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Abatement costs of alternative tax systems to regulate agricultural nitrogen loss

Author

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  • Jan Christensen
  • Lars Hansen

Abstract

Nitrogen emissions from agriculture are considered an important environmental problem in Denmark, motivating consideration of different tax schemes as regulatory instruments. In this article, input/output behavior of Danish pig farms is estimated with farm-level panel data using the dual profit function approach, and emission functions for nitrogen loss are derived. With the estimated model, we are able to compare cost effectiveness of a comprehensive Pigouvian tax on nitrogen loss with simpler tax schemes that focus on nitrogen use. We find that both a fertilizer tax and a feed tax generate substantially higher abatement costs than Pigouvian incentives. A tax on nitrogen in all inputs will, on the other hand, only generate a marginal increase in abatement costs. These results are of interest because a tax on all nitrogen inputs is easier to implement than a comprehensive nitrogen loss tax. Our result implies that even a limited administrative cost advantage may make the input tax preferable to implementing Pigouvian incentives through a nitrogen loss tax. Copyright Springer Japan 2005

Suggested Citation

  • Jan Christensen & Lars Hansen, 2005. "Abatement costs of alternative tax systems to regulate agricultural nitrogen loss," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(2), pages 53-74, June.
    • Handle: RePEc:spr:envpol:v:7:y:2005:i:2:p:53-74
    DOI: 10.1007/BF03353945
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    References listed on IDEAS

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    1. Hansen, Lars Gårn, 1999. "A Deposit-Refund System Applied to Nitrogen Emissions from Agriculture," MPRA Paper 26664, University Library of Munich, Germany.
    2. Hallam, David & Zanoli, Raffaele, 1993. "Error Correction Models and Agricultural Supply Response," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 20(2), pages 151-166.
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    6. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, September.
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    10. Isabelle Piot-Lepetit & Dominique Vermersch, 1998. "Pricing organic nitrogen under the weak disposability assumption : an application to the French pig sector," Post-Print hal-02299654, HAL.
    11. Isabelle Piot‐Lepetit & Dominique Vermersch, 1998. "Pricing Organic Nitrogen Under The Weak Disposability Assumption: An Application to the French Pig Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(1), pages 85-99, March.
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    Cited by:

    1. Innocent Bakam & Robin Matthews, 2009. "Emission trading in agriculture: a study of design options using an agent-based approach," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 14(8), pages 755-776, December.

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    More about this item

    Keywords

    Non-point source emission; incentive regulation;

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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