The aim of this paper is to identify optional ways of preventing NO3-levels from rising within Croatian farming systems, and the implications from the viewpoint of the manager. More specifically, the purpose is to 1) Determine whether Croatian farmers exceed profit maximising levels of N-fertilizer use in maize cultivation, and its possible influence on NO3 - N-levels. 2) To estimate the marginal abatement cost (MAC), at the farm level, of reducing NO3-N leaching through the following instruments: a tax on optimal N-doses, a product tax and an N-fertiliser quota and a requirement for all instruments to correspond to the same abatement level. Based on. N-response experiment from feld trial for maize N-response curves were estimated. A sample of 20 family farms was used for calculating intensity, nutrient content in manure, and the prices paid for N and obtained for maize. Profit maximising doses from the field trials were compared with the use of nutrients on farms. An effluent production function was estimated based on experiments with NO3-N contents in lysimeter water for the same treatment levels as those in the N-response experiments. The results indicate that farmers use higher than optimal levels of N-fertilisers, if the manure is fully accounted for. In this case the estimated NO3-N/1 level in groundwater is 162-192% higher than the critical level stipulated by the Nitrate Directive. Neglecting the N-content in manure shows close to profit maximising nutrient levels. At this fertilising level the estimated NO3/1 is approximately 62 mg NO3/1 or clearly higher that the critical level stipulated by the nitrate directive (50 mg NO3/1). Through any of the three instruments a 76% NO3-leaching reduction could be obtained. It was concluded, however, that the quota has the lowest MAC (0.92 euro/mg NO3/1) followed by the N-fertiliser tax (3.65 euro/mg NO3/1), and the product tax comes in third place (9.32 euro/mg NO3/1). Management practices that may increase yield levels, and correspondingly NO3-leaching in the short and long run, were also identified. One way to achieve a quick improvement might be a system of cross compliance, stipulating a code of good agricultural practices.


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