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Paying Farmers to Reduce Nitrogen Application on Corn: The Baseline Approach

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  • Horowitz, John
  • Ueda, Kohei

Abstract

We model a simulated green-payment policy to reduce nitrogen application on corn. In contrast to other papers, we recognize that the farm’s business-as-usual application rate cannot be known by the policymaker. We develop a structural model and data-driven approach to address this issue. We find that only one-third of the credits that would receive payments would be additional nitrogen reductions. The substantial volume of non-additional “reductions” leads the effective payment rate to be 3.5 times the price paid by the simulated policy. We discuss a further eligibility criterion that can improve policy performance.

Suggested Citation

  • Horowitz, John & Ueda, Kohei, 2013. "Paying Farmers to Reduce Nitrogen Application on Corn: The Baseline Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150561, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150561
    DOI: 10.22004/ag.econ.150561
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    References listed on IDEAS

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