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Evaluating Input Standards for Non-Point Pollution Control under Firm Heterogeneity

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  • Graeme J. Doole

Abstract

The efficacy and cost of input standards for reducing nitrate pollution from New Zealand dairy production are evaluated. In contrast to previous studies, firm heterogeneity is explicitly considered through the novel integration of efficient techniques for the calibration and decomposition of large optimisation models. Nitrogen fertiliser application should not be targeted by policy given its minor role in determining emissions. In contrast, livestock intensity is an appropriate base for regulation given its strong correlation with pollutant load. Abatement cost increases as stocking rate declines, but this can be offset at low levels of regulation through utilising slack feed resources to improve per-cow milk production. Both uniform and differentiated input standards based on livestock intensity achieve substantial decreases in pollutant load at moderate cost. However, because of disparity in the slopes of abatement cost curves across firms, a differentiated policy is more cost-effective at the levels of regulation required to achieve key societal goals for improved water quality. Copyright (c) 2010 The Author. Journal compilation (c) 2010 The Agricultural Economics Society.

Suggested Citation

  • Graeme J. Doole, 2010. "Evaluating Input Standards for Non-Point Pollution Control under Firm Heterogeneity," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(3), pages 680-696.
  • Handle: RePEc:bla:jageco:v:61:y:2010:i:3:p:680-696
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    1. Fleming, R. A. & Adams, R. M., 1997. "The Importance of Site-Specific Information in the Design of Policies to Control Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 347-358, July.
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    Cited by:

    1. Holland, Luke M. & Doole, Graeme J., 2014. "Implications of fairness for the design of nitrate leaching policy for heterogeneous New Zealand dairy farms," Agricultural Water Management, Elsevier, vol. 132(C), pages 79-88.
    2. Encarna Esteban & José Albiac, 2016. "Salinity Pollution Control in the Presence of Farm Heterogeneity — An Empirical Analysis," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 1-20, June.
    3. Anastasiadis, Simon & Kerr, Suzi, 2012. "Mitigation and Heterogeneity in Management Practices on New Zealand Dairy Farms," 2012 Conference, August 31, 2012, Nelson, New Zealand 136039, New Zealand Agricultural and Resource Economics Society.
    4. repec:eee:agisys:v:154:y:2017:i:c:p:34-44 is not listed on IDEAS

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