Effects of nitrogen input and nitrogen surplus taxes in Dutch agriculture

In this paper a partial equilibrium, regionalised, comparative static, mathematical programming model of the Dutch agricultural sector is developed to analyse the effects of taxes on nitrogen input use and nitrogen surpluses in Dutch agriculture. The focus of this paper is on effects of taxes on nitrogen surpluses at the soil level, gross margin from agriculture, land use and livestock composition. Strong and weak points of the model are discussed. Strong points are its consistency at regional, national and sector level and the possibility to model manure flows and markets for intermediates in detail. Weak points are the level of aggregation and the restricted number of substitution possibilities at the activity level. As a result elasticities of input demand are quite low. Environmental policies effect different components of the Dutch agricultural sector simultaneously. Therefore the effects of nitrogen input and nitrogen surplus taxes on environmental targets are very uncertain