On the usefulness of the directional distance function in analyzing environmental policy on manure management

The purpose of this paper is to model the manure management policy implemented in the European Union, and more specifically the limit imposed on the spreading of organic nitrogen. A theoretical model is defined in such a way that a number of specificities concerning livestock production can be introduced.The theoretical framework is used to investigate how the land can be shared out optimally between the non-productive purpose of spreading manure in a manner compliant with the environmental regulation and the productive function of providing crops.Then,we define an empirical model derived from the previous theoretical model, using the directional distance function.It provides a framework for deriving shadow prices of pollutant, of productive and non productive use of land and of the constraint on organic manure involved by the European environmental regulation.