ECONOMIC IMPLICATIONS OF PHOSPHORUS LOADING POLICIES FOR PASTURE LAND APPLICATIONS OF POULTRY LITTER

ABSTRACT: Non‐point source pollution created by agriculture is one of the major issues of intensive production. Recent studies indicate that the eutrophication from agricultural non‐point source pollution, especially from phosphorus, is of growing concern. The objectives of this paper are to measure the economic opportunity costs of a proposed phosphorus management policy that targets soils with elevated phosphorus levels and examine the impacts of alternative policies such as Pigouvian taxes on the optimal use of litter. The study focuses on land applications of poultry litter in the Muddy Fork watershed of the Illinois River in Northwest Arkansas. The analysis indicates that restriction of litter applications on soils with elevated phosphorus levels will significantly reduce the net returns generated from forage production, resulting in an environmental policy with a high opportunity cost for producers. An analysis of alternative Pigouvian tax policies shows that a smaller tax per ton of litter applied can achieve the same litter control as that of a larger tax on a per acre basis.