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Open AccessArticle

Profitability of Nitrification Inhibitors for Abatement of Nitrate Leaching on a Representative Dairy Farm in the Waikato Region of New Zealand

Centre for Environmental Economics and Policy, School of Agricultural and Resource Economics, University of Western Australia, 35 Stirling Highway, Crawley, Western Australia 6009, Australia
AgResearch, Ruakura Research Centre, East Street, Private Bag 3123, Hamilton, New Zealand
Author to whom correspondence should be addressed.
Water 2011, 3(4), 1031-1049;
Received: 11 August 2011 / Revised: 21 October 2011 / Accepted: 1 November 2011 / Published: 11 November 2011
(This article belongs to the Special Issue Water Policy)
Direct policies for the management of nonpoint source pollution are difficult to apply given asymmetric information, spatial and temporal variability, and uncertainty. There is increasing awareness that these limitations may be overcome where profitable mitigation practices are broadly adopted by polluters. Nitrification inhibitors (chemicals applied to paddocks that retard the nitrification process in soils) are a rare example of a mitigation practice that reduces pollutant loads and potentially increases farm profit through promoting pasture production. This study investigates their capacity to achieve both goals to inform policy makers and producers of their potential for simultaneously improving farm profit and water quality. With an assumed 10 percent increase in pasture production in response to nitrification inhibitor application, nitrification inhibitors are a profitable innovation because greater pasture production supports higher stocking rates. Nonetheless, their overall impact on farm profit is low, even when the cost of inhibitors or their impact on subsequent pasture production is substantially altered. However, inhibitors are found to be a critical mitigation practice for farmers posed with decreasing leaching loads to satisfy regulatory requirements. These findings suggest that, despite their shortcomings for nonpoint pollution regulation, direct policies appear to be the only way to motivate producers to account for their impact on environmental values given the current lack of profitable mitigations. View Full-Text
Keywords: nitrification inhibitors; nitrate leaching; bioeconomic model nitrification inhibitors; nitrate leaching; bioeconomic model
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Doole, G.J.; Paragahawewa, U.H. Profitability of Nitrification Inhibitors for Abatement of Nitrate Leaching on a Representative Dairy Farm in the Waikato Region of New Zealand. Water 2011, 3, 1031-1049.

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