Dynamically and spatially efficient phosphorus policies in crop production

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Title: Dynamically and spatially efficient phosphorus policies in crop production
Author: Iho, Antti
Publisher: Helsingin yliopisto, taloustieteen laitos
Date: 2007
Belongs to series: Julkaisuja
ISBN: 978-952-10-4048-1
ISSN: 1235-2241
URI: http://hdl.handle.net/1975/1497
Abstract: Eutrophication of surface waters accelerated by nutrient runoff from agriculture is a growing concern in developed countries. Controlling the loss of phosphorus is complicated, among other things, due to its intertemporal nature. Phosphorus fertilisation affects crop yields and phosphorus losses mainly via the potentially plant available of soil phosphorus reserves whose development is very slow. Hence, both privately and socially optimal choices of phosphorus are results of a dynamic decision making process. On the other hand, phosphorus loss is comprised of various phosphorus forms, differing in their contribution to eutrophication and in their sensitivity towards various phosphorus control measures. These forms can be roughly divided into particulate phosphorus and dissolved reactive phosphorus. The former can be controlled mainly by controlling the soil erosion, the latter by controlling the potentially plant available soil phosphorus reserves. In this study, we solve analytically the privately and socially optimal steady state fertilisation levels and vegetative filter strip allocations, and design and analyse alternative instruments to sustain these allocations. We conduct an empirical application for an agricultural area of 37 parcels of one hectare, varying in their slopes and shapes. We find that the first-best taxes can be equivalently base on fertilisation or on soil phosphorus, but basing them directly on soil phosphorus might reduce the information burden of the regulator. We also find that the vegetative filter strip allocations are strongly differentiated, and that the second-best vegetative filter strip subsidies can be relatively easily be adjusted to sustain almost the first-best allocations.
Subject: Dynamic programming
phosphorus fertilization
vegetative filter strips

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