| Nutrients such as nitrogen and phosphorus are essential for agricultural crop growth. In excess amounts, however, they can cause water pollution problems such as eutrophication. The EPA (1990) estimates that nutrients are the most widespread cause of lake pollution and the second most widespread cause of river pollution in the United States. Agriculture is the most widespread source of both lake and river pollution. Agricultural nutrient pollution, due to its nonpoint nature, is difficult to monitor and control. The Coastal Zone Act Reauthorization Amendments (CZARA) of 1990 constitute the most extensive federal legislation to deal directly with nonpoint source water pollution, requiring coastal states to develop federally approved nonpoint source programs. One of the principal means by which states may reduce nonpoint nutrient pollution is through the application of market incentives. Market incentives have theoretical appeal in that, if set at the proper level, they compel polluters to reduce pollution generation to the socially efficient level automatically.;Complementarity spatial price equilibrium models are developed to analyze the effects of various market incentive schemes (excess nutrient tax, waste transport subsidy, off-site disposal subsidy, compost subsidy, and nutrient permit trading) to reduce agricultural nutrient pollution. The models are applied empirically to an agricultural subsector of southeastern Pennsylvania. Analyses are performed concerning cost, pollution abatement, Nash equilibrium intercounty waste flows, and waste clearing prices. Based on the results of the analysis, and on issues regarding implementation, policy recommendations are developed. Of the various incentive schemes, the off-site disposal subsidy is determined to be most appropriate. However, due to the high degree of informational and other inefficiencies that are found to exist in the market, an alternative approach, based on education and increasing information flow, is recommended. |
