Regulation og non-point phosphorus emissions from the agricultural sector by use of economic incentives

Research output: Book/anthology/dissertation/reportPh.D. thesisResearch

  • Line Block Hansen, Denmark
Loss of phosphorus (P) from the agricultural sector has, in recent decades, caused eutrophication of streams and lakes across Europe and North America. Intensive and increasing livestock production generates manure P well in excess of crop requirements. These areas are therefore key elements in the effort to reduce agricultural P runoff. Continued application of P in excess of crop requirements causes P stocks to build up in fields and, over time, this increases the risk of losing P to the aquatic environment through surface runoff and erosion and through leaching via the soil matrix or macropores. Once a soil is highly enriched it will become a significant source of P losses for a long time. In Denmark, application of manure is primarily determined by nitrogen (N) crop nutrition, implying that livestock farmers are not motivated to further reduce their surplus P applications. The high costs of transporting and applying manure to fields means that increasing mineral-fertilizer prices does not generate a sufficient incentive for farmers to reallocate all P surpluses generated by livestock between farms and fields.

The aim of the thesis is to increase the understanding of the long-term impacts of economic incentives applied in the agricultural sector on 1) P-surplus application rates at the field level; 2) the accumulation of P in the soil; 3) the level of risk of P losses to the aquatic ecosystem; and 4) farm economics when analysed using a profit maximization approach.

The thesis consists of four papers all dealing with phosphorus regulation in the agricultural sector from either a theoretic or an empirical approach, and an introductory chapter. The first two papers are theoretical, where a dynamic model for P regulation is developed. The first paper introduces the P agri-environmental cycle and identifies the most important parameters to include in a dynamic model where farm profit is maximized over time whilst taking soil-P dynamics into account. The paper focuses on heterogeneity of farm type and how these farmers utilize the soil-P stock and apply P fertilizers. The second paper completes the modelling framework from paper 1 and analyses how a tax on P surpluses (defined as the difference between P applications and P removal by crops at harvest) motivates the different farmer types to utilize the soil-P stock and implement measures to reduce P loss. The third paper is empirical, where a farm profit maximization model is developed for an area in the catchment area of Odense Fjord, Denmark. The area covers 3,993 hectares and is cultivated by 258 arable, cattle and pig farmers. The paper investigates two different general incentives for reducing soil P losses: a tax on mineral-fertilizer P and a tax on P surplus (this time defined as the difference between applied P and the level of P application recommended when soil P is taken into account). The two incentives are compared in terms of their effect on different environmental and production-related parameters over a 30-year period. The paper differentiates between the three farm types and analyses how farm type affects farmers’ incentives to reallocate manure P between farms and fields. The last paper is also empirical and builds upon the model from paper 3. It compares the general incentives analysed in paper 3 with a tax on the phosphorus index (PI) for erosion. The PI estimates the risk of P being lost to the environment from critical source areas characterized by the overlap of the source factors (e.g., P application rates) with transport factors (e.g., erosion and runoff processes). The incentives are also compared with a subsidy for implementing filter strips. In addition to the effects investigated in paper 3, the final paper also analyses the effect the incentives have on the risk of losing P from different P-loss pathways.

Knowledge of the agri-environmental P cycle, along with how different farmer types are affected by the implementation of different general economic incentives, is obtained from the first three papers. The last paper provides a comparison of general and targeted incentive policies and their cost-efficiency. With reference to the joint findings of all four papers it is concluded that a tax on P surplus (either defined as the difference between applied P and P removed by crops at harvest, or as the difference between P applied and the recommended P application rate in relation to the soil-P stock) can be a core element in a close-to-efficient policy regulating P losses from the agricultural sector. The efficiency of the P-surplus tax is dependent upon farm heterogeneity in the area regulated. This is because transportation costs reduce the area within which it is profitable to distribute manure. The P-surplus tax expands this area, but in areas with a high density of intensive livestock production the P-surplus tax might not be sufficient to reallocate all P surpluses. However, there might be capacity in the soil to store more P and thereby postpone P emissions to the future, i.e., it might be expensive to cut down livestock production to obtain reduced P surpluses when these surpluses could be applied to fields where the emission would happen in the distant future.

The general tax policies on mineral-fertilizer P and P surpluses motivate farmers to trade manure thus reallocating manure P between farms and fields. This reallocation contributes to the elimination of the P surplus over time and to a decrease in the average soil-P levels. However, within a 30-year period, the average soil-P level does not reach the optimum for crop fertilization. The two tax policies also contribute to a decrease in the total application rate of both mineral-fertilizer N and P. Both policies can therefore be seen as contributing to reducing both the problem of P-surplus applications and the problem of resource (mineral-fertilizer P) scarcity. However, P can be lost to the aquatic environment through several pathways, and the two general tax systems only contribute in a minor way to reducing surface losses (through erosion and surface runoff). Targeted taxes on the PI level for erosion are highly efficient in reducing P losses through surface pathways because farmers are motivated to implement filter strips to reduce the PI. However, the targeted policies fail to reduce P losses through subsurface pathways (leaching through macropores or the soil matrix). The same is applicable for the subsidy for filter strip implementation. The mineral-fertilizer tax turns out to be very expensive, especially for arable farmers, and is, in general, the policy with the highest income loss. The P surplus tax is most expensive for pig farmers whereas the other policies do not show the same variability in costs across farm types. Whether the P-surplus tax is most cost-efficient from a cost-benefit approach has not formed a part of this thesis but it represents an important and highly policy-relevant topic for future research.
Original languageEnglish
PublisherAarhus University, Department of Environmental Science
Number of pages178
Publication statusPublished - 2013

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