In this paper, we apply mathematical programming methods to account explicitly for restrictions on land application of nutrients from large dairy operations in New York and to analyze the effects on measured outcomes of farm management adjustments to the nutrient policy and to recent changes in relevant agricultural prices. Based on a set of unique data, we assess the effects of new regulations for nutrient management by confined animal feeding operations (CAFOs) on farm income, land use, manure and fertilizer management, and environmental quality for an important dairy production region in New York. Our mathematical methods also allow us to make distinctions between the value of land for production and as a manure disposal site so that we can assess the differential effects of the land nutrient application standards on the economic value of land. The results indicate that adjustments to dairy rations in response to the current high prices of traditional feed ingredients lead to increased nitrogen and phosphorus content in dairy waste. In addition, crop nutrient applications from manure far exceed the critical uptake levels for optimum yield and increase the risks of nutrient loading to the environment. In a related paper, we demonstrate that while the CAFO regulations correct for this problem, the reductions in the risks of nutrient loadings could be accompanied by losses to farm income. Our current application to an important dairy production region in Western New York further buttresses this point. We also demonstrate that farm net revenue is sensitive to the availability of nearby land suitable for manure disposal. Since the new nutrient restrictions require that about half of the manure produced on the dairy farms in the region be transported off-site for disposal, crops with higher potential to absorb field nutrients are more attractive than would otherwise be the case. The shadow prices for CAFO land with low soil phosphorus increase, reflecting not only the value of land for crop production but also its value as a site for manure disposal. These shadow prices reflect what the CAFOs could pay for additional land, and this price falls as the distance to the CAFO increases.


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