A case study of investment in agricultural sustainability: adoption and policy issues for nitrogen pollution control in the Chesapeake Bay drainage

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Virginia Polytechnic Institute and State University

Nutrient loadings to the Chesapeake Bay are a source of concern for water quality agencies. In particular, excess nitrogen loadings from agricultural production activities threaten water quality in the Bay. Questions have been raised about how effectively traditional BMPs can control nitrogen loss from crop production. This study examines agricultural nitrogen pollution control from an input management perspective. Using an economic and physical model, seven production systems and nitrogen management strategies are compared in terms of input use, profitability, and nitrogen loss potential. Results suggest that several of the production systems will reduce residual nitrogen without reducing profits. However, it is recognized that factors in addition to profitability will influence producers' nitrogen management decisions. Therefore, using the results of a farmer survey, adoption models are estimated to examine the impact of production system characteristics and producer characteristics on the decision to use an alternative production system and nitrogen management strategy. Finally, a sensitivity analysis is conducted to examine the impact of alternative policy tools on adoption incentives. Both financial incentives and education and information programs are found to be important tools for influencing producers' decisions. Producers' interest in the alternative systems and desire for information on the systems suggest that agricultural research will contribute by assuring that producers have access to adequate information on the alternative systems.