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A micro-dynamic model of a livestock-crop operation is calibrated with data from a representative dairy in California's Central Valley and is used to predict the effects of regulations designed to reduce nitrogen emissions. Policy simulations clarify the importance of dynamic elements and demonstrate three main results: (1) dairies are unresponsive to pollution charges unless they are relatively large and financially burdensome for farmers; (2) regulations aimed at controlling only nitrate leaching will cause significant increases in ammonia emissions; and (3) mitigating both nitrogen problems with emissions taxes involves substantial reductions in both herd size and farm profit.


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