IDEAS home Printed from
   My bibliography  Save this paper

Evaluation of Agri-Environmental Policies for Water Quality Improvement Accounting for Firm Heterogeneity


  • Graeme J. Doole

    () (University of Waikato)

  • Dan Marsh

    () (University of Waikato)

  • Thiagaragah Ramilan

    () (University of Melbourne)


Policy makers worldwide are interested in the identification of cost-effective policy instruments to reduce diffuse pollution. A large economic model representing heterogeneous farms is used to evaluate a broad set of policies for reducing nitrate regulation within a large catchment dominated by dairy production. A policy instrument that allows the level of abatement to vary among producers according to differences in abatement cost is most cost-effective. The primary goal of 26 kg N ha-1 can be achieved at a cost of $15 ha-1 under this cap and trade policy, while a uniform cap on emissions for all farmers would be more than three times as expensive ($49 ha-1). In contrast, requiring uniform reductions in stocking rate, banning the application of nitrogen fertiliser, and land retirement perform poorly. These instruments are at least three times more costly than a cap and trade policy over all simulated reductions. Moreover, the differentiated policy does not greatly alter the distribution of farm profit, relative to what exists without regulation. The use of a large, complex economic model incorporating disaggregated farms provides unique insight into the economic benefits accruing to a differentiated policy.

Suggested Citation

  • Graeme J. Doole & Dan Marsh & Thiagaragah Ramilan, 2011. "Evaluation of Agri-Environmental Policies for Water Quality Improvement Accounting for Firm Heterogeneity," Working Papers in Economics 11/13, University of Waikato.
  • Handle: RePEc:wai:econwp:11/13

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Basset-Mens, Claudine & Ledgard, Stewart & Boyes, Mark, 2009. "Eco-efficiency of intensification scenarios for milk production in New Zealand," Ecological Economics, Elsevier, vol. 68(6), pages 1615-1625, April.
    Full references (including those not matched with items on IDEAS)

    More about this item


    diffuse pollution; economic model; cap and trade policy;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wai:econwp:11/13. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Geua Boe-Gibson). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.