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Using field-level data on cropping patterns and a survey of 7,500 farmers in western Lake Erie basin, we estimate farmers’ heterogeneous derived demand for phosphorus fertilizer that vary by both farmer and field characteristics. We combine these results with a spatially-explicit hydrological model to quantify the impacts of a fertilizer tax on fertilizer application rates, total and dissolved reactive phosphorus loadings. Finally, an efficiency frontier is constructed to quantify the trade-offs among predicted changes in agricultural profits, fertilizer application rates, and phosphorus loadings under a uniform fertilizer tax versus one that is targeted either spatially or based on farmer characteristics.


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