Optimal Regional Regulation of Animal Waste

Large animal facilities generate more manure than needed on their own feed production areas. Excessive nutrient applications deteriorate groundwater (nitrogen) and surface water quality (nitrogen and/or phosphorus). Due to differences in environmental and economic characteristics, adjacent regions may have differing objectives towards controlling nitrogen and phosphorus surpluses from manure applications. We consider jointly and separately optimal nutrient policies of an upstream agricultural and a downstream recreational region. We show that, depending on the environmental and economic characteristics, tightening upstream regulation with respect to the loading of one nutrient might increase the downstream loading of the other. We differentiate the impacts of manure regulation between the livestock farms and the adjacent crop production farms and show how this impacts nitrogen and phosphorus loading due to changes in nutrient application, crop uptake and changes in application areas. We allow regional differences in abatement objectives and identify locally and globally optimal policies