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Spatial model of dairy farm management, nutrient runoff and greenhouse gas emissions: Private and social optima

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  • Lotjonen, S.
  • Temmes, E.
  • Ollikainen, M.

Abstract

We provide a comprehensive theoretical analysis of private and social optimum in dairy production when society accounts for greenhouse gas emissions and nutrient runoff to waterways. The private farmer maximizes revenue from milk production by choosing herd size, diet, fertilization and land allocation between crops. Changes in the diet impact milk production, manure composition, and land allocation between crops. A critical radius emerges for the choices of crops and fertilizer type (mineral and manure); it is independent of the chosen crops in the private optimum but not in the social optimum. Fertilizer intensity is higher in the manure fertilized fields than in the fields where mineral fertilizer is used. Moreover, manure application rate decreases in distance to the farm centre. In contrast to what has generally been thought, the socially optimal fertilizer application follows the same spatial pattern than the private fertilization but at a lower level of intensity. A simulation model applied to the Finnish agriculture is used to further examine the features of the model. Acknowledgement : The work presented is part of the BONUS GO4BALTIC project: . The BONUS GO4BALTIC project is supported by BONUS (Art 185), funded jointly by the EU and national funding institutions in Denmark (the Innovation Fund), Estonia (Estonian Research Council ETAG ), Finland (Academy of Finland), Poland (NCBR) and Sweden (FORMAS). The work has also received funding from Stockholm University Baltic Sea Center project Baltic Eye.

Suggested Citation

  • Lotjonen, S. & Temmes, E. & Ollikainen, M., 2018. "Spatial model of dairy farm management, nutrient runoff and greenhouse gas emissions: Private and social optima," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277111, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae18:277111
    DOI: 10.22004/ag.econ.277111
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