Excessive nutrient loading poses significant water quality problems in many water bodies across the country. An important question that must be addressed when nutrient reduction policies are devised is where nutrient reduction targets will be applied within the watershed. This paper examines the cost implications of establishing three possible nutrient reduction targets in different locations along the Fox‐Wolf River basin in northeast Wisconsin. A linear programming model calculates the total cost of achieving a 50% phosphorus load reduction target established in various locations throughout the basin. Two strategies establish phosphorus reduction targets for each of the 41 subwatersheds, and the third approach establishes a single 50% target reduction at Green Bay for the entire watershed. The results indicate that achieving target phosphorus reductions at the subwatershed level is over 4 times more expensive than achieving the same percentage phosphorus reduction for the watershed as a whole.

Linear programming is applied to identify the least cost strategy for reaching politically specified phosphorus and total suspended solids reduction targets for the Fox‐Wolf river basin in Northeast Wisconsin. The programming model uses data collected on annualized unit reduction costs associated with five categories of sources of phosphorus and total suspended solids discharge in each of the 41 sub‐watersheds in the basin to determine the least cost management strategy. Results indicate that: (1) cost‐effective nutrient reduction requires careful selection of geographic areas and source categories to address throughout the watershed; (2) agricultural sources are the most cost‐effective to address in the basin; and (3) care should be exercised in setting nutrient reduction targets, given that there are likely to be significantly increasing marginal costs of nutrient reduction; the model predicts that lowering the most restrictive target by 33 percent would cut reduction expenditures by about 75 percent. Policy implications of the model include support for the investigation and potential development of institutional arrangements that enable cost‐effective nutrient reduction activities to occur, such as the creation of an agency with authority over a given watershed, coordinated watershed management activities, or nutrient trading programs.

This paper attempts to develop an easily reproducible methodology for the economic selection of an optimal reservoir size given an annual sedimentation rate. The optimal capacity is that at which the marginal cost of constructing additional storage capacity is equal to the dredging costs avoided by having that additional capacity available to store sediment. The cost implications of misestimating dredging costs, construction costs, and sediment delivery rates are investigated. In general, it is shown that oversizing is a rational response to uncertainty in the estimation of parameters. The sensitivity of the results to alternative discount rates is also discussed. The theoretical discussion is illustrated with a case study drawn from Highland Silver Lake in southwestern Illinois.

Contamination from agricultural sources can contribute to exceedances of drinking water standards in our public water supplies. Watershed-based mechanisms, including TMDLs, might offer a way to reduce agricultural nonpoint source impacts, thereby reducing or eliminating the need for or cost of upgrading at water treatment plants. This paper presents background on some practical questions and policy issues that must be addressed in order to realize successful integration of source water protection with TMDLs. These key issues include agency coordination, listing of drinking water contaminants, uncertainty, financing, adaptive implementation, and performance measures. Understanding of these issues will open the way to protection of source waters through voluntary watershed management with accountability.