Monetary Valuation and Internalization of Externalities in German Agriculture Using the Example of Nitrate Pollution: A Case-Study

Lukas Folkens, Volker Wiedemer and Petra Schneider
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Lukas Folkens: Department of Water, Environment, Construction and Safety, University of Applied Sciences Magdeburg-Stendal, 39114 Magdeburg, Germany
Volker Wiedemer: Department of Economics University of Applied Sciences Magdeburg-Stendal, 39114 Magdeburg, Germany
Petra Schneider: Department of Water, Environment, Construction and Safety, University of Applied Sciences Magdeburg-Stendal, 39114 Magdeburg, Germany

Sustainability, 2020, vol. 12, issue 16, 1-19

Abstract: Plants are dependent on nitrogen for their growth. However, if more plant nutrients are deposited than the plant can absorb, the excess nitrogen seeps into the soil where it accumulates as nitrate. About 74% of the drinking water produced in Germany comes from groundwater. The legal limit of 50 milligrams of nitrate per liter of fresh water is exceeded frequently in Germany, especially in agricultural areas. High levels of nitrate in drinking water can quickly lead to health issues, under certain conditions. The nitrate problem is omnipresent in Germany. However, studies which determine the externalized costs of nitrogen eutrophication are mostly missing. The present study closes this gap by combining the results of a transdisciplinary investigation from hydrological analyses and environmental-economic calculations. Water samples were taken from a deep well in Hauneck, which is a municipality in Hesse (Germany). Afterwards, an isotope analysis was carried out to determine the groundwater residence time and possible sources of nitrate. Thus, in addition to the sources of pollution, concrete social costs were determined, using a damage cost approach as well as an avoidance cost approach. For Hauneck, it was found that about 54% of the drinking water price is directly linked to the externalization of costs. These are borne via the principle of the common burden. In addition, the isotope investigations have shown that the removal of excess nitrate will continue for decades, which will lead to long term external costs. The paper reveals how the internalization of these costs can contribute to the conservation of water resources.

Keywords: internalization of external costs; negative externalities of nitrate; environmental economics; agriculture; conservation of water resources (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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