Revisited water-oriented relationships between a set of farmers and an aquifer: accounting for lag effect

Cyril Bourgeois and Pierre-Alain Jayet

No 2010/06, Working Papers from INRA, Economie Publique

Abstract: Many environmental problems are due to damages caused by stock of pollutants which accumulate with time lag to their emission. In this paper, we focus on nitrates used in agriculture which can pollute groundwater years after their initial use. A dynamic optimal control problem with heterogeneous farmers is proposed. Usual structural parameters like the discount rate, the natural clearing rate, the lagged time interval between the soil-level pollution occurrence and the impact on groundwater are taken into account. We also examine pollution as caused by a continuous set of farms characterized by their individual performance index and by their individual marginal contribution to the pollution. The issue is further investigated by taking account of change in the information context, successively related to perfect information and to asymmetric information. As a result, when the delay between the spreading of N-fertilizer and the impact on the aquifer increases, i.e., the higher the lag, the steady state pollution stock and the steady state shadow price of the stock both increase. Moreover, asymmetric information leads to a higher stock of pollution. Given the U.S. EPA context or given the European Union context and their directives focusing on nitrate pollution and water quality, the qualitative results provided in this paper should help modellers and decision makers promote suitable environmental policies.

Keywords: Non-point source pollution; Farming pollution; Aquifer; Nitrate; Time lag; Optimal control; Mechanism design (search for similar items in EconPapers)
JEL-codes: C61 D62 D82 Q53 (search for similar items in EconPapers)
Date: 2010-06-01
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Citations: View citations in EconPapers (1)

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