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The Impact of Crop Price on Nitrous Oxide Emissions: A Dynamic Programming Approach

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  • Cai, Ruohong
  • Zhang, Xin
  • Kanter, David

Abstract

The use of N fertilizer in agriculture is a major source of Nitrous Oxide, an important greenhouse gases. Market-based instruments, such as incentives or taxes, may help reduce Nitrous Oxide emission by changing Nitrogen application rate. Using a dynamic programming approach, we found that changing corn price or fertilizer price have effects on both farm profit and Nitrogen application rate. However, farm profit and Nitrogen rate always change in the same direction when affected by either input or output prices. Furthermore, as the corn price is relatively higher than the fertilizer price, changing the corn price is more effective in influencing Nitrogen rate, and thus Nitrous Oxide emission. This analysis can provide policymakers with useful information when designing Market-based tools to help reduce Nitrous Oxide emissions and mitigate global warming.

Suggested Citation

  • Cai, Ruohong & Zhang, Xin & Kanter, David, 2014. "The Impact of Crop Price on Nitrous Oxide Emissions: A Dynamic Programming Approach," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170691, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:170691
    DOI: 10.22004/ag.econ.170691
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    File URL: https://ageconsearch.umn.edu/record/170691/files/Agricultural%20price%20volatility%20impacts%20on%20nitrous%20oxide%20emission.pdf
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    References listed on IDEAS

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    1. Meyer-Aurich, Andreas & Weersink, Alfons & Janovicek, Ken & Deen, Bill, 2006. "Cost Efficient Tillage and Rotation Options for Mitigating GHG Emissions from Agriculture in Eastern Canada," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25485, International Association of Agricultural Economists.
    2. Cai, Ruohong & Bergstrom, John C. & Mullen, Jeffrey D. & Wetzstein, Michael E., 2011. "A Dynamic Optimal Crop Rotation Model in Acreage Response," Faculty Series 103949, University of Georgia, Department of Agricultural and Applied Economics.
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    Cited by:

    1. Santos, Elizângela Aparecida dos & Cunha, Dênis Antônio da & Travassos, Guilherme Fonseca, 2021. "Nitrogen Demand and Agro-Environmental Efficiency in Brazilian Cereal Production," 2021 Conference, August 17-31, 2021, Virtual 314989, International Association of Agricultural Economists.
    2. Schuurman, Daniel & Weersink, Alfons & Delaporte, Aaron, 2021. "Optimal Sequential Crop Choices for Soil Carbon Management: A Dynamic Programming Approach," 2021 Annual Meeting, August 1-3, Austin, Texas 314042, Agricultural and Applied Economics Association.

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    Keywords

    Agricultural and Food Policy; Farm Management; Production Economics;
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