Agroeconomic analysis of nitrate crop source reductions

This paper presents an agroeconomic approach to assess the economic impact of improving nitrogen and irrigation management practices in California's Tulare Lake Basin and the Salinas Valley. The approach employs a self-calibrated mathematical programming model with a constant elasticity of substitution production function and two nests: one for irrigation and one for nitrogen. Agricultural crop yields are maintained as a worst-case for improving nitrogen use efficiency. Small reductions (<25%) in nitrate load to groundwater can be achieved at relatively low costs. Load reductions of 50% may require more costly nitrogen management practices and a broader education strategy with higher reductions in farm net revenues and irrigated area. Other policy instruments such as a tax and levees on applied nitrogen may help reduce groundwater load and raise revenues for alternate drinking water supplies in affected areas. The model also provides further evidence that it is possible to integrate agronomic and economic models that account for substitutability of applied nitrogen and water in agricultural production for policy analysis. © 2013 American Society of Civil Engineers.