Mitigating non point source pollution from dairy farms : economic evaluation on the Don watershed

We built a model of regulation for non point source water pollution through non linear taxation/subsidisation of agricultural production. Farms are heterogeneous along two dimensions: their ability to transform inputs into final production, and the available area they possess. We propose a framework for describing the ability of farmers, the cost and the emission joint functions from a population of heterogeneous producers on a watershed. The application uses data collected on the Don watershed (France). Several policies are compared ex ante on this watershed on their cost and efficiency.