52
E. Romstad
produce more accurate impact estimates. For biological systems, such models may also be used to decompose overall environmental impacts into natural and man-made effects. The
basic idea of the paper is to offer farmer contracts to reduce
nonpoint source with various price tags attached. Rather than
requiring certain practices, a farmer who accepts the contract
is willing to let his/her runoffs be calculated by a model based
on the measures the farmer reports as implemented, which
then leads to farmer paying based on the calculated runoffs
from the model. Two types of contracts are envisioned: (1)
where the farmer is held responsible for year-specific calculated runoffs (the most demanding contract type that triggers
a higher upfront payment) and (2) where the farmer is held responsible for average calculated runoffs (the least demanding
contract type with a lower upfront payment). Models under
the Eutropia research project (http://www.mn.uio.no/kjemi/
english/research/projects/eutropia/index.html) will be used to
test the feasibility of the proposed mechanism.
4.5.9 Computable Nonpoint Source Integrated
Modeling
In the last 20–30 years, several nonpoint emission projects
have been initiated where economic modeling has been integrated with natural science models. This brief overview
covers some of those models that have appeared repeatedly
in the literature. There are two main types of models, farmlevel (micro) models and sector models. Both modeling approaches have the advantages and disadvantages.
The strong side of farm-level (micro) models is their close
interaction with the natural science models (nutrient turnover, erosion, hydrology, and plant growth), which makes
these models well suited as a meeting platform between natural scientists and economists. Their main weak side is that
they do not explicitly model sector-wide changes. The main
reason for this is that farms do not change type, i.e., a dairy
farm remains a dairy farm throughout the modeling exercise.
EcEcMod (Vatn et al. 1997) and its follow-up, EcEcMod 2.0
(Vatn et al. 2006) are well-documented examples of this type
of models. Economics modeling techniques involve a combination of nonlinear, mixed integer, and linear programming, where optimization takes place at the farm level, crop
selection is endogenous (among allowable crops for that
farm type), and manure storage and handling is consistent
with tillage practices for model farms with livestock. The
EcEcMod modeling system is no longer maintained.
The strong side of sector models is that they are able to
endogenously capture changes in the agricultural sector.
Their main weak side is that the integration with the natural sciences is weaker than for the farm models. Schou et al.
(2000) is an example of such a model. Several sector models
have been fitted to project sector figures of nutrient use to
model farms. CAPRI (Leip et al. 2011) is one example of
this approach.
The EU project Seamless combined the rich model interface of farm-level (micro) models and the endogenous treatment of farm types in sector models. Although the up- and
downscaling issues of such a modeling exercise have been
solved (Pérez Domínguez et al. 2009), the availability of detailed farm models at the European level was too limited to
really test the procedure. This work continues through the
Seamless Association (http://www.seamlessassociation.org/).
References
Batie SS (2008) Wicked problems and applied economics. Americ J
Agricul Econom 90(5):1176–1191
Boxall PC, Adamowicz WL, Swait J, Williams M, Louvieree J (1996)
A comparison of stated preference methods for environmental valuation. Ecol Econ 18(3):243–253
Braden JB, Segerson K (1993) Information problems in the design of
nonpoint-source pollution policy. In: Russell CS, Shogren JF (eds)
Theory, modeling and experience in the management of nonpointsource pollution. Kluwer Academic, Boston
Brown G, Mendelsohn R (1984) The hedonic travel cost method. Rev
Econ Stat 66(3):427–433
Byström O, Andersson H, Gren I-M (2000) Economic criteria for using
wetlands as nitrogen sinks under uncertainty. Ecol Econ 35(1):35–
45
Diamond PA, Hausmann JA (1994) Contingent valuation: is some number better than no number? J Econ Perspect 8(4):45–64
Ervin DE, Hefferman WE, Green GP (1984) Cross-compliance for erosion control: anticipating efficiency and distributive impacts. Am J
Agric Econ 66(3):273–278
Gibbons R (1997) An introduction to applicable game theory. J Econ
Perspect 11(1):127–149
Gren I-M, Folke C, Turner K, Batemen I (1994) Primary and secondary values of wetland ecosystems. Environ Resour Econ 4(1):55–74
Hanemann WM (1994) Valuing the environment through contingent
valuation. J Econ Perspect 8(4):19–43
Hanley N (1990) The economics of nitrate pollution. Europ Rev Agr
Econ 7(2):129–151
Hansen LG, Romstad E (2007) Nonpoint source regulation—a selfreporting mechanism. Ecol Econ 62(3–4):529–537
Hodge I (2001) Beyond agri-environmental policy: towards an alternative model of rural environmental governance. Land Use Policy
18(2):99–111
Holmstrom B (1979) Moral hazard and observability. Bell J Econ
10(1):74–79
Latacz-Lohmann U, Hodge I (2003) European agri-environmental
policy for the 21st century. Aust J Agr Resour Econ 47(1):123–139
Leip A, Britz W, de Vries W, Weiss F (2011) Farm, land, and soil nitrogen budgets for agriculture in Europe calculated with CAPRI. Environ Pollut 159(11):3243–3253
McSweeny WT, Shortle JS (1989) Reducing nutrient application rates
for water quality protection in intensive livestock areas policy
implications of alternative producer behaviour. Northeastern J Agr
Resour Econ 18:1–11
Oenema O (2004) Governmental policies and measures regulating
nitrogen and phosphorus from animal manure in European agriculture J Anim Sci 82(E-suppl):E196–206
E. Romstad
produce more accurate impact estimates. For biological systems, such models may also be used to decompose overall environmental impacts into natural and man-made effects. The
basic idea of the paper is to offer farmer contracts to reduce
nonpoint source with various price tags attached. Rather than
requiring certain practices, a farmer who accepts the contract
is willing to let his/her runoffs be calculated by a model based
on the measures the farmer reports as implemented, which
then leads to farmer paying based on the calculated runoffs
from the model. Two types of contracts are envisioned: (1)
where the farmer is held responsible for year-specific calculated runoffs (the most demanding contract type that triggers
a higher upfront payment) and (2) where the farmer is held responsible for average calculated runoffs (the least demanding
contract type with a lower upfront payment). Models under
the Eutropia research project (http://www.mn.uio.no/kjemi/
english/research/projects/eutropia/index.html) will be used to
test the feasibility of the proposed mechanism.
4.5.9 Computable Nonpoint Source Integrated
Modeling
In the last 20–30 years, several nonpoint emission projects
have been initiated where economic modeling has been integrated with natural science models. This brief overview
covers some of those models that have appeared repeatedly
in the literature. There are two main types of models, farmlevel (micro) models and sector models. Both modeling approaches have the advantages and disadvantages.
The strong side of farm-level (micro) models is their close
interaction with the natural science models (nutrient turnover, erosion, hydrology, and plant growth), which makes
these models well suited as a meeting platform between natural scientists and economists. Their main weak side is that
they do not explicitly model sector-wide changes. The main
reason for this is that farms do not change type, i.e., a dairy
farm remains a dairy farm throughout the modeling exercise.
EcEcMod (Vatn et al. 1997) and its follow-up, EcEcMod 2.0
(Vatn et al. 2006) are well-documented examples of this type
of models. Economics modeling techniques involve a combination of nonlinear, mixed integer, and linear programming, where optimization takes place at the farm level, crop
selection is endogenous (among allowable crops for that
farm type), and manure storage and handling is consistent
with tillage practices for model farms with livestock. The
EcEcMod modeling system is no longer maintained.
The strong side of sector models is that they are able to
endogenously capture changes in the agricultural sector.
Their main weak side is that the integration with the natural sciences is weaker than for the farm models. Schou et al.
(2000) is an example of such a model. Several sector models
have been fitted to project sector figures of nutrient use to
model farms. CAPRI (Leip et al. 2011) is one example of
this approach.
The EU project Seamless combined the rich model interface of farm-level (micro) models and the endogenous treatment of farm types in sector models. Although the up- and
downscaling issues of such a modeling exercise have been
solved (Pérez Domínguez et al. 2009), the availability of detailed farm models at the European level was too limited to
really test the procedure. This work continues through the
Seamless Association (http://www.seamlessassociation.org/).
References
Batie SS (2008) Wicked problems and applied economics. Americ J
Agricul Econom 90(5):1176–1191
Boxall PC, Adamowicz WL, Swait J, Williams M, Louvieree J (1996)
A comparison of stated preference methods for environmental valuation. Ecol Econ 18(3):243–253
Braden JB, Segerson K (1993) Information problems in the design of
nonpoint-source pollution policy. In: Russell CS, Shogren JF (eds)
Theory, modeling and experience in the management of nonpointsource pollution. Kluwer Academic, Boston
Brown G, Mendelsohn R (1984) The hedonic travel cost method. Rev
Econ Stat 66(3):427–433
Byström O, Andersson H, Gren I-M (2000) Economic criteria for using
wetlands as nitrogen sinks under uncertainty. Ecol Econ 35(1):35–
45
Diamond PA, Hausmann JA (1994) Contingent valuation: is some number better than no number? J Econ Perspect 8(4):45–64
Ervin DE, Hefferman WE, Green GP (1984) Cross-compliance for erosion control: anticipating efficiency and distributive impacts. Am J
Agric Econ 66(3):273–278
Gibbons R (1997) An introduction to applicable game theory. J Econ
Perspect 11(1):127–149
Gren I-M, Folke C, Turner K, Batemen I (1994) Primary and secondary values of wetland ecosystems. Environ Resour Econ 4(1):55–74
Hanemann WM (1994) Valuing the environment through contingent
valuation. J Econ Perspect 8(4):19–43
Hanley N (1990) The economics of nitrate pollution. Europ Rev Agr
Econ 7(2):129–151
Hansen LG, Romstad E (2007) Nonpoint source regulation—a selfreporting mechanism. Ecol Econ 62(3–4):529–537
Hodge I (2001) Beyond agri-environmental policy: towards an alternative model of rural environmental governance. Land Use Policy
18(2):99–111
Holmstrom B (1979) Moral hazard and observability. Bell J Econ
10(1):74–79
Latacz-Lohmann U, Hodge I (2003) European agri-environmental
policy for the 21st century. Aust J Agr Resour Econ 47(1):123–139
Leip A, Britz W, de Vries W, Weiss F (2011) Farm, land, and soil nitrogen budgets for agriculture in Europe calculated with CAPRI. Environ Pollut 159(11):3243–3253
McSweeny WT, Shortle JS (1989) Reducing nutrient application rates
for water quality protection in intensive livestock areas policy
implications of alternative producer behaviour. Northeastern J Agr
Resour Econ 18:1–11
Oenema O (2004) Governmental policies and measures regulating
nitrogen and phosphorus from animal manure in European agriculture J Anim Sci 82(E-suppl):E196–206