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Cost-effective regulation of nonpoint emissions from pastoral agriculture: a stochastic analysis


  • Doole, Graeme J.
  • Romera, Alvaro J.


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.

Suggested Citation

  • Doole, Graeme J. & Romera, Alvaro J., 2014. "Cost-effective regulation of nonpoint emissions from pastoral agriculture: a stochastic analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), July.
  • Handle: RePEc:ags:aareaj:262411
    DOI: 10.22004/ag.econ.262411

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    References listed on IDEAS

    1. Doole, Graeme & Pannell, David J., 2011. "Evaluating environmental policies under uncertainty through application of robust nonlinear programming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(4), pages 1-18.
    2. Graeme J. Doole & David J. Pannell, 2012. "Empirical evaluation of nonpoint pollution policies under agent heterogeneity: regulating intensive dairy production in the Waikato region of New Zealand," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(1), pages 82-101, January.
    3. Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, December.
    4. Athanasios Kampas & Ben White, 2004. "Administrative Costs and Instrument Choice for Stochastic Non-point Source Pollutants," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(2), pages 109-133, February.
    5. Segarra, Eduardo & Taylor, Daniel B., 1987. "Farm Level Dynamic Analysis Of Soil Conservation: An Application To The Piedmont Area Of Virginia," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(2), pages 1-13, December.
    6. Breda Lally & Brendan 'Riordan & Thomas van Rensburg, 2007. "Controlling Agricultural Emissions of Nitrates: Regulation versus Taxes," Working Papers 122, National University of Ireland Galway, Department of Economics, revised 2007.
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