Paying Farmers to Reduce Nitrogen Application on Corn: The Baseline Approach

John Horowitz and Kohei Ueda

No 150561, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: We model a simulated green-payment policy to reduce nitrogen application on corn. In contrast to other papers, we recognize that the farm’s business-as-usual application rate cannot be known by the policymaker. We develop a structural model and data-driven approach to address this issue. We find that only one-third of the credits that would receive payments would be additional nitrogen reductions. The substantial volume of non-additional “reductions” leads the effective payment rate to be 3.5 times the price paid by the simulated policy. We discuss a further eligibility criterion that can improve policy performance.

Keywords: Agricultural and Food Policy; Crop Production/Industries (search for similar items in EconPapers)
Pages: 39
Date: 2013
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:150561

DOI: 10.22004/ag.econ.150561

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