Dairy Farming and Newt Habitat: How Shocks in Milk Prices Influence the Optimal Design of Water Retention Policies

Abstract: Floods and droughts are expected to occur more frequently due to climate change. Regional water boards in the Netherlands are anticipating water level variations in streams in rural areas. To moderate adverse effects of those variations, they seek for opportunities to enhance retention of rainfall runoff on agricultural land in the stream valleys. This can be done by contracting farmers to apply agri-environmental measures. We focus on this small-scale and flexible (in space and time) rainfall runoff retention by farmers. Farmers can decide to (temporarily) allocate parts of their land to apply agri-environmental measures, depending on shocks of various nature, e.g. shocks due to increased price fluctuation for agricultural products. These patches of land may then serve as water retention areas and can be temporarily habitat to certain species, and the configuration of the habitat patches is highly dynamic. Spatiotemporal habitat dynamics can have strong effects on species ’ viability. This paper develops an index as a proxy to express the persistence of species in the complex socio-ecological system, depending on crucial – but dynamic – factors landscape histor