Cost‐Effective Regulation of Nonpoint Emissions from Pastoral Agriculture: A Stochastic Analysis

24 Pages Posted: 8 Jul 2014

See all articles by Graeme Doole

Graeme Doole

The University of Western Australia - School of Agricultural and Environment

Alvaro J. Romera

DairyNZ

Date Written: July 2014

Abstract

Nutrient emissions from pastoral agriculture are a global cause of declining water quality. Their management is complicated through variability arising from climate and soil influences. This paper compares the implications of input‐based policies and direct restrictions on leaching to achieve 10 and 20 per cent reductions in nitrogen (N) load, in the context of pasture‐based New Zealand dairy farms. The most important mitigation practices on these farms are de‐intensification (involving reductions in N fertiliser application and stocking rate) and the application of nitrification inhibitors. A stylised conceptual model, incorporating both sources of variability, is used to identify the implications of alternative policies. Direct restriction of estimated N leaching is the most cost‐effective policy to reduce N leaching by 10 and 20 per cent. These results indicate the general insufficiency of input‐based mechanisms for water quality improvement, given the low correlation between input use and leaching, possible substitution with unrestricted inputs and their failure to motivate the use of mitigation strategies. Additionally, model output indicates that inherent variability in water quality, mainly due to climate influences, can dominate the benefits of regulatory action in any given year.

Keywords: agricultural policy, mathematical programming, natural resource policy, operations research, water management & policy

Suggested Citation

Doole, Graeme and Romera, Alvaro J., Cost‐Effective Regulation of Nonpoint Emissions from Pastoral Agriculture: A Stochastic Analysis (July 2014). Australian Journal of Agricultural and Resource Economics, Vol. 58, Issue 3, pp. 471-494, 2014. Available at SSRN: https://ssrn.com/abstract=2463449 or http://dx.doi.org/10.1111/1467-8489.12034

Graeme Doole (Contact Author)

The University of Western Australia - School of Agricultural and Environment ( email )

Nedlands, Western Australia 6907
Australia

Alvaro J. Romera

DairyNZ

Hamilton
New Zealand

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