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Introducing individual transferable quotas on nitrogen in Danish fresh water aquaculture: Production and profitability gains

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  • Nielsen, Rasmus

Abstract

The purpose of this paper is to investigate the potential gains from changing the existing regulatory framework for fresh water aquaculture production in Denmark. The regulatory framework is changed from an input regulation based on farm-specific feed quotas, to an individual transferable quota system on nitrogen pollution. The regulatory change is analyzed using Data Envelopment Analysis to model the underlying production structure. The effect of allowing trading of nitrogen quotas on production and profitability is analyzed in a joint production model with good and bad output under different behavioral and technical assumptions, whilst keeping the overall pollution level of nitrogen constant. Furthermore, the effect of a catchment area restriction on nitrogen is analyzed to comply with the EU Water Framework Directive. The paper quantifies the gains of a policy change from a command and control system to an incentive based system. The estimated results suggest that the changed regulation could increase Danish aquaculture production by 16 to 55%, whilst actual profitability could be increased 5 to 10 times.

Suggested Citation

  • Nielsen, Rasmus, 2012. "Introducing individual transferable quotas on nitrogen in Danish fresh water aquaculture: Production and profitability gains," Ecological Economics, Elsevier, vol. 75(C), pages 83-90.
  • Handle: RePEc:eee:ecolec:v:75:y:2012:i:c:p:83-90
    DOI: 10.1016/j.ecolecon.2012.01.002
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    Citations

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    Cited by:

    1. Ankamah-Yeboah Isaac & Max Nielsen & Rasmus Nielsen, 2015. "Organic Salmon – Considered a Fisheries or Agricultural Product Among Consumers?," 2015 EAFE (European Association of Fisheries Economists) Conference Papers 003, Nisea.
    2. repec:spr:annopr:v:255:y:2017:i:1:d:10.1007_s10479-015-2020-4 is not listed on IDEAS
    3. Jacobsen, Lars-Bo & Nielsen, Max & Nielsen, Rasmus, 2016. "Gains of integrating sector-wise pollution regulation: The case of nitrogen in Danish crop production and aquaculture," Ecological Economics, Elsevier, vol. 129(C), pages 172-181.
    4. Bronnmann, Julia & Asche, Frank, 2017. "Sustainable Seafood From Aquaculture and Wild Fisheries: Insights From a Discrete Choice Experiment in Germany," Ecological Economics, Elsevier, vol. 142(C), pages 113-119.
    5. Nielsen, Rasmus & Hoff, Ayoe & Waldo, Staffan & Hammarlund, Cecilia & Virtanen, Jarno, 2019. "Fishing for nutrients – economic effects of fisheries management targeting eutrophication in the Baltic Sea," Ecological Economics, Elsevier, vol. 160(C), pages 156-167.
    6. Ankamah-Yeboah, Isaac & Nielsen, Max & Nielsen, Rasmus, 2016. "Price premium of organic salmon in Danish retail sale," Ecological Economics, Elsevier, vol. 122(C), pages 54-60.

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