Agricultural Externalities and Environmental Regulation: The Case of Manure Management and Spreading Land Allocation

The aim of this paper is firstly to show how the measures introduced by the European regulation on manure management are incorporated into the theoretical analysis framework for studying the issue of nonpoint externality and especially, agricultural runoff. The model is extended because only some of the polluting emissions at the origin of diffuse pollution are regulated by the Nitrates Directive. More specifically, the model represents the standard that limits the spreading of organic manure to 170 kg/ha as a production right assigned to each farm. Secondly, this paper proposes an empirical model in which the theoretical assumption that productive abilities are fully exploited is relaxed. In order to describe the disparity that exists between individual situations, an empirical model represents the production technology by means of a directional distance function. Finally, the aggregation properties of the directional distance function are used to simulate the practice of looking for off-farm lands as a means of complying with the standard. We look at how land can be allocated among producers in such a way as to combine the disposal of manure in accordance with the limit of the Nitrates Directive with an improvement in the productive and environmental efficiency of all farms. Using a sample of French pig farms, results indicate only a low potential for a reduction in nitrogen pollution based on the reduction in productive inefficiencies and the allocation of spreading lands among farmers in a same area.

Keywords: Environmental efficiency, permits trading system, directional distance function, data envelopment analysis, pig production.