Farmers’ Costs of Reducing Nitrogen Pollution Are High According to ISET’s Pati Mamardashvili
Wednesday, 06 July, 2016

ISET’s Pati Mamardashvili and her co-authors Grigorios Emvalomatis (University of Dundee) and Pierrick Jan (Agroscope, Switzerland) have recently published their research in the Journal of Agricultural and Resource Economics (JARE). The JARE is a peer-reviewed journal that publishes creative and scholarly economic studies in the fields of agriculture, natural resources, and other related areas. The Journal is published on behalf of the Western Agricultural Economics Association.

The published study analyzes the environmental performance of Swiss dairy farms and estimates farmers’ marginal abatement cost for nitrogen pollution. The production technology of farms is modeled in a way that allows for the simultaneous expansion of desirable outputs (e.g., milk) and

the reduction of environmentally harmful by-products (e.g., nitrogen pollution) of production. The analyses are based on the book-keeping data of 507 dairy farms in the mountainous regions of Switzerland. This is a cross-sectional sample from the Swiss Farm Accountancy Data Network.

The obtained quantitative information on farmers’ cost of reducing nitrogen pollution could be used in designing agri-environmental policy measures for Swiss agriculture. High variability of abatement cost across farmers suggests a rationale for using market-based instruments such as a levy on nitrogen surplus. However, the results also show that farmers’ costs for reducing nitrogen pollution are quite high in Switzerland. The mean value of abatement costs with respect to milk output is equal to 28 Swiss francs per kg of nitrogen. This implies that, on average, it would cost around 33,000 Swiss francs per farm to abate their entire nitrogen surplus (the average nitrogen surplus per farm is 1,180 kg). The authors argue that it will be politically very difficult to implement effective levies on nitrogen surpluses in Switzerland.

Pati Mamardashvili, Dr. Sc., ETH Zurich is an assistant professor at ISET and also serves as the Head of the Agricultural Policy Research Center at the ISET Policy Institute. She teaches Agricultural Economics and International Agricultural Trade in ISET’s MA program. Pati’s research interests are in agricultural economics, environmental economics, and econometrics.

Mamardashvili, P., Emvalomatis, G. and Jan, P. (2016). Environmental performance and shadow value of polluting on Swiss dairy farms. Journal of Agricultural and Resource Economics 41(2), 225-246.