Price induced water irrigation: Unraveling conflicts and synergies between European agricultural and water policies

The 2003 CAP reform considerably affects cropping patterns in European agriculture. At the same time the imperatives of the forthcoming Water Framework Directive (WFD) is expected to modify irrigation decisions especially in Southern Europe where irrigated agriculture utilizes about 70-80% of total water. This paper examines the combined effect of CAP reform and the application of likely volumetric water pricing on water demand by taking into account three drivers of change, namely extensive margin changes, intensive margin changes and irrigation technology shift. For low rates of water prices, CAP reform contradicts the WFD objectives since it leads to cropping patterns that consume more water resources. On the contrary, as water prices increase, decoupling and water pricing display a synergistic effect on water conservation. Finally, decoupling substantially increases the efficiency of water pricing in terms of water conservation. As a result, the post CAP reform regime clearly dominates the prior CAP reform regime when an index of value for money water conservation is examined.irrigation, bio-economic modeling, mathematical programming, policy analysis, price endogenous model, water demand, CAP reform, WFD

``The choice between emission taxes and output taxes under imperfect monitoring": a comment

We consider a special case of Schmutzler's and Goulder''s (1997) analysis of output taxes vs emission taxes as environmental policy instruments. We identify new necessary conditions for the existence of an optimum. We also show that, in this case, it is always optimal to have a mixed tax with positive enforcement effort.

Assessing the Distributional Impacts of Transferable Pollution Permits: The Case of Phosphorus Pollution Management at a River Basin Scale

Although the initial allocation of pollution permits is neutral in terms of efficiency, it does have a significant impact on distributive equity. In this paper, we examine the two main categories of permit allocation rules, the distributive and the reductive, for controlling phosphorus pollution in a small catchment in South West England. Based on the premise that the regulatory choice compromises efficiency and equity, the main result of this paper is that an allocation of permits in proportion to the intensity of environmental preferences is a “win-win†choice. The reason is that it simultaneously achieves two goals. First, it is efficient (or cost-effective) since a permit system achieves a prespecified target at a minimum abatement cost, while second, it is the only allocation rule which reduces the income inequality of the baseline scenario.pollution permits, phosphorus, nutrient management, export coefficient model, water quality, distributive justice, income inequality, Atkinson Index, Environmental Economics and Policy,

The Impact of River Flow Restrictions on Instruments to Control noPoint Nitrate Pollution

An economic analysis of policies to control nonpoint source nitrate pollution in the presence of minimum river flow restrictions was undertaken. A non-linear bio-physical economic optimisation model of an intensively cultivated Scottish agricultural catchment was constructed. The presence of minimum river flow controls in the catchment was found to reduce nitrogen pollution. However, by themselves, river flow controls were found not to be a cost effective means to reduce diffuse pollution. River flow controls did not, for the most part, alter relative instrument ranking.

Identifying Common Fallacies in the Choice of Environmental Taxes for Agricultural Pollution Control: The Absence of Transaction Costs and the Normality of Agricultural Pollutants

The choice of environmental taxes is one of the central themes in policy design for agricultural pollution control, which dominates both empirical and theoretical research. This paper examines two assumptions very often employed in applied research, namely the absence of transaction costs and the normality of agricultural pollutants. Our results indicate that the well-known superiority of emission taxes over input taxes may not always be valid, when transaction costs are taken into account. Further more, the assumption of normal distributed agricultural pollutants overestimate the relative abatement costs

Identifying Common Fallacies in the Choice of Environmental Taxes for Agricultural Pollution Control: The Absence of Transaction Costs and the Normality of Agricultural Pollutants

The choice of environmental taxes is one of the central themes in policy design for agricultural pollution control, which dominates both empirical and theoretical research. This paper examines two assumptions very often employed in applied research, namely the absence of transaction costs and the normality of agricultural pollutants. Our results indicate that the well-known superiority of emission taxes over input taxes may not always be valid, when transaction costs are taken into account. Further more, the assumption of normal distributed agricultural pollutants overestimate the relative abatement costs.Environmental Economics and Policy,

Assessing the Distributional Impacts of Transferable Pollution Permits: The Case of Phosphorus Pollution Management at a River Basin Scale

Although the initial allocation of pollution permits is neutral in terms of efficiency, it does have a significant impact on distributive equity. In this paper, we examine the two main categories of permit allocation rules, the distributive and the reductive, for controlling phosphorus pollution in a small catchment in South West England. Based on the premise that the regulatory choice compromises efficiency and equity, the main result of this paper is that an allocation of permits in proportion to the intensity of environmental preferences is a “win-win” choice. The reason is that it simultaneously achieves two goals. First, it is efficient (or cost-effective) since a permit system achieves a prespecified target at a minimum abatement cost, while second, it is the only allocation rule which reduces the income inequality of the baseline scenario

Emission versus Input Taxes for Diffuse Nitrate Pollution Control in the Presence of Transaction Costs

The most important obstacle to solving diffuse pollution problems is that emissions are either unobservable or cannot be observed at a reasonable cost. Biophysical models may provide sufficient information to set a cost-effective emission tax. However, evidence from recent studies has shown that transaction costs for emission-based policies are higher per hectare than for input-based policies. An economic model of agriculture for the Kennet catchment in south-east England shows that, when transaction costs are accounted for, an input tax is more efficient than an emission tax over a range of emission standards. This result has policy implications in that it indicates, first, that economists' policy recommendations should account for transaction costs, and, secondly, that the standard advice that emission-based policies are superior may be wrong where transaction costs differ substantially between emission- and input-based policies.

On the regulatory choice of refunding rules to reconcile the 'polluter pays principle' and Pigovian taxation: an application

The 'polluter pays principle' (PPP) is one of the four principles that govern the European Union's environmental policy. Although PPP justifies Pigovian taxation as a legitimate policy means to internalise externalities, there is a potential contradiction between PPP and Pigovian taxation depending upon the definition of pollution control costs. We summarise this debate and focus on the lump-sum refunding of tax revenues in order to reconcile the PPP and Pigovian taxation. We propose equity as the guiding principle to select among various refunding schemes, and empirically examine a specific application.