Cost-efficient nutrient load reduction in agriculture. A short-run perspective on reducing nitrogen and phosphorus in Finland

Abstract

This dissertation examines the economic efficiency of nutrient abatement measures in agriculture, focusing on the case of Finland. The thesis consists of an introductory article and four separate studies, which consider the nutrient abatement problem from different angles. Nutrient abatement was put on the environmental policy agenda decades ago because of the adverse impacts of eutrophication in surface waters, and remains there as water quality, in Europe and elsewhere, has not reached satisfactory levels. In particular, the Water Framework Directive of the European Union requires the member states to reach a good surface water status. In Finland, agriculture accounts for a major share of nutrient loads and could play an important role in achieving the water quality targets. However, the current environmental policy, relying on subsidies paid to farmers, has not met the abatement targets set for agriculture. As the European farm subsidy regime is shifting, new environmental policies could be adopted. For identifying the policies that would reach water protection targets, more information on costs-efficient measures is required. The objective of this dissertation is to estimate nutrient abatement costs in agriculture and to rank the measures in terms of cost-efficiency. The focus is on the measures that have been considered in the agri-environmental support scheme. The dissertation relies on empirical numerical models that are based on microeconomic theory. Numerical representative farm models were developed for dairy and crop production. Abatement costs were found to fluctuate, depending on the target abatement levels, environmental and market conditions as well as production structure of agriculture. It is argued that reaching the national abatement targets, set by the government for 2015, is unlikely; extending the measures currently common in Finland is insufficient. For such a high abatement targets, policies should aim at increasing the share of green fallow, which can be effective in cutting down both nitrogen and phosphorus loads and increases biodiversity.

Tämän väitöksen tavoitteena on arvioida ravinteiden vähentämisen kustannuksia suomen maataloudessa ja asettaa vähennyskeinot järjestykseen kustannustehokkuuden perusteella. Tarkastelun pääpaino on maatalouden ympäristö­tukijärjestelmän toimenpiteillä. Väitös nojaa mikrotalousteorian pohjalta laadittuihin empiiriseen aineistoon perustuviin laskentamalleihin. Tutkimuksessa ohjelmoitiin maito ja peltoviljely -tuotantosuuntia edustavat tilamallit. Tuloksista käy ilmi että ravinnekuormituksen vähentämisen kustannukset vaihtelevat riippuen vähennystasoista, ympäristöllisistä tekijöistä, markkinatilanteesta ja tuotantosuunnista. Kansallisten maataloudelle vuoteen 2015 asetettujen vähennystavoitteiden saavuttaminen nykyisten keinojen avulla vaikuttaa epätodennäköiseltä. Kun vähennystavoitteet on asetettu korkealle, niiden saavuttamiseksi tähtäävän politiikan kannattaisi lisätä viherkesantojen osuutta, sillä siten on tehokasta vähentää sekä typpeä että fosforia ja toisaalta suojella biodiversiteettiä.