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Regulation Of Nitrogen Pollution: Taxes Versus Quotas

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  • Choi, E. Kwan
  • Feinerman, Eli

Abstract

This paper investigates the effects of first-best policies to regulate nitrogen application. Some nitrogen fertilizer is applied ex ante before a random rainfall, but sidedressed nitrogen may be applied ex post. First-best policy is a tax or a quota on ex ante application, because sidedressed nitrogen is not leached. Since a risk-averse farmer uses more nitrogen ex ante than a risk-neutral farmer, a higher tax must be imposed on the former. Action equivalent first-best taxes and quotas are also welfare equivalent. An empirical model for wheat in Israel was used to demonstrate the analytical findings.

Suggested Citation

  • Choi, E. Kwan & Feinerman, Eli, 1995. "Regulation Of Nitrogen Pollution: Taxes Versus Quotas," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(1), pages 1-22, July.
    • Handle: RePEc:ags:jlaare:30925
    DOI: 10.22004/ag.econ.30925
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    References listed on IDEAS

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    1. Martin L. Weitzman, 1974. "Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 41(4), pages 477-491.
    2. Choi, E. Kwan & Johnson, Stanley R., 1992. "Regulation of externalities in an open economy," Ecological Economics, Elsevier, vol. 5(3), pages 251-265, June.
    3. Feinerman, Eli & Kwan, E. & Johnson, Stanley R., 1990. "Uncertainty and Split Nitrogen Application in Corn Production," Staff General Research Papers Archive 328, Iowa State University, Department of Economics.
    4. Eli Feinerman & E. Kwan Choi & Stanley R. Johnson, 1990. "Uncertainty and Split Nitrogen Application in Corn Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(4), pages 975-985.
    5. Kwan Choi, E. & Lapan, Harvey E., 1991. "Optimal trade policies for a developing country under uncertainty," Journal of Development Economics, Elsevier, vol. 35(2), pages 243-260, April.
    6. Feinerman, Eli & Choi, E. Kwan & Johnson, Stanley R., 1990. "Uncertainty and Split Nitrogen Application in Corn Production," Staff General Research Papers Archive 10598, Iowa State University, Department of Economics.
    7. Anderson, Jock R. & Dillon, John L. & Hardaker, Brian, 1977. "Agricultural Decision Analysis," Monographs: Applied Economics, AgEcon Search, number 288652, July.
    8. Anderson, Jock R. & Feder, Gershon, 2007. "Agricultural Extension," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 44, pages 2343-2378, Elsevier.
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    Cited by:

    1. Schwabe, Kurt A. & Knapp, Keith C., 2005. "Nitrogen as a Capital Input and Stock Pollutant: A Dynamic Analysis of Corn Production and Nitrogen Leaching under Non-Uniform Irrigation," 2005 Annual meeting, July 24-27, Providence, RI 19466, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Zheng, Yanan & Goodhue, Rachael E., 2022. "Intensive or Extensive Margin Effects? Growers’ Responses to the Restriction of High-Volatile Organic Compound (VOC) Pesticide Products in the San Joaquin Valley, California," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322085, Agricultural and Applied Economics Association.
    3. Larson, James A. & Roberts, Roland K. & Tyler, Donald D. & Duck, Bob N. & Slinsky, Stephen P., 1998. "Nitrogen-Fixing Winter Cover Crops And Production Risk: A Case Study For No-Tillage Corn," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 30(1), pages 1-12, July.
    4. 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.
    5. Matthew Elliott & Lisa Elliott & Evert Van der Sluis, 2018. "A Predictive Analytics Understanding of Cooperative Membership Heterogeneity and Sustainability," Sustainability, MDPI, vol. 10(6), pages 1-31, June.
    6. 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.
    7. Weersink, Alfons & Dutka, Charray & Goss, Michael, 1996. "Crop Price And Risk Effects On Farmer Abatement Costs Of Reducing Nitrate Levels In Groundwater Imposed By Environmental Policy Instruments," Working Papers 244794, University of Guelph, Department of Food, Agricultural and Resource Economics.
    8. Whittaker, Gerald & Färe, Rolf & Grosskopf, Shawna & Barnhart, Bradley & Bostian, Moriah & Mueller-Warrant, George & Griffith, Stephen, 2017. "Spatial targeting of agri-environmental policy using bilevel evolutionary optimization," Omega, Elsevier, vol. 66(PA), pages 15-27.

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