The Impact of Agricultural Land Use Change on Lake Water Quality: Evidence from Iowa

The environmental impacts of agricultural policies must be quantified to perform full cost-benefit analyses and make informed policy decisions. In this paper I use a unique panel data set to estimate the effect of changes in cropland on lake water quality. Fifteen years of water quality measurements across over 100 lakes are combined with satellite imagery and weather data. Using a dynamic panel data model, I find that the elasticity of water quality to cropland is 0.0535. To understand the policy implications, I estimate a second model to find the elasticity of cropland to crop prices. I combine these estimates to analyze the effect of the Renewable Fuel Standard (RFS). I find that the RFS decreased lake water quality; however, the magnitude of this effect is negligible.