How Inefficient Are Nutrient Application Limits? A Dynamic Analysis of Groundwater Nitrate Pollution from Concentrated Animal Feeding Operations

Jingjing Wang () and Kenneth A. Baerenklau

Applied Economic Perspectives and Policy, 2015, vol. 37, issue 1, 130-150

Abstract: Animal waste from concentrated animal feeding operations (CAFOs) is a significant contributor to nitrate contamination of groundwater. To evaluate the cost-effectiveness of alternative policies for controlling nitrate pollution at both the field and farm level, this article utilizes a structural dynamic model of a representative CAFO. The model accounts for herd management, manure handling systems, crop rotations, water sources, irrigation systems, waste disposal options, and pollutant emissions. Results show that the standard approach of limiting the amount of animal waste that may be applied to fields reduces net farm income by more than 25%, whereas the most cost-effective emission-based policies reduce income only marginally. This motivates greater consideration for nonpoint source pollution control policies that target estimated emissions. Furthermore, price instruments are shown to slightly outperform quantity instruments under conditions that are typical for CAFOs. The results also show that adopting alternative technologies and practices is crucial for cost-effective abatement, and demonstrate the importance of accounting for the spatial heterogeneity of both irrigation water and salinity when designing policy mechanisms for nitrate pollution control.

Date: 2015
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