50
E. Romstad
(Van Es et al. 2004). At the first glance, such findings would
lend support to applying CAC regulations for many timing decision. However, there is also substantial variability
on phosphorus leaching owing to soil type, which implies
that the environmental benefits from a time ban on manure
spreading could vary. Hence, timing restrictions could also
be subject to soil type. This would reduce the variability in
environmental benefits and hence, also make such timing restrictions less costly.
The disadvantage of introducing a soil type adjustment
to a time ban is that the costs of administering the regulation would increase as reports about manure spreading outside the spreading time window needs to be checked—does
spreading take place on a soil type exempt from the ban or
not?
To some extent, one may claim that some of the timing
issues should sort themselves out. The main reason for this
(bold) claim is that the application of manure or fertilizers
in banned time periods contributes little to plant growth.
Consequently, valuable nutrients are wasted. A caveat in this
connection relates to manure treatment—where insufficient
manure storage may still make it profitable for farmers to
spread manure in periods where impacts on plant growth are
limited and leaching higher. Under such settings, the problem
is insufficient storage and directing regulations toward this is
a more direct approach than timing restrictions. A modeling
study by Vatn et al. (1997) shows that requiring sufficient
manure storage reduces problems of manure spreading in
unsuitable time periods in Norway, but at substantial costs
to farmers who either have to expand their storage or reduce
their number of livestock.
4.5.2 Production Method Procedures
The second group of procedural regulations—mandating
certain production methods—is well illustrated by tillage
requirements. Unlike timing procedures, the possibilities of
using incentive-based (IB) regulations like subsidies appear
far greater for this type of problems. As mentioned previously, the use of such payments allows farmers greater flexibility in their production decisions and hence also lower costs.
An additional benefit of IB regulations is that payments can
be adjusted over time as farmers gain experience or new and
improved technologies become available.
Major drawbacks with subsidies are that they strain public
funds and that they are inconsistent with widely held notions
about fairness—farmers are paid to reduce their emissions
while in other sectors of the economy, polluters pay unless
they clean up. Cross-compliance resolves some of the funding and fairness issues. The basic idea of cross-compliance is
that farmers who do not adopt desired practices or continue
with undesired farming methods lose some of their other
farm payments. Since the mid-1990s and until recently, crosscompliance has been an important part of the common agricultural policy of the EU. Trade issues and allegations under
the WTO agreement about unjustified farm supports were
important drivers for the EU adoption of cross-compliance.
Latacz-Lohmann and Hodge (2003) review the performance of the EU cross-compliance policy. They found that
while better than subsidies on fairness and strain on public
funds, cross-compliance policies had poor spatial targeting and suffered from a lack of clarity between environmental and income support objectives. In an early simulation study on erosion control measures, Ervin et al. (1984)
reached many of the conclusions—cross-compliance policies are not well targeted and there were substantial distributive concerns as large farm operations benefited more
than smaller operations. Although appealing at first sight,
there are therefore many troublesome features of crosscompliance policies. In the revised common agricultural
policy, the EU is therefore reducing its emphasis on crosscompliance.
It should also be noted that there has been substantial
technological progress in the last 10--15 years, which has
made reduced tillage as profitable as conventional tillage, in
particular, for larger farm operations. The emergence of agricultural entrepreneurs has made many of these technological
benefits available even for smaller farm operations.
4.5.3 Offsetting Procedures
Offsetting procedures like vegetation zones, buffer strips,
and restoration of wetlands have gained increased attention.
They can be implemented using CAC or IB regulations. In
the IB variant, farmers are offered payments equal to the forfeited crop value of using land for offsets. On the eutrophication side, all these measures perform well in reducing nutrient leaching under stochastic weather events, serving as an
end-of-pipe fix, and they are reasonably low cost (Byström
et al. 2000). Additional benefits from such land use policies include biodiversity and the scenic value of landscapes
(Gren et al. 1994), which partly deals with arguments that
such offsets distort trade in an unfair manner. Land use policies have gained increased attention for controlling nutrient
leakages (Hodge 2001).
4.5.4 Input Factor-Oriented Regulations
Input factor regulations come in two variants, CAC and IB.
The IB form of input factor regulations are in the form of
taxes on inputs that are perceived to contribute to nutrient
leaching. Such taxes entail multiple benefits:
• They promote more efficient use of the taxed input and
their close substitutes (like manure in the case of nitrogen
fertilizer taxes). This increases their net benefits.
E. Romstad
(Van Es et al. 2004). At the first glance, such findings would
lend support to applying CAC regulations for many timing decision. However, there is also substantial variability
on phosphorus leaching owing to soil type, which implies
that the environmental benefits from a time ban on manure
spreading could vary. Hence, timing restrictions could also
be subject to soil type. This would reduce the variability in
environmental benefits and hence, also make such timing restrictions less costly.
The disadvantage of introducing a soil type adjustment
to a time ban is that the costs of administering the regulation would increase as reports about manure spreading outside the spreading time window needs to be checked—does
spreading take place on a soil type exempt from the ban or
not?
To some extent, one may claim that some of the timing
issues should sort themselves out. The main reason for this
(bold) claim is that the application of manure or fertilizers
in banned time periods contributes little to plant growth.
Consequently, valuable nutrients are wasted. A caveat in this
connection relates to manure treatment—where insufficient
manure storage may still make it profitable for farmers to
spread manure in periods where impacts on plant growth are
limited and leaching higher. Under such settings, the problem
is insufficient storage and directing regulations toward this is
a more direct approach than timing restrictions. A modeling
study by Vatn et al. (1997) shows that requiring sufficient
manure storage reduces problems of manure spreading in
unsuitable time periods in Norway, but at substantial costs
to farmers who either have to expand their storage or reduce
their number of livestock.
4.5.2 Production Method Procedures
The second group of procedural regulations—mandating
certain production methods—is well illustrated by tillage
requirements. Unlike timing procedures, the possibilities of
using incentive-based (IB) regulations like subsidies appear
far greater for this type of problems. As mentioned previously, the use of such payments allows farmers greater flexibility in their production decisions and hence also lower costs.
An additional benefit of IB regulations is that payments can
be adjusted over time as farmers gain experience or new and
improved technologies become available.
Major drawbacks with subsidies are that they strain public
funds and that they are inconsistent with widely held notions
about fairness—farmers are paid to reduce their emissions
while in other sectors of the economy, polluters pay unless
they clean up. Cross-compliance resolves some of the funding and fairness issues. The basic idea of cross-compliance is
that farmers who do not adopt desired practices or continue
with undesired farming methods lose some of their other
farm payments. Since the mid-1990s and until recently, crosscompliance has been an important part of the common agricultural policy of the EU. Trade issues and allegations under
the WTO agreement about unjustified farm supports were
important drivers for the EU adoption of cross-compliance.
Latacz-Lohmann and Hodge (2003) review the performance of the EU cross-compliance policy. They found that
while better than subsidies on fairness and strain on public
funds, cross-compliance policies had poor spatial targeting and suffered from a lack of clarity between environmental and income support objectives. In an early simulation study on erosion control measures, Ervin et al. (1984)
reached many of the conclusions—cross-compliance policies are not well targeted and there were substantial distributive concerns as large farm operations benefited more
than smaller operations. Although appealing at first sight,
there are therefore many troublesome features of crosscompliance policies. In the revised common agricultural
policy, the EU is therefore reducing its emphasis on crosscompliance.
It should also be noted that there has been substantial
technological progress in the last 10--15 years, which has
made reduced tillage as profitable as conventional tillage, in
particular, for larger farm operations. The emergence of agricultural entrepreneurs has made many of these technological
benefits available even for smaller farm operations.
4.5.3 Offsetting Procedures
Offsetting procedures like vegetation zones, buffer strips,
and restoration of wetlands have gained increased attention.
They can be implemented using CAC or IB regulations. In
the IB variant, farmers are offered payments equal to the forfeited crop value of using land for offsets. On the eutrophication side, all these measures perform well in reducing nutrient leaching under stochastic weather events, serving as an
end-of-pipe fix, and they are reasonably low cost (Byström
et al. 2000). Additional benefits from such land use policies include biodiversity and the scenic value of landscapes
(Gren et al. 1994), which partly deals with arguments that
such offsets distort trade in an unfair manner. Land use policies have gained increased attention for controlling nutrient
leakages (Hodge 2001).
4.5.4 Input Factor-Oriented Regulations
Input factor regulations come in two variants, CAC and IB.
The IB form of input factor regulations are in the form of
taxes on inputs that are perceived to contribute to nutrient
leaching. Such taxes entail multiple benefits:
• They promote more efficient use of the taxed input and
their close substitutes (like manure in the case of nitrogen
fertilizer taxes). This increases their net benefits.