Economic Effects of Environmental Taxation on Chemical Fertilizers

Chang-Gil Kim and Arthur L. Stoecker

No 25501, 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists

Abstract: This paper analyzes the economic effects of environmental taxes on chemical fertilizer in producing rice. A charge of 10 percent tax on nitrogen fertilizer leads to a reduction in fertilizer use of 1.5 percent without changing rice yield, but the farm income is reduced by 0.6 percent. The tax rate of 100 percent leads to a reduction of 14.6 percent in fertilizer use, a 0.4 percent reduction in rice yield, and a 3.6 percent reduction in farm income. A significant feature of eco-taxes imposed on chemical fertilizers is their revenue potential, which could contribute to increasing government budgets for finance pollution control programs, such as education and R&D. This study provides an insight into the application of market-based instrument to achieve sustainable agricultural development.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 20
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae06:25501

DOI: 10.22004/ag.econ.25501

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