On dealing with the pollution costs in agriculture: A case study of paddy fields

Abstract

The main purpose of this study is to evaluate marginal abatement cost of the main agricultural pollutants. In this sense, we construct three indices including Net Global Warming Potential (NGWP) and Nitrogen Surplus (NS), simulated by a biogeochemistry model, and also an Environmental Impact Quotient (EQI) for paddy fields. Then, using a Data Envelopment Analysis (DEA) model, we evaluate environmental inefficiencies and shadow values of these indices. The results show that there is still room for improvement at no extra cost just through a better input management. Besides, enormous potential for pollution reduction in the region is feasible. Moreover, in paddy cultivation, marginal abatement cost of pesticides and herbicides are much bigger than nitrogen surplus and greenhouse gasses. In addition, in the status quo, the mitigation costs are irrelevant to production decisions. Finally, to deal with the private pollution costs, market-based instruments are proved to be better than command-and-control regulation.

Keywords: Agriculture; Data Envelopment Analysis; Directional Distance Functions; Environmental efficiency; Pollution cost.