Agriculture Reference
In-Depth Information
Table 7. Results of alternative policy measures in the district
Welfare
(10
6
Quasi-rent
(10
6
Water
(hm
3
)
Nitrogen
(tons)
Percolation
(hm
3
)
Nitrogen
leaching
(tons)
Base Scenario
22.3
24.1
190.7
4,525
66.1
1 459
0.06
3
Water
price
21.2
18.8
86.4
4,367
43.3
1 381
0.09
3
19.6
12.6
109.1
4,039
20.2
1 346
Nitrogen
price
0.90
22.4
22.6
200.6
4,265
45.3
1 222
1.20
22.7
21.5
186.6
3,976
56.2
990
Nitrogen standard
23.7
23.8
98.1
4,134
14.1
634
Emission tax
23.9
23.8
185.4
3,596
43.4
697
Source
: Martínez and Albiac (2004).
An increase in water prices only slightly reduces nitrogen discharges at very high
costs to farmers and society. A tax on nitrogen fertilisation results in more significant
pollution reduction at much lower costs. A standard on nitrogen application curbs
emissions by more than half, with a very moderate impact on quasi-rent and gains in
welfare.
The fact that higher water prices are found to be very inefficient in abating emissions
questions the reliance of the European Water Framework Directive on water pricing as a
pollution control instrument to reach the “good status” target for all waters. The
implication is that other instruments included in the Directive, such as ambient quality
standards and emissions limits, need to be applied in order to curb pollution.
Turning to Spanish domestic policies, the main piece of legislation affecting nonpoint
pollution is the National Irrigation Plan, which promotes irrigation modernisation through
public subsidies. The National Irrigation Plan is a good instrument in irrigation areas with
relatively high-profit crops such as fruits and vegetables, or when farmers change the
crop mix to these more profitable crops. In large inland collective irrigation systems
based on low profit crops, yields increase and pollution is substantially reduced with the
renovation of secondary canals and plot irrigation systems. The problem is that the
required investments are not financially sustainable, even when public subsidies are
accounted for (Uku, 2003). The consequence is that nitrogen pollution in irrigated areas
based on low profit crops, such as the Flumen-Monegros district examined here, could be
controlled by the abatement measures being considered, but not by the National Irrigation
Plan.
In addition, the results contribute further evidence to the discussion on the choice of
instrument base for nitrogen control. Horan and Shortle (2001), using the empirical
results by Helfand and House (1995) and Larson et al. (1996), claim that instruments
based on irrigation water are more cost-efficient than those based on nitrogen fertilisation.
The reason given is that irrigation water is more highly correlated with nitrate leaching,
implying that the appropriate instrument base is not the nutrient responsible for pollution
but rather the input most highly correlated with pollution. This interpretation appears
inaccurate, however, because soil nitrogen dynamics are ignored. Neglect of the dynamic
aspects of nonpoint pollution may have serious consequences for the design of policy
measures.
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