IMPACT OF NITROGEN TAX ON NITROGEN USE IN LITHUANIA

Abstract

The use of nitrogen fertilizers inevitably causes external negative effects that can be mitigated by various means. This study focusses on tax of mineral nitrogen fertilizer. A study “Farmers' Response to Rise in Mineral Fertilizer Price” investigates the potential response of farmers to a possible tax on mineral nitrogen fertilizer use in Lithuania. Used survey method of data collection, therefore, a questionnaire was conducted to ask farmers, how they would adapt their fertilizer practice to a mineral nitrogen fertilizer tax. Research object: the impact of the nitrogen tax on nitrogen use. Research aim: to identify farmers’ response to changed prices for nitrogen fertilizer. Farmer’s responds were used to model the reaction of farmers to a tax. The obtained results showed a negative reaction in terms of mineral nitrogen fertilizer use to the rise in mineral fertilizer price. Furthermore, farmers tended to switch to crops with lower nitrogen fertilizer requirements. Price elasticity of demand for mineral fertilizers founded inelastic.