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collentineDoing Something About It: Environmental Policy That Works

Dennis Collentine
Department of Economics
Uppsala University
June 2002

Polluters make choices. They can keep on polluting or they can do something about it. Policymakers make choices, they can design and implement environmental policy to help polluters choose to change what they're doing. My research is about choices, the economics of decisions. Why do we choose to do something one way instead of another? How do farmers make decisions about how they farm? There are different ways of farming that can have a positive impact on water quality. Understanding how decisions are made is a way research can be used to help farmers do something about pollution.

Farmland is a major source of nutrients (nitrogen and phosphorus) in water. The presence of these nutrients helps plants and algae grow in the water. Too much growth can lead to cloudy, green water with little or no oxygen. This is an environmental problem. Reducing the amount of nutrients leaching from farmland will lead to improvement in water quality. My research looks at why some environmental policy hasn't worked and suggests ways to support policy to make it work better.

Some environmental policies have been designed to reduce the flows of nitrogen and phosphorus coming from farmland by changing how land is farmed. In Sweden for example, farmers can be paid if they plant catch crops in their fields. A catch crop planted into the main crop can reduce the amount of nitrogen leaching from the field and entering into water systems. Participation in the program is voluntary which means that farmers have a choice. Unfortunately, in the first five years of the program there were only one-fifth as many as acres enrolled (around 20,000) as expected (around 100,000). Why not? The simple answer is that farmers didn't think it was worth it.

Farmers seemed to believe that the costs were greater than the benefits. It cost more than it gave. Since all farmers participating in the program got paid the same, the reason some farmers joined and others didn't, must have been that they looked at costs differently. My research studies how farmers make decisions about expected costs.

The costs of planting catch crops depend on which farmer, which field, what the soil is like, which main crop is going to be planted, what was planted last year, etc. If each farmer could be asked what they thought it may be that the costs were really less than they believed. Policymakers thought they were paying enough to cover all the costs, farmers didn't agree.

One part of my research is aimed at helping both farmers and policymakers to understand more about the costs associated with environmental management practices on the farm. Studying how decisions are made on the farm led to development of a computer based model on the Internet to help farmers calculate costs and to see how changes in practices can reduce nitrogen leaching. The model can also be used by policymakers to understand more about the design of policy that works.

A second part of my research is about the design of environmental policy for the management of non-point source pollution coming from farmland. I study a way to construct a type of pollution trading policy so that cost efficiences for reducing pollution can be exploited but the problems associated with these kind of policies can be avoided. Both parts of my research deal with how policymakers and farmers communicate with each other. By learning to communicate it may be possible to make environmental policy work by helping farmers 'do something about it'.