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Community Environmental Program

BMP Auction Description

BMP Auctions

Best Management Practice (BMP) Auctions are a market-based approach for supporting BMPs to improve water quality. BMP auctions are modeled after a traditional reverse auction format with many sellers (agricultural producers) and one buyer (i.e. environmental agency).

Stages of a BMP Auction:

  1. Farmers submit bids to supply the targeted watershed with water quality improvements in the form of cropping and/or livestock management BMPs.
  2. Bids are ranked by amount of water quality improvements generated per dollar. Bid Ranking Process
  3. The producers who offer water quality improvements at lowest price are contracted with first. Sample of Ranked Bids
  4. The process is repeated until a water quality improvement goal is reached or funds are exhausted.

BMP auctions identify and purchase the most cost-effective water quality improvements for a specified budget. Theory and preliminary experience indicate that BMP auctions may be more efficient (dollars per water quality unit improvement) at getting BMPs on the ground compared to traditional government incentive-based programs.

Watershed stakeholders enjoy the ownership in the process. Also, since producers identify the price for BMP implementation, project sponsors are not required to “guess” what incentive level will foster adoption of needed BMPs. In Kansas to date, producers have also been allowed to pair auction funds with other cost-share funding sources up to any limit imposed by the cost-share program. Hence, participation in BMP auctions may lead to greater utilization of government cost-share programs plus additional BMP adoption.

Kansas State University, with support from the Kansas Department of Health and Environment (KDHE) and the U.S. Environmental Protection Agency (EPA) have coordinated six BMP auctions since 2007 targeting soil erosion reduction from crop land. These auctions have provided over $150,000 in funding to producers and reduced 5,679 tons of soil erosion annually. Two auctions targeting phosphorous runoff reduction from livestock operations provided approximately $70,000 in funding to producers and reduced 937 pounds of phosphorous from entering Kansas and Missouri water bodies. Additional cropland and livestock auctions are planned throughout Kansas in the upcoming years.

Detailed Presentations on BMP Auctions:
General Auction Presentation
Why should we use a BMP Auction?