Trading on risk: The moral logics and economic reasoning of North Carolina farmers in water quality trading markets

Water quality trading (WQT) is a popular policy for improving the quality of waterways across the United States by reducing water pollution. However, in established markets, few trades are happening, making environmental gains from WQT limited. Despite these trends, policy makers continue to implement this market‐based approach to achieve clean water. Successful markets rely on stakeholders' willingness to buy and sell in the market, yet research has not focused on this aspect of WQT. The stakeholders involved in WQT are frequently farmers (as sellers) trading with developers and urban municipalities (as buyers). To better understand stakeholder decisions about WQT, this research sought to document barriers and catalysts for farmers participation in a brand‐new WQT program in the Jordan Lake Watershed, North Carolina. Key findings from interviews with ninety farmers show that most have high conservation rates and know about local water problems. Nevertheless, they were unwilling or unlikely to participate in the program. We offer detailed evidence of the complex ways farmers calculate risk for farm practices and environmental health as an indication that their perceptions of risk and moral sensibilities involve a broader set of costs and values than accounted for in the WQT policy design, ultimately making trading unviable.