff e r. Factorssuch as the productivity of the land neare s tthe stream and the type of crop grown willa ffect these costs. In some areas, the stre a m-side will be the gro w e r ’s most productive land,in others, the least productive.

Option ValueO p p o rtunity costs also include the option

value of the land. The option value, similar tooptions in the stock or futures market, is thepossible price the landowner would receive forthe land in the future if all his or her optionsw e re available. Most landowners will take intoaccount the possible change, which could be areduction, in the potential sales price of con-v e rting the land to residential developmentbecause of the buff e r ’s presence. The changemay not be negative, however; sales prices cani n c rease or decrease with a forested parcel. Forexample, the Chesapeake Bay Program re p o rt sin its “Economics of Riparian Forest Buff e r s ”that according to a Bank of America Mort g a g es u rv e y, real estate agents find that homes witht reed lots are 20 percent more saleable.A c c o rding to the Chesapeake Bay Pro g r a m ,

M a ryland developers receive prices 10 to 15p e rcent above the average for lots next tof o rests and buff e r s .

Landowner ConcernsLandowners have expressed a number of

c o n c e rns re g a rding the adoption of buff e r s .Some owners worry that once the buffer is inplace they will not be able to remove it. Thei rreversibility could derive from future re g u l a-tions or existing legislation that will apply tothe land once a buffer is planted. For example,if an endangered species establishes itself inthe buff e r, would a landowner ever be able tocut down the buff e r, even though the endan-g e red species would not exist there had theb u ffer not been established? Thus, the buff e rcould limit the landowner’s flexibility oroptions.

As another example, if the land containingthe buffer re v e rts to a wetland, would the landthen be subject to all wetland legislation?Most growers have to be assured that they willbe able to drain and farm this area again orwould need a risk premium or “option value”to cover the new restriction. In the case ofCREP participants, landowners have a 5-year

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window following the termination of the con-tract to reclaim the cropland before the wet-land legislation goes into effect.

Although some landowners favor adoptinga buffer that creates habitat and attractswildlife, others worry that buffers mightattract members of endangered species or toomany deer. A possible increase in the deerpopulation could lead to an increase in cro pd e s t ruction or an increase in expenditures top revent deer from entering the fields.University of Maryland economists found that,92 percent of Maryland farmers experienced ad e e r- related yield loss in 1996. Between 6 and12 percent of farmers’ income has been lost,depending on crop and location. Wildlife biol-ogists have not yet determined if the adoptionof a buffer will affect the number of deer pre-sent on a farm.

Some growers think trees will shade theirfields, decreasing yields. Careful attention tothe design of the buffer is important to ensuret rees are not located where they would shadefields. A landowner can also choose to plantboth trees and grass to ensure adequate dis-tance between trees and field. Other gro w e r sthink buffers will draw moisture from crops ornutrients in the field, decreasing pro d u c t i o n .F a rmers are also concerned about how muchof their time will be necessary to maintain abuffer and about crop destruction that mightresult from falling limbs of trees or fromnoxious weeds growing in the buffers. Somefarmers fear that a buffer will alter the con-figuration of the field, making machinery orequipment maneuvering more difficult.

In the case of waterf ront pro p e rt y,landowners e x p ress concern that establishinga forest buffer might result in a lost or hin-d e red scenic view. Views have aesthetic valueto the landowner and to any others who liveon the pro p e rt y. The sales price for land with aview can be higher than similar land nearby.H o w e v e r, a buffer design incorporating a viewc o rridor could potentially enhance the aes-thetics by framing the view, resulting in ahigher or at least undiminished sales price.

Available Programs P rograms exist that offer money to

landowners who establish buffers on theirp ro p e rt y. These programs decrease the costsassociated with a buff e r, through cost-sharep rograms and technical assistance, andi n c rease the benefits through incentive pay-ments. These are described in Fact Sheet 769,“Riparian Buffer Financial AssistanceO p p o rtunities.”

Calculating Net Benefits ofBuffer Adoption

We have computed the net benefits for twotypes of farmers in Table 4, “Partial BudgetWorksheet #1,” and Table 5, “Partial BudgetWorksheet #2.” These numbers are estimatesthat farmers might use. Although paymentsand costs cover a 15-year period, the values arenot discounted to 1999 dollars. Fact Sheet 547,“Using the Partial Budget To Analyze FarmChange,” explains partial budgets more fully.

The first case is a farmer in Queen Anne’sCounty who traditionally grows nonirr i g a t e dc o rn on a 200-acre farm. This farmer has a firsto rder or intermittent stream on the pro p e rt yand wants to consider whether to adopt ariparian buff e r. The farm e r ’s yield is 120bushels per acre with a per acre cost (exclud-ing land rent) of $210. At the 5-year averageprice of $2.60 a bushel, the profit computes to$102 per acre. Of course, as with any agricul-tural commodity, yield and market price canv a ry with climatic conditions and changes indemand. There f o re, the $102 profit per acre isnot guaranteed. If yields or prices fell, thef a rmer could earn less. If yields rose or pricesi n c reased, the farmer could earn more.

If the farmer joins CREP and puts in a tre eb u ff e r, the program calculates a rental ratebased on the types of soil in the buffer area. Inthis case, he can earn $81 per acre in re n t a lfees plus an incentive bonus of $56.70 (70 per-cent of the rental rate) for a total payment of$137.70 per acre. This is a guaranteed pay-ment each year for the length of the contract,which can vary from 10 to 15 years. If heplants grass, the incentive bonus is $40.50 per

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a c re (50 percent of the rental rate) for a totalpayment of $121.50 per acre. The pro g r a madds on another $5 per year per acre for main-tenance costs.

The cost to install a hardwood buffer is esti-mated to be $575 per acre. Combining CREP,MACS (Maryland Agricultural Cost-ShareP rogram) and funds from the Chesapeake BayFoundation and Ducks Unlimited, the costs h a re for trees equals 100 percent. In mostcases, the farmer would have to expend themoney and be reimbursed later. In addition topaying the establishment costs, the farm e rmust spend time signing up for the pro g r a mand possibly participating in the site visit, tak-ing part in the buffer design, and ord e r i n gplant material. Estimating these steps taking15 hours and valuing the owner’s labor at $10per hour equals an additional cost of $150. Ofcourse, some growers may value their time at ahigher rate and others may not find the timeoutlay burdensome.

After examining the partial budget work-sheet #1, we find that the farm e r ’s benefits—ani n c rease in income and a reduction of costs—exceed his costs, which are a reduction of re v-enue and an increase in costs. There f o re, if thisf a rmer did not estimate any additional costs,he might consider investigating the CREP pro-gram and establishing a buff e r.

In case number 2, a Frederick Countyf a rmer pastures her cows on 75 acres. Thecows water in the stream running through thep ro p e rt y. This has caused some stre a m b a n kd e s t ruction, and several dairy cows have comedown with mastitis from walking in thes t re a m ’s bacteria-laden water.

After reading some information on CREP,the farmer is considering installing a fore s tb u ff e r, the only type permitted on marg i n a lp a s t u re. Besides the cost of installing a tre eb u ffer at $575 per acre, the farmer must ere c ta fence to keep the cows out of the buffer andthe stream. Since pasture lies on both sides ofthe stream, she must also build a stream cro s s-ing. In addition, she must provide a waterings o u rce for her animals. Depending on theevaluation of the streambank destruction, theowner may also have to employ some engi-

neering or bioengineering tools and methodsto keep the bank from degrading and toe n s u re its integrity. (More information aboutbioengineering or streambank restoration canbe found in Fact Sheet 729, “Riparian Buff e rManagement: Soil Bioengineering orS t reambank Restoration for Riparian Fore s tB u ff e r s . ”)

She does not anticipate any reduction inincome resulting from the buff e r, nor does sheexpect any reduction in expenses related tothe farm. She will have to invest in mecha-nisms to keep the cows out of the stre a m .T h e re will be some increase in income, h o w e v e r, from the rental, incentive, and cost-s h a re payments. The farmer uses Part i a lBudget Worksheet #2 to get a rough idea ofwhat the net benefits are of installing ariparian forest buffer. Based on the estimatedpayments and added costs, she finds that theoverall impact is positive and thereforeworth a visit to the local Farm ServiceAgency office to discuss actual numbers.

ConclusionsB u ffers provide another mechanism for

reducing the flow of nutrients into theChesapeake Bay, and thus contribute toi n c reased water quality. However, while soci-ety obviously benefits from these buffers, al a n d o w n e r ’s decision whether or not to adopta buffer will have to be based on his or herindividual circumstances. We have pro v i d e di n f o rmation about the costs of establishingd i ff e rent types of buffers and their possiblebenefits. We present two case studies of farm-ers who may be eligible for the CREP pro g r a m :in the first study, the farmer grows a field ofrow crops, and in the second, the farmer pas-t u res cows. We present a format landownerscan use to determine what the cost-benefitt r a d e o ffs are for their individual situations.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _We would like to thank Anne Hairston-

Strang of Maryland Department of NaturalR e s o u rces, Patty Engler of USDA NaturalR e s o u rce Conservation Service, and ClaudiaJones of the Chesapeake Bay Critical Are aCommission for their review of and commentsabout the document.

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ReferencesChesapeake Bay Program, Annapolis, Md.

May 1998. “Economics of Riparian Fore s tB u ff e r s . ”

L e s s l e y, Billy V., Dale M. Johnson, and JamesC. Hanson. 1990. “Using the Partial BudgetTo Analyze Farm Change.” University ofM a ryland Cooperative Extension FactSheet 547.

M c N e w, Kevin, and John Curtis. Fall 1997.“ M a ryland Farmers Lose Bucks on Deer-Damaged Crops,” Economic Vi e w p o i n t s2 ( 2 ) .D e p a rtment of Agricultural and Resourc eEconomics, University of Mary l a n dCooperative Extension.

Ribaudo, Mark O., C. Tim Osborn, and KazimK o n y a r. 1994. “Land Retirement as a To o lfor Reducing Agricultural Nonpoint Sourc eP o l l u t i o n . ” Land Economics70(1): 77-87.

Riparian Forest Buffer Panel Technical Te a m .October 1996. “Riparian Forest Buffer PanelR e p o rt: Technical Support Document.”Chesapeake Bay Pro g r a m .

Tjaden, Robert L., and Glenda M. We b e r.1998. “Riparian Buffer Management: SoilBioengineering or Streambank Restorationfor Riparian Forest Buffers.” University ofM a ryland Cooperative Extension FactSheet 729.

Issued in furtherance of Cooperative Extension work, acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture, University of Maryland, College Park,and local governments. Thomas A. Fretz, Director of Maryland Cooperative Extension, University of Maryland.

The University of Maryland is equal opportunity. The University’s policies, programs, and activities are in conformance with pertinent Federal and State laws and regulations onnondiscrimination regarding race, color, religion, age, national origin, sex, and disability. Inquiries regarding compliance with Title VI of the Civil Rights Act of 1964, as amended; TitleIX of the Educational Amendments; Section 504 of the Rehabilitation Act of 1973; and the Americans With Disabilities Act of 1990; or related legal requirements should be directedto the Director of Personnel/Human Relations, Office of the Dean, College of Agriculture and Natural Resources, Symons Hall, College Park, MD 20742.

P2000

b yLori L y n c h

Assistant Pr o f e s s o rAgricultural and Resource EconomicsUniversity of Maryland, College Park

a n dR o b e r t Tjaden

Regional Extension SpecialistWye Research and Education Center