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Environmental and Resource Economics

, Volume 69, Issue 1, pp 1–21 | Cite as

Impact of Spatial Differentiation of Nitrogen Taxes on French Farms’ Compliance Costs

  • Anna LungarskaEmail author
  • Pierre-Alain Jayet
Article

Abstract

The spatial differentiation of input-based pollution fees should in theory decrease compliance costs in the case of nitrate pollution of water bodies from agriculture because both the damage and the compliance costs vary over space. However, the empirical evidence in the literature does not agree on the extent of the potential savings from differentiation. We address this issue in the case of France, using a mathematical programming model of agricultural supply (AROPAj). The modeling approach used accounts for the spatial diversity of nitrate pollution and the heterogeneity of farming systems. Our results reveal the efficiency gains from differentiating pollution fees among polluters and water bodies. For instance, firm-specific and water body-specific taxes represent respectively 5.8 and 32.5 % of farmers’ gross margin in terms of compliance costs, whereas a uniform policy at the river-basin district or national level leads to major economic losses and abandonment of the agricultural activity. These results stem from the lower tax rates faced by farmers in less polluted areas, for scenarios based on spatial differentiation. Our estimates suggest that realistic regulation via input-based pollution fees should be differentiated in order to significantly reduce the financial burden on farmers of conforming to predefined pollution levels. Some potential adverse effects related to input-based taxation and land use change call for additional fine-scale nitrogen pollution regulation (e.g. limitations on crop switching).

Keywords

Fertilizer Livestock Nitrate Pollution Scale Tax Water 

Abbreviations

EU

European Union

WFD

Water Framework Directive

NO\(_3\)

Nitrate

N

Nitrogen

NPK

Nitrogen (N), Phosphorus (P) and Potassium (K)

GIS

Geographical Information Systems

RBD

River Basin District

CAP

Common Agricultural Policy

NVZ

Nitrate Vulnerable Zone

FADN

Farm Accountancy Data Network

AG

Adour-Garonne

AP

Artois-Picardie

LB

Loire-Bretagne

SN

Seine-Normandie

RM

Rhin-Meuse

RMC

Rhône-Méditerranée et Corse

SPS

Single Payment Scheme

FOC

First Order Condition

IDPR

Network Persistence and Development Index

BRGM

Bureau de recherches géologiques et miniéres

Notes

Acknowledgments

We are thankful to the co-editor Céline Nauges and the anonymous reviewers for their extremely useful comments, which have greatly contributed to the revised version of the manuscript. We would also like to thank Cyril Bourgeois and Athanasios Petsakos for their valuable help. Anna Lungarska acknowledges funding from French National Research Agency (ANR) under the ORACLE project (ANR-10-CEPL-011) and from the PIREN-Seine research program.

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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  1. 1.Economie Publique, INRA, AgroparistechUniversité Paris-SaclayThiverval-GrignonFrance

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