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Efficient Waste? Why Farmers Over-Apply Nutrients and the Implications for Policy Design

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  • Glenn Sheriff

Abstract

Understanding why farmers over-apply fertilizer is essential to designing effective agro-environmental policy. If farmers are simply inefficient, possibilities exist for simultaneously improving farm profits and the environment. If not, costly trade-offs are necessary. This article examines why farmer perceptions of agronomic advice, input substitutability, hidden opportunity costs, uncertainty, and risk aversion can make it economically rational to “waste” fertilizer by applying it above agronomically recommended rates. I use this information to evaluate the relative merits of policy responses such as insurance, education, cost-shares, regulation, taxes, and land retirement. Copyright 2005, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.1467-9353.2005.00263.x
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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal Review of Agricultural Economics.

Volume (Year): 27 (2005)
Issue (Month): 4 ()
Pages: 542-557

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Handle: RePEc:oup:revage:v:27:y:2005:i:4:p:542-557

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Cited by:
  1. Claassen, Roger & Cattaneo, Andrea & Johansson, Robert, 2008. "Cost-effective design of agri-environmental payment programs: U.S. experience in theory and practice," Ecological Economics, Elsevier, vol. 65(4), pages 737-752, May.
  2. Amy W. Ando & Shibashis Mukherjee, 2012. "Benefits of pollution monitoring technology for greenhouse gas offset markets," Economics Bulletin, AccessEcon, vol. 32(1), pages 122-136.
  3. repec:ags:jrapmc:122307 is not listed on IDEAS
  4. Ali, Sarah & McCann, Laura M.J. & Allspach, Jessica, 2012. "Manure Transfers in the Midwest and Factors Affecting Adoption of Manure Testing," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(04), November.
  5. Finger, Robert, 2011. "Reductions of Agricultural Nitrogen Use Under Consideration of Production and Price Risks," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114356, European Association of Agricultural Economists.
  6. Asci, Serhat & Borisova, Tatiana & VanSickle, John J. & Zotarelli, Lincoln, 2012. "Risk and Nitrogen Application Decisions in Florida Potato Production," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119797, Southern Agricultural Economics Association.
  7. Finger, Robert, 2012. "Nitrogen use and the effects of nitrogen taxation under consideration of production and price risks," Agricultural Systems, Elsevier, vol. 107(C), pages 13-20.
  8. Burkhart, Christopher S. & Jha, Manoj K., 2012. "Site-Specific Simulation of Nutrient Control Policies: Integrating Economic and Water Quality Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(1), April.
  9. Williamson, James M., 2010. "Does Information Matter? Assessing the Role of Information and Prices in the Nitrogen Fertilizer Management Decision," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60892, Agricultural and Applied Economics Association.
  10. Boyer, Christopher N. & Larson, James A. & Roberts, Roland K. & McClure, Angela T. & Tyler, Donald D., 2014. "The impact of field size and energy cost on the profitability of supplemental corn irrigation," Agricultural Systems, Elsevier, vol. 127(C), pages 61-69.
  11. Yiridoe, Emmanuel K. & Amon-Armah, Frederick & Hebb, Dale & Jamieson, Rob, 2013. "Eco-efficiency of Alternative Cropping Systems Managed in an Agricultural Watershed," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150357, Agricultural and Applied Economics Association.

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