Optimal Regional Policies to Control Manure Nutrients to Surface and GroundWaters

Current day large animal facilities generate more manure than they need on their own feed production areas. Excessive nutrient applications deteriorate groundwater (nitrogen) and sur- face water quality (nitrogen and/or phosphorus). Due to differences in environmental and eco- nomic characteristics, adjacent regions may have differing objectives for nitrogen and phos- phorus abatement. We postulate an analytical model of upstream agricultural and downstream recreational regions, and analyze optimal policies that consider both regions. We show that de- pending on the environmental and economic characteristics, tightening upstream regulation with respect to loading of one nutrient only might increase the downstream loading of the other. As the prevailing regulatory tool for livestock production is the Nutrient Management Plan based on nitrogen standard; and because livestock production is the main source of man-made nutrient loads to environment, the model is of high importance. Our model contributes to literature by i) differentiating (the impacts of) manure regulation between the livestock farm and the adjacent crop production farm ii) showing how this differentiation is carried over to relative and absolute amounts of nitrogen and phosphorus loading due to changes in nutrient application and uptake; and due to changes in application areas iii) allowing for regional differences in abatement objec- tives.