Efficient waste? Why farmers over-apply nutrients and the implications for policy design

Understanding why farmers over-apply fertilizer is essential to designing effective agro-environmental policy. If farmers are simply inefficient, possibilities exist for simultaneously improving farm profits and the environment. If not, costly trade-offs are necessary. This article examines why farm...

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Bibliographic Details
Published inApplied economic perspectives and policy Vol. 27; no. 4; pp. 542 - 557
Main Author Sheriff, G
Format Journal Article
LanguageEnglish
Published Agricultural and Applied Economics Association 01.12.2005
SeriesReview of Agricultural Economics
Subjects
agricultural education
agricultural law
agricultural policy
agroecology
cost benefit analysis
cost-shares
environmental policy
farm inputs
farm profitability
farmers
farmers' attitudes
fertilizer rates
fertilizer requirements
fertilizers
information sources
insurance
land retirement
literature reviews
opportunity costs
risk aversion
risk reduction
soil fertility
taxes
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Summary:Understanding why farmers over-apply fertilizer is essential to designing effective agro-environmental policy. If farmers are simply inefficient, possibilities exist for simultaneously improving farm profits and the environment. If not, costly trade-offs are necessary. This article examines why farmer perceptions of agronomic advice, input substitutability, hidden opportunity costs, uncertainty, and risk aversion can make it economically rational to "waste" fertilizer by applying it above agronomically recommended rates. I use this information to evaluate the relative merits of policy responses such as insurance, education, cost-shares, regulation, taxes, and land retirement.
ISSN:1058-7195
2040-5790
1467-9353
2040-5804
DOI:10.1111/j.1467-9353.2005.00263.x