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An Economic Analysis of Groundwater Contamination From Agricultural Nitrate Emissions in Southern Ontario

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  • Giraldez, Cesareo
  • Fox, Glenn

Abstract

This paper analyses the costs and benefits of controlling groundwater pollution from nitrogen fertilizer. The Village of Hensall, where nitrate concentrations have been observed above 10 mg/1 in recent years, was selected as the study site. The CREAMS simulation model was used to estimate the effect of reducing nitrogen fertilizer on nitrate leaching and consequently on nitrate groundwater pollution. Estimates of the value of groundwater were obtained from the literature and used to calculate the off-farm cost of groundwater contamination. This procedure resulted in a wide range of values for the benefits of reducing nitrate pollutionJEstimated annual benefits of improved groundwater quality ranged from less than $1000.00 to more than $30,000.00 for the village. The off­farm benefits of nitrate groundwater pollution abatement outweigh the cost of using bottled water and in this case the on-farm cost of reducing nitrogen fertilizer. Placing a tax on nitrogen fertilizer would reduce the level of nitrogen applications, but the farm cost of compliance to a nitrogen tax policy is substantially higher than the compliance cost under a regulatory policy.

Suggested Citation

  • Giraldez, Cesareo & Fox, Glenn, 1994. "An Economic Analysis of Groundwater Contamination From Agricultural Nitrate Emissions in Southern Ontario," Department of Agricultural Economics and Business 258811, University of Guelph.
    • Handle: RePEc:ags:uguaeb:258811
    DOI: 10.22004/ag.econ.258811
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    References listed on IDEAS

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    1. Edwards, Steven F., 1988. "Option prices for groundwater protection," Journal of Environmental Economics and Management, Elsevier, vol. 15(4), pages 475-487, December.
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    1. Fox, Glenn, 1997. "Environmental Policy Harmonization: Comment," Proceedings of the 3rd Agricultural and Food Policy Systems Information Workshop, 1997: Harmonization\Convergence\Compatibility in Agriculture and Agri-Food Policy: Canada, United States and Mexico 16892, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.

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