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Spatially Optimal Steady State Phosphorus Policies in Crop Production

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Title: Spatially Optimal Steady State Phosphorus Policies in Crop Production
Author: Iho, Antti
Belongs to series: Discussion Papers - 25
ISSN: 1459-9996
Abstract: We analyze optimal phosphorus fertilization and erosion control policies in a spatial, dynamic, stationary framework. First-best instruments to incentivize farmers to undertake the socially optimal choices are analyzed both analytically and empirically. The empirical application is conducted for a cereal production area of 4 hectares. We find that taxes on phosphorus use can equivalently be levied either on fertilizer use or directly on soil phosphorus. However, tax on soil phosphorus is simpler and poses lower information requirements for the social planner. Also, the potential differences in socially and privately applied discount rates are shown to affect optimal tax rates substantially.
URI: http://hdl.handle.net/1975/8329
Date: 2008

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