The Optimal Number and Size of Fertilizer Plants Under Hazardous Materials Regulations

Suzanne M. Lahlum and Frank J. Dooley

No 231704, MPC Reports from North Dakota State University, Upper Great Plains Transportation Institute

Abstract: Public concern about hazardous materials, such as agricultural fertilizers, has steadily increased. Thus, North Dakota created Recommended Management Practices for The Primary and Secondary Containment of Fertilizers (RMP). This study attempted to determine how compliance with RMP guidelines affects logistic, operating, and investment costs of fertilizer plants and evaluate the effect on plant size and industry market structure. This study will be important to fertilizer plant managers because the North Dakota Health and Consolidated Laboratories, which regulates the North Dakota fertilizer industry, has been approached about introducing legislation that would create and support consistency within the industry. A cost-minimizing, mixed-integer linear programming model was employed in four different scenarios to analyze the effects of possible fertilizer legislation. Results show forced compliance with the RMP guidelines will (1) start a shake-out of excess capacity, (2) generate cost savings of 8 percent for the industry, and (3) discourage storage capacity expansion.

Keywords: Crop Production/Industries; Environmental Economics and Policy; Health Economics and Policy (search for similar items in EconPapers)
Pages: 160
Date: 1996-05
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ndtimr:231704

DOI: 10.22004/ag.econ.231704

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