The cost-e ciency of Swedish Arable-Nitrogen Abatement Policy

The purpose of this article was to study the economics of Sweden's scheme of 'multiple' arable nitrogen abatement instruments. A large-scale, spatially distributed mathematical programming model that linked changes in agricultural production practices to coastal nitrogen load was developed. Actual abatement policy induced 21% abatement. A rst-best solution to 21% abatement required increased concentration of commodity production and remaining land to be farmed relatively more pro tably. A second-best solution required sparser production and less cost-e ective commodity production. Under actual policy, relative abatement was too high in the fertile southern coastal regions than either of the benchmarks. The choice of efciency benchmark was critical to de ning 'cost-e ective' policies. Abatement could be increased without causing excessive ine ciencies with a) incentives that also steer crop choice decisions and b) increased relative abatement in less pro table regions. Coordination of environmental and agricultural policy could o er considerable e ciency gains.