An Empirical Analysis of the Relative Efficiency of Policy Instruments to Reduce Nitrate Water Pollution in the U.S. Southern High Plains

Abstract

This paper develops a modeling framework for evaluating alternative water quality protection policies. The framework integrates the EPIC‐PST crop growth/chemical transport model and a mathematical programming model. The framework is applied to the evaluation of four water quality policies in the southern high plains of the United States:• restrictions on per‐acre nitrogen use,• taxes on nitrogen use,• taxes on irrigation water use, and• incentives to convert conventional irrigation systems to modem irrigation technology. The results indicate that producers would make a variety of adjustments in responding to these policies. Important responses might include reductions in nitrogen and water use, crop substitution, removal of land from crop production and conversion from irrigated to dryland production. These four policies are evaluated based on changes in farm income and social welfare. The irrigation system conversion incentive clearly outperforms other policies from both society's and producers points of view. Producers would prefer nitrogen use restrictions to nitrogen or water use taxes because farm income would be reduced less under the restrictions than under the taxes. Nitrogen use taxes, however, are more desirable than nitrogen use restrictions from society's point of view.