REGULATION OF NITROGEN POLLUTION: TAXES VERSUS QUOTAS

Eun Choi and Eli Feinerman

Journal of Agricultural and Resource Economics, 1995, vol. 20, issue 01, 22

Abstract: This paper investigates the effects of first-best policies to regulate nitrogen application. Some nitrogen fertilizer is applied ex ante before a random rainfall, but sidedressed nitrogen may be applied ex post. First-best policy is a tax or a quota on ex ante application, because sidedressed nitrogen is not leached. Since a risk-averse farmer uses more nitrogen ex ante than a risk-neutral farmer, a higher tax must be imposed on the former. Action equivalent first-best taxes and quotas are also welfare equivalent. An empirical model for wheat in Israel was used to demonstrate the analytical findings.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:30925

DOI: 10.22004/ag.econ.30925

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