NOTICE: Return or renew all Library Materials! The Minimum Fee for
each Lost Book is $50.00.
The person charging this material is responsible for
its return to the library from which it was withdrawn
on or before the Latest Date stamped below.
Theft, mutilation, and underlining of books are reasons for discipli-
nary action and may result in dismissal from the University.
To renew call Telephone Center, 333-8400
UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN
DIVERSITY OF
NOIS LIBRARY
IANA-CHAMPAIGN
ACES
L161— O-1096
NOTICE: Return or renew all Library Materials! The Minimum Fee for
each Lost Book is $50.00.
The person charging this material is responsible for
its return to the library from which it was withdrawn
on or before the Latest Date stamped below.
Then, mutilation, and underlining of books are reasons for discipli-
nary action and may result in dismissal from the University.
To renew call Telephone Center, 333-8400
UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN
MAR 2
J/W04
A/OV /I
3 1994
L161— 0-1096
CIRCULATING
AGRICULTURE LIBRAE*
Economic Effects
Of Controls
On Nitrogen Fertilizer
E. R. SWANSON, C. R. TAYLOR,
AND P. J. VAN BLOKLAND
Bulletin 757
Agricultural Experiment Station
College of Agriculture
University of Illinois at Urbana-Champaign
This bulletin is one of six publications reporting research con-
ducted in a four-and-a-half-year study of nitrogen as an environ-
mental quality factor. The study, including publication costs, was
supported principally by a grant from the Rockefeller Foundation.
Support for this phase of the study was also received from the Illinois
Agricultural Experiment Station and the Office of Water Resources
Research of the U.S. Department of the Interior through the Water
Resources Center of the University of Illinois at Urbana-Champaign.
In addition to this bulletin, two others in the series have been pub-
lished: "Nitrates, Nitrites, and Health," Bulletin 750, and "Environ-
mental Decision Making: The Role of Community Leaders," Bulletin
756. Other bulletins in preparation for the series deal with nitrogen in
wells and farm ponds, and management of nitrogen for crop produc-
tion. A book on nitrogen in relation to food, environment, and energy
is also being prepared as a part of the series.
E. R. Swanson is a professor in the Department of Agricultural
Economics, College of Agriculture, University of Illinois at Urbana-
Champaign. C. R. Taylor is an assistant professor in the Department
of Agricultural Economics, College of Agriculture, Texas A & M
University, College Station. P. J. van Blokland is an assistant profes-
sor in the Food and Resource Economics Department, Institute of
Food and Agricultural Sciences, University of Florida, Gainesville.
The authors acknowledge the research contributions of five doc-
toral candidates associated with the project: K. K. Frohberg, D.
Leonard, H. Onishi, D. Palmini, and M. E. Walker, Jr. Professor
L. F. Welch in the Department of Agronomy, University of Illinois
at Urbana-Champaign, provided valuable assistance and data for esti-
mating crop yield responses to nitrogen.
Urbana, Illinois April, 1978
Publications in the bulletin series report the results of investigations made or sponsored by
the Experiment Station. The Illinois Agricultural Experiment Station provides equal oppor-
tunities in programs and employment.
CONTENTS
Nitrate Controls and Water Quality 2
Education as a Means of Voluntary Restriction
of Nitrogen Fertilizer 7
Per-Acre Restrictions on the Use of Nitrogen Fertilizer 11
An Excise Tax on Nitrogen Fertilizer 19
A Market for Rights to Use Nitrogen Fertilizer 22
Restrictions on Nitrate Concentration in Groundwater
Below the Root Zone 26
A Total-Farm Nitrogen Balance 29
Summary 33
Bibliography 35
In recent years the role of agricultural chemicals as water contaminants
has become a matter of increasing concern among people who are
interested in the quality of the environment. Before controls are under-
taken, however, the problem of reducing contamination should be exam-
ined from various perspectives. This bulletin looks at the economic effects
that six alternative methods might have in the agro-environmental com-
plex if attempts are made to control the use of commercial nitrogen
fertilizer. Although much of the work concerns Illinois, many of the
results of these analyses can be applied elsewhere as well.
During the 1950's and 1960's the nitrate content of ground and
surface water increased substantially, especially in the Midwest. This
increase was apparently related to the expanded use of commercial fer-
tilizers and more intensive farming. Increased quantities of both phos-
phorus and nitrogen in nonflowing water can stimulate algal growth,
which eventually adds to the decaying organic matter and may reduce
oxygen to critical levels for aquatic life.
Human and animal health can also be endangered by excess concen-
trations of nitrates, which are a form of nitrogen. Under certain condi-
tions bacteria in the intestinal tract of both humans and animals reduce
nitrates to nitrites. When absorbed into the bloodstream, nitrites change
hemoglobin into methemoglobin, which cannot carry oxygen to body tis-
sue. Oxygen levels are lowered, and when more than 70 percent of the
hemoglobin is changed into methemoglobin, death may result. Infants
under six months of age, especially those with digestive disorders, are
particularly vulnerable. In addition, according to Lijinski (1971), some
of the nitrosamines formed by the reaction between nitrites and certain
organic compounds produce cancer in laboratory animals.
Researchers are still uncertain about the possible link between human
health hazards and the use of commercial nitrogen fertilizers and other
sources that raise the nitrate content of water. In some areas of the
United States the nitrate concentration in water, expressed as nitrate-
nitrogen, chronically exceeds the standard of 10 parts per million, in
some cases up to ten times this level, yet no serious health problems have
been linked to nitrates in these areas. Even so, the possibility that hazards
may develop warrants an investigation of the economic effects of various
control measures.
Commercial nitrogen fertilizers are only one source of nitrates. Ni-
trates are also derived from mineralizing soil organic matter, precipita-
tion, fixation of atmospheric nitrogen by soil organisms, animal and
2 BULLETIN NO. 757
human metabolic wastes, and organic wastes from industries that pro-
cess food, paper, and pulp. It should be emphasized that the nitrate ions
from these other sources are as subject to leaching as the ions from com-
mercial nitrogen fertilizer. The amount of nitrate moving into water
would probably be the same if the same amount of nitrogen were sup-
plied from sources other than nitrogen fertilizer. However, because
nitrogen fertilizer adds a significant quantity of nitrates to water, it is
prudent to examine the consequences of policy alternatives that might
control this source but still meet food production needs (Aldrich, 1972).
NITRATE CONTROLS AND WATER QUALITY
In addition to entering into biological changes in the soil, nitrate can
go to ground or surface water or to the atmosphere by volatilization fol-
lowing denitrification. This report deals with leaching into waters and
the grain farmer's contribution to the potential nitrate problem.
In recent years there has been a spectacular increase in the quantity
of commercial nitrogen fertilizer used. In 1940 a little over 400,000
short tons (363,000 metric tons) of nitrogen in commercial fertilizer
was used in the United States. Between 1965 and 1977 the application
of nitrogen more than doubled in this country, and now stands at about
10 million tons (9.1 million metric tons). In 1977 Illinois alone applied
978,000 tons (887,000 metric tons). About 40 percent of all nitrogen
fertilizer is used for corn production. According to recent indications,
the rates of application on the most heavily fertilized cornfields in the
Alidwest have nearly reached a plateau.
The effect of commercial nitrogen fertilizer on corn yield has re-
ceived attention for some time, and as a consequence, reasonably good
estimates of this relationship under a range of conditions are available
(Swanson et al., 1973). In contrast, our knowledge concerning the
amount of applied nitrogen that is recovered by the crop and the amount
escaping into water is not at all clear. As one investigator explains:
"Only rarely have . . . tests shown nitrogen recoveries in the crop plus
soil greater than about 95 per cent of the applied nitrogen; values of
only 70 to 90 per cent are fairly common, and a few are as low as 60
per cent. . . . Such results, obtained under ideal conditions where no
leaching occurred, help to explain why nitrogen recoveries in the crop
under average field conditions often are no greater than 50 to 60 per
cent of that applied" (Allison, 1966).
ECONOMIC EFFECTS OF CONTROLS 3
Taylor (1973) attempted to statistically estimate the relationships
between nitrate content of some Illinois streams and agricultural activi-
ties, including fertilizer use, in watersheds draining into these streams.
The results of the study were inconclusive, in part because the study was
based on available water quality and fertilizer use data that had not been
collected specifically for estimation of these relationships. In addition,
biological theory has not yet developed to the point that it can provide
much guidance regarding the variables that should be included in the
estimated relationships.
It is possible that actions will be proposed to reduce agriculture's con-
tribution to the overall nitrate problem even though this contribution is
not well defined. The Illinois Pollution Control Board did, in fact, con-
duct hearings in 1971 on regulations that would have controlled nitrogen
fertilizer applications. The Board decided that there was an insufficient
basis for establishing regulations (Illinois Pollution Control Board,
1972). Various ways of controlling nitrate pollution are currently being
considered in the implementation of Section 208 of the Federal Water
Pollution Control Act. Different methods of control would of course
produce different effects; this report presents the economic effects that
selected nitrogen-related policies would have on the amount and location
of crop production and farm income.
Alternative Methods of Control
The six public policy alternatives to be considered are: (1) educa-
tion, (2) per-acre restrictions on commercial nitrogen fertilizer rates,
(3) an excise tax, (4) a market for rights, (5) restrictions on nitrate
concentrations in leachate in a watershed, and (6) restrictions on the
nitrogen balance at the farm level. Although the main task of this report
is to present economic evidence, these proposed alternatives may also
provide additional background information for decision makers, who
must attempt to weigh the trade-offs between the economic effects and
other relevant consequences, the most important of which relate to en-
vironment and health. The various control methods are obviously not
mutually exclusive; a combination of two or more could be adopted.
Because this report considers only the economic consequences to farmers,
a socially optimal policy must be determined within a more comprehen-
sive framework that includes environmental, health, and tax effects, as
well as some of the ways consumers might be affected (Gros and Swan-
son, 1976).
4 — BULLETIN NO. 757
Principal Analytic Tool
In the sections on per-acre restrictions, excise tax, and restrictions
on the nitrate balance at the farm level, the analyses presented are based
on a common logic, that of linear programming. This method uses an
optimization technique that permits many variables to be considered
simultaneously. Described technically, the procedure maximizes or mini-
mizes a linear criterion function, subject to a set of linear equalities or
inequalities. In economic applications the criterion function is usually
net returns (income) in a maximization problem or costs in a minimiza-
tion problem. Various constraints, such as the amount and location of
land resources of differing quality, are taken into account. Applied to
individual farms, the method permits a more detailed analysis of the
interrelationships among enterprises and consideration of a wider range
of technical alternatives than is possible with conventional, less formal
methods. At the regional or national level, the method allows an analysis
of the influence that markets and regional variations in soil productivity
and climate have on the location of agricultural production.
The analytic capability of linear programming is especially impor-
tant for estimating the effects of nitrogen-related control measures. Re-
strictions on nitrogen fertilizer will, for example, have "ripple" effects
throughout the agricultural economy by altering the competitive advan-
tage of crops that depend in varying degrees on nitrogen fertilizer. As
a result of changes in competitive positions among crops, land use pat-
terns change. The crops disadvantaged by nitrogen controls are replaced
to some extent by those crops not directly affected by the controls. To
illustrate the point, in one of the models used, the total digestible nutrient
requirement for livestock could be met by substituting one feed for an-
other. The possibility of substituting different kinds of grain in a pro-
ducing region to meet feed and food requirements tends to moderate the
economic impact of public policy intervention.
Types of Linear Programming Models
Five mathematical programming models were used to analyze the
effects of nitrogen fertilizer control measures. These models differ pri-
marily in the unit of analysis, namely, the nation, the Corn Belt, Illinois,
a watershed, and a farm. Assumptions about the demand for crop pro-
duction are related to the unit analyzed. These demand assumptions
influence the price and production effects of programs that control the
use of nitrogen fertilizer. As the price and production effects vary, the
A. Quantity Fixed,
Price Variable
ECONOMIC EFFECTS OF CONTROLS 5
D
B. Quantity and
Price Variable
0' 0
C. Quantity Variable,
Price Fixed
Figure 1. Effect of marginal cost in-
creases under various demand as-
sumptions. D = demand, P = price,
Q = quantity, S = supply.
consequences of nitrogen controls on total revenues (gross income) will
also vary. Figure 1 illustrates the difference in the demand concept
among models, and provides a framework for classifying the five models
used.
In each of the three types of demand assumption patterns in Figure
1, a control on the use of nitrogen fertilizer increases the marginal cost
of crop production. Marginal cost, that is, the increase in total produc-
tion cost occurring when output is increased by one unit, is based on
variable cost. In all three types of demand patterns, supply (marginal
cost function) increases in a similar way from S to S' when a control
is imposed. The effect on price and quantity, however, varies because
the demand assumptions are different.
In Figure 1A the demand is a fixed quantity, or perfectly inelastic
with respect to price. Thus the full effect of a marginal cost increase is
reflected in price. Before the control is imposed, the total revenue (quan-
6 — BULLETIN NO. 757
tity times price) is OQ X OP; after the supply curve rises to S', total
revenue increases to OQ X OP'. The national model discussed in later
sections of this report uses this type of demand assumption. The national
model is of course much more complex than Figure 1A indicates because
this model includes many crops and regions, each with its individual
crop supply and demand functions, and with all of the regions linked
in a transportation network. Nevertheless, the figure represents the con-
cept of a fixed demand, which is central to interpreting the results of
the analysis.
The Corn Belt model also has a number of crops and regions, but
the demand assumptions for two major crops, corn and soybeans, are
those illustrated in Figure IB. In this pattern, consumption is reduced
as increased marginal costs are reflected in increased prices. For crops
other than corn and soybeans the inelastic demand of Figure 1A is used.
Note that an increase in the marginal cost from S to S' may cause total
revenue either to increase or decrease, depending on the slope of the
demand curve. In Figure IB the total revenue increases after nitrogen
fertilizer controls are imposed, from OQ X OP to OQ' X OP'. The de-
mand assumption presented in Figure IB is preferred for analysis of
controls having economic effects at the regional and national levels, but
often the increased complexity of implementing this concept leads to the
use of the concepts in Figures 1A and 1C.
The state, farm, and watershed models have crop demands that are
perfectly elastic (Figure 1C). Thus, as marginal costs increase from S
to S', there is no increase in price, and total revenue decreases from
OQ X OP to OQ' X OP. In the national model some of the results
pertain to a situation in which nitrogen controls are imposed only in
Illinois. In this case, either Figure 1C with a perfectly elastic demand or
Figure IB with a somewhat elastic demand would characterize the de-
mand assumption for Illinois, even though the national model otherwise
follows the pattern in Figure 1A.
The different demand concepts underlying the models used should
be kept in mind as the economic effects of the various nitrogen control
alternatives are presented in later sections of this report. There are also
other differences in model formulation, but they are not as important as
those discussed above. The following sources contain detailed descrip-
tions of the five models: national, Taylor and Swanson (1975); Corn
Belt, Taylor and Frohberg (1977); state, Palmini (1975); watershed,
Onishi (1973), Onishi et al (1974), Onishi and Swanson (1974); and
farm, Walker (1974), Walker and Swanson (1974).
ECONOMIC EFFECTS OF CONTROLS 7
EDUCATION AS A MEANS OF VOLUNTARY RESTRICTION
OF NITROGEN FERTILIZER
If farmers are applying more nitrogen fertilizer than necessary to
meet their economic goals, then an educational program could be an
effective way to convince them to voluntarily reduce the amount applied.
Farmers would save money in the long run and water quality would im-
prove. But are most farmers actually applying too much fertilizer? To
answer this question, we did three separate analyses to determine optimal
levels of nitrogen fertilizer for corn in Illinois. Two of these studies
used experimental data; the third examined the experiences of farmers
themselves.
Experimental Data
Using experimental data from eight locations in Illinois, Swanson
et al. (1973) statistically estimated the effects of various amounts of
nitrogen on corn yields (response function). In some instances the tim-
ing of application was included in the estimates. These response func-
tions were then used to calculate how the corn-nitrogen price ratio would
affect the economically optimal rate of application for each year.
In this study we started with the assumption that it was known with
certainty what the corn yields would be in relation to the amount of nitro-
gen applied. The optimal level in our analysis ranged from 100 pounds
per acre (112 kg./ha.) at Brownstown to 290 pounds per acre (325
kg./ha.) atDeKalb.
We then dropped the assumption of a known response function, and
used three game-theoretic decision models to estimate the best rates of
nitrogen application. The models and their criteria were: choose the fer-
tilizer rate giving the highest simple average over time (La Place);
maximize the minimum return (Wald); and minimize the maximum
regret (Savage). These three models use the concept of a game against
nature in which the farmer chooses the nitrogen fertilizer level that
corresponds to his expectation of the kind of natural phenomena, such
as weather, that will characterize the coming season. The La Place cri-
terion assumes that the average season will occur, and the Wald criterion
assumes the worst possible season. The Savage criterion, or minimizing
the maximum regret, assumes that the farmer will choose that amount
of fertilizer which, in retrospect, will result in the smallest loss or
regret. The loss is determined by subtracting the realized net return from
what the return would have been had foresight been perfect. Given the
8 BULLETIN NO. 757
assumption of each of the three decision models, the optimal amounts of
nitrogen fertilizer to be applied ranged from 100 to 240 pounds per acre
(112 to 269 kg./ha.)- In general, these amounts exceed the levels actu-
ally applied by farmers; hence, we have little evidence here that educa-
tional programs based on these experiments would reduce the levels of
nitrogen.
Frohberg and Taylor (1975) incorporated uncertainty into a deci-
sion model in another way: they used regression equations to estimate
the influence of risk due to weather variations on the response of corn
to nitrogen. Rainfall and temperature data from seven experimental
fields in Illinois for the period May 20 through August 23 for the seven
years 1967 through 1973 were used to estimate the effect of weather
plus nitrogen on corn yields. These data, which were essentially the same
as those used in the Swanson et al. study (1973), were divided into two
sets, depending on the crop rotation pattern used for each field. Harts-
burg, Aledo, Kewanee, and Toledo had corn followed by soybeans, while
Carthage, DeKalb, and Brownstown had corn followed by corn. The
response to applied nitrogen is different in the two rotation patterns be-
cause soybeans, through a biological process known as nitrogen fixation,
convert nitrogen in the air into a form that the following corn crop can
use. Hence, two regression equations were used, one for each rotation
pattern.
With these two equations we then determined the optimal rates for
nitrogen fertilizer application. It was assumed for this analysis that the
decision criterion was to maximize expected or average profits subject
to the risk of not recovering the cost of the fertilizer. Two levels of risk
were considered: a loss in one year out of one hundred, and a loss in
one year out of twenty. The results show that, on the basis of recent
price relationships, the weather-related risk constraint is not effective.
In other words, farmers who are sensitive to this kind of risk should
apply nitrogen fertilizer at the rate that maximizes expected profits. In
all seven areas the optimal rates were more than 150 pounds per acre
(168 kg./ha.).
Comparison of Experimental and Actual Data
In advising individual farmers on optimal rates of nitrogen applica-
tion and in analyzing alternative control methods, it is important to con-
sider how closely the experimental conditions correspond to the actual
experiences of commercial farmers. Taylor and Swanson (1973) ap-
proached the issue in two ways, first, by comparing experimental re-
ECONOMIC EFFECTS OF CONTROLS 9
None
1-50
(1-56)
51-100
(57-112)
101-150
(113-168)
151-200
(169-224)
Nitrogen Applied, Ib. /A. (kq./ha.)
201 -I-
(225+)
Figure 2. Proportion of Illinois corn acreage receiving specified amounts of
commercial nitrogen fertilizer, 1971.
sponse functions with the results of a survey of yields on commercial
farms and, second, by comparing experimental results with some re-
sponse functions, developed by the U.S. Department of Agriculture, that
were based on the judgments of agronomists familiar with both experi-
mental data and farm practices. Taylor and Swanson concluded that,
while the experimental response of corn yields to nitrogen appeared to
be consistently higher than the response experienced by commercial
farmers, the economically optimal fertilization rates for commercial
farms were only slightly lower than the optimal rates for the experi-
mental situations.
Next, we compared these optimal rates with the rates farmers actu-
ally use. Figure 2 shows an estimated nitrogen fertilizer rate distribution
for Illinois. The average rate in 1971 was about 113 pounds per acre
(127 kg./ha.), which is well below the optimal experimental rates indi-
cated for many situations in the state. It might be argued that farmers
who apply more than 150 pounds of nitrogen are overapplying. How-
ever, extension personnel and others intimately familiar with Illinois
farming claim that most farmers in this category have yields that justify
these rates.
We must then conclude that any reduction in fertilizer use is likely
to reduce the profits of an individual farmer. Consequently, an educa-
tional program would probably not reduce the nitrogen load (the total
10 BULLETIN NO. 757
ECONOMIC EFFECTS OF CONTROLS — 11
amount of nitrogen added minus the amount removed by crops). In
fact, if farmers were better informed about response functions and price
ratios, an educational program could possibly increase the nitrogen load,
because in terms of economic returns, more farmers apparently under-
apply than overapply nitrogen.
PER-ACRE RESTRICTIONS ON THE USE
OF NITROGEN FERTILIZER
If adopted as public policy, a mandatory per-acre restriction on the
use of commercial nitrogen fertilizer would set limits on the amount of
nitrogen that could be applied to any one crop. The objective of such a
policy would be to reduce the degree of water contamination. Restrictions
would, however, have other effects as well, as our analyses of the na-
tional, Corn Belt, and state models will show.
National Model
The quantitative framework used in this analysis is a national linear
programming model of U.S. crop production. Eight crops are included
in the model: feed grains (corn, sorghum, oats, and barley), food grains
(wheat and rye), and oilseeds (cotton and soybeans). The method of
solving the model enables us to determine the crop acreages that minimize
the production and transportation cost (total cost) of meeting the fixed
demands for domestic livestock feed and food for direct human con-
sumption, and for export (Figure 1A).
Agricultural production and distribution regions in this country are
interdependent. To reflect this interregional relationship, the U.S. De-
partment of Agriculture divided the United States into producing re-
gions and consuming regions (Figures 3 and 4). Producing regions are
delineated principally on the basis of uniformity of the soil. Each pro-
ducing region has at least one crop production activity or enterprise, for
example corn, which is considered agriculturally important for that re-
gion. A particular crop may be a dryland enterprise, an irrigated enter-
prise, or both.
The producing regions do not blanket the entire country (Figure 3),
but they do include more than 99 percent of the feed grain, cotton, and
soybean acreage, and about 97 percent of the small grain acreage. Any
production of these commodities outside of the producing regions is not
12 BULLETIN NO. 757
Figure 4. Consuming regions.
ports
exports moving overland to Canada and Mexico
treated within the model, but is predetermined at estimated 1973 pro-
duction levels.
The consuming regions, which follow state boundaries (Figure 4),
specify regional commodity demands and also make it possible to deter-
mine interregional commodity transportation within the model. The total
demand, including domestic and export, for each of the consuming re-
gions is broken down into the following parts for all eight crops : domes-
tic demand for seed, food for direct human consumption, specified grains
for all livestock except cattle, sheep, and swine, and feed in the form of
digestible nutrients and digestible protein for cattle, sheep, and swine;
and export demand, specified by port or by overland route in the case of
corn or soybeans moving to Mexico and Canada. Added together, the
regional demands make up the total national demand for each crop.
These demands are treated as requirements for solutions to the national
model, with each solution giving the crop acreages that minimize the total
cost of meeting domestic and export demands.
There are three basic assumptions related to fertilizer use for the
analyses involving the national, Corn Belt, and state models. First, farm-
ers applying nitrogen at rates lower than the restriction level will not
change their practice, and farmers applying more than this level will
reduce their rate to comply with the restriction. Second, phosphorus and
ECONOMIC EFFECTS OF CONTROLS 13
Table 7. — Changes Required in Total U.S. Acreage* to Meet Low and High
Export Demands Under Commercial Nitrogen Fertilizer Restric-
tions — National Model
Location of Nitrogen restriction on corn, sorghum, wheat
restriction No 150 Ib./A. 100 Ib./A. 50 Ib./A.
Export level restriction (168 kg./ha.) (112 kg./ha.) (56 kg. /ha.)
Illinois only
Low export
High export . . .
. 214.6
(86.9)
228.4
million acres (ha.)
214.1 214.6
(86.7) (86.9)
229.4 229.9
(92.9) (93.1)
211.4 214.9
(85.6) (87.0)
226.0 229.9
(91.5) (93.1)
215.2
(87.2)
231.8
(93.9)
230.7
(93.4)
246.5
(99.8)
Entire U.S.
Low export. .
(92.5)
214 6
High export
(86.9)
228 4
(92.5)
a Land required for corn, soybeans, sorghum, cotton, wheat, and other small
grains.
potassium applications do not change with changes in nitrogen restric-
tion levels. Third, the distribution pattern of nitrogen application among
farmers is based on the mean fertilizer rate, together with an assumption
about the mathematical form of the distribution (Taylor and Swanson,
1973).
We conducted two main investigations, one for nitrogen restrictions
in Illinois only, and the other for nationwide restrictions. Although the
restrictions apply only to corn, sorghum, and wheat, the acreages of other
crops may also be affected in the process of meeting the demand at mini-
mum cost. Both analyses determined the following: first, the acres neces-
sary to meet high and low export demand predictions when nitrogen re-
strictions of 150, 100, and 50 pounds per acre (168, 112, 56 kg./ha.) are
imposed (Table 1); and second, some more detailed effects of these
restrictions (Table 2).
The low export demand level corresponds approximately to the na-
tional exports in calendar year 1970 for the eight crops in the model.
The high demand level, which is a little greater than the actual exports
for the 1972 crop year, represents the following increases above the low
export levels: 40 percent for corn and sorghum, 15 percent for soybeans
and cottonseed, and 93 percent for small grains.
In general, restricting the use of nitrogen will lower the yields.
Therefore, if domestic and export demands are to be met, the number
of acres planted to some crops must be increased. When low export
14 BULLETIN NO. 757
levels are considered, nationwide restrictions require a far greater in-
crease in the total crop acreage than do restrictions in Illinois only
(Table 1). The bench-mark solution with no restrictions in Illinois re-
quires a total of 214.6 million acres (86.9 million ha.) to meet the low
export demand, while the 50-pound-per-acre restriction only in Illinois
needs 215.2 million acres (87.2 million ha.) nationwide, an increase of
less than 1 percent. However, if the restriction of 50 pounds per acre is
enforced throughout the entire United States, the acreage needed for
crops increases 16 percent.
A similar comparison of the high export figures was made. With no
nitrogen restrictions in Illinois, the bench-mark requirement is 228.4
million acres (92.5 million ha.). When a 50-pound limit is imposed in
Illinois only, the total required to meet the high export demand increases
to 231.8 million acres (93.9 million ha.), or about 3.5 percent. If, how-
ever, the same 50-pound limit is set throughout the United States, the
acreage needed to meet high export levels leaps by 18 percent over the
no-restriction levels, to 246.5 million acres (99.8 million ha.). Such an
increase would have serious environmental consequences, as mentioned
later in this section.
Note in Table 1 that, under the low export demand with a 150-pound
restriction in Illinois, the total U.S. acreage required is about 500,000
acres (200,000 ha.) less than with no restriction. Further, the total U.S.
acreage required does not increase at the 100-pound limit. In both cases
there is no acreage increase because the amount of nitrogen applied is
reduced to levels that are more economical than those of the 1970 bench-
mark solution. Data not shown in Table 1 indicate that, as a result of
the 150- and 100-pound limits, corn acreage in Illinois rises slightly to
compensate for the yield reductions. At these levels of nitrogen limita-
tion Illinois can maintain its competitive position in corn production.
With a restriction of 50 pounds, however, corn acreage in Illinois is
reduced nearly 50 percent. When restrictions are applied to the entire
United States, the corn acreage required to meet the low export demand
increases slightly at the 100-pound level. The same general pattern pre-
vails for the high export demands.
The above analysis assumes a rather short time span between the im-
position of controls and their effects. We have assumed that crop yields
for a given amount of nitrogen fertilizer are the same as yields in the
early 1970's. Thus we ruled out the adoption of new yield-increasing
technology, which would tend to offset the yield losses from nitrogen
restrictions. Should a new technology that is not dependent on high levels
ECONOMIC EFFECTS OF CONTROLS 15
Table 2. — Effects of Imposing Per- Acre Restrictions on Commercial Nitro-
gen Fertilizer in Illinois — National Model
]
Nitrogen restriction
Change
150 Ib./A.
(156 kg./ha.
100 Ib./A.
) (112 kg./ha.) (
50 Ib./A.
56 kg./ha.)
Illinois
Net income per farm*
0 4%
-4 0%
-17 0%
Nitrogen on unit area of corn
-10 0%
—30 0%
— 62 0%
Nitrogen on unit area of wheat . . .
-2 0%
— 10 0%
—39 0%
Total nitrogen used ....
—9 0%
-29 0%
-81 0%
Corn
+0 03
million acres (ha.)
+0 04
-5 70
Soybeans
(+0.01)
-0 02
(+0.02)
+0 03
(-2.31)
+4 40
Rest of Corn Belt"
Corn
(-0.01)
-0 10
(+0.01)
+0 03
( + 1.78)
+3 60
Soybeans
(-0.04)
+0.10
(+0.01)
+0 30
( + 1.46)
+4 60
(+0.04)
(+0.12)
( + 1.86)
a Income derived from corn, soybeans, wheat, and oats.
b Indiana, Iowa, Missouri, and Ohio.
of nitrogen be adopted, our estimates of land needed under each situ-
ation are too high. Nevertheless, the differences in model solutions — the
focus of this analysis — would not be significantly biased by the changes
in crop production technology likely to occur in the next five to ten years.
The increased demand for land resulting from nitrogen restrictions,
combined with expanding export markets, may have soil conservation
and environmental quality consequences. As poorer land is brought under
cultivation, soil erosion will increase, producing more sediment than at
present. While a per-acre restriction on nitrogen might reduced nitrates
in water, restrictions could at the same time result in an increase in
sedimentation.
This overview hides some noteworthy regional changes. Table 2 pre-
sents a few consequences of imposing a nitrogen restriction in Illinois
only. A 50-pound-per-acre maximum will decrease nitrogen use in Illi-
nois by 81 percent and the average income per farm by 17 percent. At
the same time, nitrogen applications in the rest of the Corn Belt will
rise by 20 percent (data not shown). The dissatisfaction of Illinois farm-
ers with inevitable reductions in corn acreages and associated income
while farmers in neighboring states appear to gain at their expense would
16 BULLETIN NO. 757
be considerable. Also, from the standpoint of environmental improve-
ment not much would be gained, because many of Illinois' nitrate prob-
lems would simply be transferred to other states.
Corn Belt Model
This model is a linear programming representation for the produc-
tion of six crops, namely, corn, soybeans, wheat, oats, hay, and pasture,
which are economically important to the Corn Belt. In this model the
Corn Belt includes all of Illinois and Iowa, together with parts of Indi-
ana, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, South
Dakota, and Wisconsin. Solutions to the Corn Belt model are obtained
by maximizing the sum of consumer's and producer's surpluses minus
the variable costs of producing the six crops. Consumer's surplus is mea-
sured by comparing what consumers are willing to pay for food and what
they actually pay. Producer's surplus, or the return to the fixed resource
(land), represents rent to the landowner. Estimates of demand and
supply as functions of price are required to implement the concepts of
consumer's and producer's surpluses.
Corn and soybeans are of major economic importance to the Corn
Belt, which produces 70 percent of the nation's corn and 60 percent of
the soybeans. Therefore, the demand for these two crops is introduced
into the model in the manner indicated in Figure IB, and both prices and
quantities for these two crops are determined within the model. In con-
trast, the demands for the other four crops are treated as fixed quanti-
ties (Figure 1A).
The Corn Belt is divided into seventeen geographic regions, each with
eleven land capability units that reflect variations in the suitability of soil
and climate for crops. Crop production activities in these units can vary
in several ways: by crop rotation, with an average of eleven rotations per
unit; by conservation practice, namely, straight row, contouring, and ter-
racing; and by tillage methods, namely, fall plow, spring plow, and chisel
plow. Rotations, rather than single crop activities, were included to re-
flect the influence of the previous crop on the fertilizer and pesticide
requirements of the current crop.
In this application (Taylor and Frohberg, 1977), the Corn Belt model
was used to assess the effects of reducing the average rate of nitrogen
application from 140 pounds per acre (157 kg./ha.) to a maximum of
50 pounds per acre (56 kg./ha.). Imposing this limit reduces consumer's
surplus by $3.3 billion and increases producer's surplus by $2.0 billion,
leaving a net decrease of $1.3 billion (Table 3). Producer's surplus, or
ECONOMIC EFFECTS OF CONTROLS 17
Table 3. — Effects on Producer's and Consumer's Surpluses, Crop Prices,
and Nitrogen Load Resulting From Per-Acre Restrictions on
Commercial Nitrogen Fertilizer — Corn Be/t Model"
Change
Nitrogen restriction
140 Ib./A.
(157 kg./ha.)
100 Ib./A.
(112 kg./ha.)
50 Ib./A.
(56 kg./ha.)
Producer's surplus (million)
0
$ 21
-321
$ 2.56
100.80
$ 5.24
192.57
1,595
1,447
$ 2,036
-3,325
$ 3.08
121.28
$ 5.82
213.89
1,100
998
Consumer's surplus (million)
o
Crop price
Corn
per bushel
$ 2 46
per metric ton
96 86
Soybeans
per bushel
$ 5 26
per metric ton
193.31
Nitrogen loadb
short ton (1,000)
2,095
metric ton (1,000)
1,901
a The Corn Belt model includes all of Illinois and Iowa, together with parts of
Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, South Dakota,
and Wisconsin.
b Total from inorganic and organic sources.
rent, increases as a result of the fertilizer restriction, because land be-
comes more scarce and hence more valuable as a source of crop produc-
tion. The average annual rent for Corn Belt land changes from $87 to
$111 per acre ($215 to $274/ha.), an increase of about 27 percent.
Corn prices rise from $2.46 to $3.08 per bushel, an increase of 25
percent. But the nitrogen load, that is, the total nitrogen added minus
the nitrogen removed in harvested crops, decreases by 47 percent.
Whether such a reduction in the nitrogen load would meet or surpass
water quality goals is not of course indicated by these results. We can
say, however, that a nitrogen fertilizer reduction of about two-thirds in
the Corn Belt as a whole would have a substantial economic impact on
both farmers and consumers.
State Model
The national model gives some indication of bath nationwide and state
changes when various nitrogen restrictions are enforced only in Illinois.
A more detailed model (Palmini, 1975), also in linear programming
format, divides the state into eight producing regions (Figure 3). The
state model considers the amounts and kinds of livestock as variables
18 BULLETIN NO. 757
that have the potential for responding to nitrogen fertilizer control meth-
ods. Like the national and Corn Belt models, the state model is short
run, so the technology used in production does not change. The three
models are also similar in that only the direct variable costs of produc-
tion are considered; taxes and depreciation are excluded.
The state model differs from the other two models primarily in its
treatment of demand. The model assumes that, in a sense, the state is
composed of eight large farms, one for each region, and that the price
of the crop is not affected by the quantity sold or the distance of the
region from the consuming center. This competitive market assumption
is illustrated in Figure 1C. Because prices do not change as production
is reduced by nitrogen fertilizer restrictions, the income reductions esti-
mated in the state model are greater than they would have been with the
demand assumptions in Figures 1A or IB. Comparisons of income re-
ductions among models is difficult because the base periods and levels
of fertilizer restriction are not identical.
Another feature of the state model that distinguishes it from the
other two is the use of flexibility constraints on shifts in production of
crops and livestock. These constraints were established by reviewing past
year-to-year shifts that farmers made in their crop acreages and live-
stock numbers. The flexibility constraints prevent drastic and unlikely
shifts in production systems because of established patterns of farming,
fixed investments, and other factors.
The crop yield response to nitrogen fertilizer is assumed to be that
reported by the U.S. Department of Agriculture (Ibach and Adams,
1968). Because the controls considered are used only in Illinois, it is also
assumed that nitrogen fertilizer is not smuggled into Illinois from other
states.
We estimated the effects on farm income, using nitrogen restrictions
of 120, 80, and 40 pounds per acre (134, 90, and 45 kg./ha.) measured
from the bench-mark application rate of 144 pounds per acre ( 161 kg./
ha.). Although the effect of a 120-pound limit was rather minor, the
effect of a 40-pound limit was substantial (Table 4) .
Because clover, when grown as a green manure crop, contributes
nitrogen to the soil, we hypothesized that its competitive position in the
crop sequence would improve as a result of controls on nitrogen fertil-
izer. The results of our analysis, presented in Table 5, show that the
clover acreage is the same at the 120- and 80-pound levels, but nearly
doubles when the application rate is restricted to 40 pounds per acre
(Palmini, 1975). We concluded that the cost of nitrogen supplied by
ECONOMIC EFFECTS OF CONTROLS 19
Table 4. — Losses in Illinois Net Income per Farm Resulting From Per-Acre
Restrictions on Commercial Nitrogen Fertilizer in Illinois — State
Model
Nitrogen restriction
Losses in Illinois
1201b./A.
(134 kg./ha.)
80 Ib./A.
(90 kg./ha.)
40 Ib./A.
(45 kg./ha.)
Net income per farm
$92
$551
$1,450
Percent of net farm income, 1969
1 4%
8 7%
22 9%
Percent of net farm household income,
1969 0.9%
5.3%
14.0%
Table 5. — Effects on Corn Production, Clover Acreage, and Commercial
Nitrogen Fertilizer Use Resulting From Per-Acre Nitrogen Re-
strictions Imposed in Illinois — State Model
Illinois
Nitrogen restriction
120 Ib./A.
(134 kg./ha.)
80 Ib./A.
(90 kg./ha.)
40 Ib./A.
(45 kg./ha.)
Corn production
billion bushels
12
1.0
25.4
126,800
51,400
374,900
340,000
0.8
20.3
215,000
87,000
156,000
141,500
million metric tons...
30 5
Clover area
acres
. 126,800
hectares
51,400
Nitrogen use
short tons
618,500
metric tons
561 000
clover is very high and that this source is not an economical substitute
for commercial nitrogen fertilizer until the supply of commercial nitro-
gen is drastically curtailed. In terms of foregone grain production, the
opportunity cost of land for clover is simply too high even if corn is
disadvantaged by fertilizer constraints at the 80-pound level.
AN EXCISE TAX ON NITROGEN FERTILIZER
A control method that involves an excise tax simply means that farm-
ers who purchase commercial nitrogen fertilizer will be charged at the
market price plus a levy or excise tax. Both the national and the state
(Palmini) models, with a few modifications, were used to examine the
economic consequences of such a tax.
20 BULLETIN NO. 757
National Model
We analyzed three excise taxes, namely, 3, 6, and 12 cents per pound
of nitrogen (6.6, 13.2, and 26.4 cents/kg.). These taxes are assumed to
be levied only in Illinois. The response of farmers to the nitrogen fer-
tilizer tax depends in part on the relationship of crop yield to fertilizer
application. Because yields increase at a diminishing rate, a given in-
crease in fertilizer price with or without a tax causes the application rate
per acre to be reduced more at high yield levels than at low. Thus, the
initial tax of 3 cents per pound reduces the amount of nitrogen applied
to corn in Illinois by 17 percent, calculated from the bench mark (Table
6), while the second 3 cents (a total of 6 cents) results only in an addi-
tional 8 percent reduction. The highest tax considered, 12 cents per
pound, reduces nitrogen use on corn by 32 percent.
The data, presented in Table 6, show the effects of the taxes in Illi-
nois and also the resulting changes in the rest of the Corn Belt. Even
the smallest of the three taxes has an appreciable effect. Illinois crop
farmers suffer an immediate 5-percent decline in income, a 40-percent
drop in fertilizer applications, and a loss of 3.1 million acres of corn
(1.3 million ha.), although this loss is more than compensated for by
an increase of 4.0 million acres of soybeans (1.6 million ha.).
Table 6. — Effects of Imposing an Excise Tax on Commercial Nitrogen Fer-
tilizer in Illinois — National Model
Change
Excise tax on nitrogen
3^/lb.
(6.6^/kg.)
6*i/lb. 12jl/lb.
(13.2^/kg.) (26.4^/kg.)
Illinois
Net income per farm*
- 5 4%
- 9.6% -12.3%
-25.0% -32.0%
-40.0% -60.0%
-61.0% -76.0%
million acres (ha.)
-5.7 -7.7
(-2.3) (-3.1)
+6.6 +8.8
(+2.7) (+3.6)
+4.6 +6.0
( + 1.9) (+2.4)
-5.7 -7.8
(-2.3) (-3.2)
Nitrogen on unit area of corn . .
— 17 0%
Nitrogen on unit area of wheat . . .
— 29 0%
Total nitrogen used
. -40 0%
Corn
-3.1
Soybeans
(-1.3)
+40
Rest of Corn Belt"
Corn
( + 1.6)
+2.3
Soybeans
(+0.9)
—4.5
(-1.8)
a Income derived from corn, soybeans, wheat, and oats.
b Indiana, Iowa, Missouri, and Ohio.
ECONOMIC EFFECTS OF CONTROLS 21
The crop acreage changes in the rest of the Corn Belt ( Indiana, Iowa,
Missouri, and Ohio) are also of interest. With an Illinois tax of 3 cents,
the Corn Belt exclusive of Illinois increases corn acreage by 2.3 million
acres (0.9 million ha.) when Illinois decreases its acreage by 3.1 mil-
lion acres (1.3 million ha.). The net result is that the Corn Belt loses
800,000 acres of corn (324,000 ha.). This shift means that part of the
feed grain requirement must be met from production outside of the Corn
Belt. In terms of total corn and soybean acreage, Illinois would seem to
gain by the tax, because its soybean acreage increases 4.0 million acres
(1.6 million ha.) at 3 cents and 8.8 million acres (3.6 million ha.) at 12
cents, while the state loses only 3.1 and 7.7 million acres of corn (1.3
and 3.1 million ha.) at the two extreme tax levels.
State Model
The state model examines excise taxes of 3, 9, and 15 cents per
pound of nitrogen (6.6, 19.8, and 33.1 cents/kg.) imposed on nitrogen
fertilizer in Illinois. For this investigation we used the same eight pro-
ducing regions outlined in Figure 3, with each region selling in a com-
petitive market where the crop price is not affected by the quantity sold.
The consequences of these taxes are presented in Table 7.
Enactment of a 3-cent excise tax in Illinois reduces net farm income
about 6 percent, compared with the slightly smaller reduction of 5.4
percent in the national model (Table 6). A 3-cent tax only in Illinois
reduces the total nitrogen fertilizer used in the state by 40 percent in
the national model but by only 18 percent in the state model. Again, the
difference in demand assumptions plays an important role.
Table 7 . — Effects of Imposing an Excise Tax on Commercial Nitrogen Fer-
tilizer in Illinois — State Model
Excise tax on nitrogen
Change in Illinois
3t/lb.
(6.6^/kg.)
9^/lb.
(19.8,f/kg.)
15jf/lb.
(33.M/kg.)
Net income per farm
-6%
-16%
-33%
-681,000
-276,000
+535,000
+ 217,000
-23%
-43%
-833,000
-337,000
+535,000
+217,000
Total nitrogen used
-18%
Corn area
acres
+5, 000s
hectares
+2,000
Soybean area
acres
. -4,000
hectares
-2,000
• Rounded to nearest thousand acres and hectares.
22 BULLETIN NO. 757
In the national model a fixed quantity of feed grains is required na-
tionwide. Areas outside of Illinois can be used to produce this quantity,
permitting Illinois to reduce its corn acreage and hence its use of nitro-
gen fertilizer. In the state model a 3-cent tax actually increases corn
acreage slightly, by 5,000 acres, or less than one-half of 1 percent. How-
ever, these acres are needed for corn silage to make minor adjustments
in livestock systems. At the higher tax levels corn acreage decreases and
soybean acreage increases. Although data are not included in Table 7,
small grain acreages were also involved in the changes in cropping
patterns.
A MARKET FOR RIGHTS TO USE NITROGEN FERTILIZER
The concept of a market for rights to purchase commercial nitrogen
is basically simple, although the operational details may be complex. On
the basis of the water quality standard specified for the year, a public
agency, such as the Illinois Environmental Protection Agency, decides
how much nitrogen fertilizer is to be used that year. In the form of
coupons or certificates issued annually, rights to purchase a given quan-
tity of fertilizer are sold on the open market, with purchasers bidding
for these rights. The procedure might start with the agency asking a
representative sample of users to indicate the quantity they would order
at various prices. With this information the agency can then decide what
price to set to ensure that approximately the number of rights the agency
wants to issue will be sold.
After the initial disposition of rights by the agency, individual users
can buy and sell rights among themselves and to nonusers. Nonusers,
such as environmental groups, can influence the amount of fertilizer used
by trying to change the number of rights through the political system or
by buying rights and then not using them. The discussion that follows
assumes that nonusers do not purchase any rights.
National Model
Using the national model, we examined the effects of imposing rights
for five different quantities of nitrogen in Illinois only. These five quan-
tities, namely, 864, 519, 336, 224, and 198 thousand short tons (784, 471,
305, 203, and 180 thousand metric tons), were selected to correspond to
the assumed decline in the amount of nitrogen used when excise taxes of
3, 6, 9, and 12 cents per pound are imposed (6.6, 13.2, 19.8, and 26.4
ECONOMIC EFFECTS OF CONTROLS 23
Table 8. — Regional Crop Acreages Resulting From a Market for Commer-
cial Nitrogen Fertilizer Rights Imposed in Illinois — National
Model
Quantity of rights, 1,000 short tons (metric tons)
Crop and region
864
(784)
519
(471)
336
(305)
224
(203)
198
(180)
,-. • , million acres (ha.)
Corn, gram sorghum
Illinois
11.4
8.4
5.7
3.9
3.7
(4.6)
(3.4)
(2.3)
(1.6)
(1.5)
Other Corn Belt states8
18.7
21.0
23.3
24.9
24.8
(7.6)
(8.5)
(9.4)
(10.1)
(10.0)
Rest of U.S
37.5
40.1
41.4
41.5
41.4
(15.2)
(16.2)
(16.8)
(16.8)
(16.8)
Total
67.6
69.5
70.4
70.3
69.9
(27.4)
(28.1)
(28.5)
(28.5)
(28.3)
Small grains
Illinois
4.3
3.4
3.4
3.4
3.5
(1.7)
(1.4)
(1.4)
(1.4)
(1.4)
Other Corn Belt states8
7.9
8.0
9.3
10.7
11.2
(3.2)
(3.2)
(3.8)
(4.3)
(4.5)
Rest of U.S
95.4
96.4
95.2
97.8
98.5
(38.6)
(39.0)
(38.5)
(39.6)
(39.9)
Total
107.6
107.8
107.9
111.9
113.2
(43.5)
(43.7)
(43.7)
(45.3)
(45.8)
Soybeans
Illinois
3.2
7.2
9.8
11.8
12.0
(1.3)
(2.9)
(4.0)
(4.8)
(4.9)
Other Corn Belt states8
16.9
14.6
11.2
9.0
9.1
(6.9)
(5.9)
(4.5)
(3.6)
(3-7)
Rest of U.S
19.6
16.8
17.0
16.2
15.8
(7.9)
(6.8)
(6.9)
(6.6)
(6.4)
Total
39.7
38.6
38.0
37.0
36.9
(16.1)
(15.6)
(15.4)
(15.0)
(14.9)
8 Indiana, Iowa, Missouri
, and Ohio.
cents/kg.). In Illinois 864,000 short tons is the bench-mark figure for
use of nitrogen fertilizer with no restriction or excise tax on nitrogen.
The analysis involved determining the acreage changes that would occur
in Illinois, in the other Corn Belt states (Indiana, Iowa, Missouri, and
Ohio), and in those states outside of the Corn Belt. Table 8 presents the
corn and grain sorghum, small grain, and soybean acreages for the five
nitrogen levels. The results underline the national acreage redistribution
that occurs when a control method is introduced in only one state. Al-
though the precise changes in the various regions are determined by the
interdependent relationships in the model, several general trends may
be noted.
24 — BULLETIN NO. 757
CHANGES IN ACREAGES
As might be expected, the imposition of a market for nitrogen fer-
tilizer rights in Illinois disadvantages that state in corn and sorghum
production. For the smallest quantity of rights, 198,000 short tons, the
acreage of these crops in Illinois drops by about two-thirds, from 11.4 to
3.7 million acres (4.6 to 1.5 million ha.). Because a fixed quantity of
corn and sorghum must be produced nationally, increases in acreages of
these crops occur both in the other Corn Belt states (an added 6.1 mil-
lion acres or 2.4 million ha.) and in states outside of the Corn Belt (an
added 3.9 million acres or 1.6 million ha.). Note that as a result of a
market for rights in Illinois, a total of 2.3 million additional acres (0.9
million ha.) are needed nationally to produce the required corn and
sorghum, that is, 69.9 versus 67.6 million acres.
In addition to the shifts in location of corn and sorghum production,
small grain acreages in the various regions also change. The pattern for
small grains parallels that for corn and sorghum — a decrease in Illinois
and an increase outside of Illinois. However, the shifts are not as dra-
matic as those for corn and sorghum, because on a national scale Illinois'
small grain production is of less importance than its corn and sorghum.
Also, small grain crops are not affected as much by the restrictions on
available nitrogen fertilizer. As in the case of corn and sorghum, more
total acres are required to meet the national needs for small grain. At
the most restricted level of rights, 5.6 million additional acres (2.3 mil-
lion ha.) would be required, that is, 113.2 versus 107.6 million acres.
The location of soybean production is changed substantially by the
market for rights in Illinois. In general, the shifts are in the opposite
direction of those for the other crops considered. With the smallest quan-
tity of rights, soybean acreage in Illinois increases almost fourfold, from
3.2 to 12.0 million acres (1.3 to 4.9 million ha.). This increase is accom-
panied by a reduction in the other states within the Corn Belt and outside
of the Corn Belt. Because Illinois soybean yields are higher than the
yields in other states, 2.8 million fewer acres (1.2 million ha.) are needed
nationally to meet the demand than when there is no market for rights.
CHANGES IN YIELDS, COSTS, AND INCOME
All of the changes discussed above are of course solely redistributions
within producing regions. The changes indicate nothing about how yields
are affected, although it is reasonable to assume that corn and sorghum
yields will decrease as these crops leave the Corn Belt. Less productive
land will be used to meet the demand, thereby increasing the cost of pro-
duction per bushel (Table 9). An 8-percent cost increase occurs as we
ECONOMIC EFFECTS OF CONTROLS — 25
Table 9. — Costs of Producing Selected Crops Under a Market for Commer-
cial Nitrogen Fertilizer Rights Imposed in Illinois — National
Model*
Crop
Quantity of rights,
1,000 short tons (metric tons)
864
(784)
519
(471)
336
(305)
224
(203)
198
(180)
Corn
per bushel
$ 1 23
$ 1.25
$ 49.22
102
$ 3.04
$111.72
100
$ 1.38
$ 50.72
101
$ .61
$ 43.04
98
$ 1.27
$ 50.01
103
$ 3.05
$112.09
100
$ 1.40
$ 51.45
103
$ .60
$ 42.34
97
$ 1.30
$ 51.19
106
$ 3.04
$111.72
100
$ 1.42
$ 52.19
104
$ .59
$ 41.63
95
$ 1.33
$ 52.37
108
$ 3.05
$112.09
100
$ 1.45
$ 53.29
107
$ .60
$ 42.34
97
per metric ton .
$ 48 43
Index . .
100b
Soybeans
per bushel
$ 3 05
per metric ton
$112 09
Index
. . . 100
Wheat
per bushel
$ 1 36
per metric ton .
$ 49 98
Index
100
Oats
per bushel
$ 62
per metric ton
. . $ 43 75
Index
100
* All costs are for the 1969-71 base period, and are based in part on the opportu-
nity costs of the model. Opportunity costs represent net income foregone in order to
increase the production of a given crop by 1 bushel.
b Base price corresponding to a quantity of rights equal to 864,000 short tons
(784,000 metric tons).
go to the smallest quantity of rights. In the long run, the increased costs
must be covered by the price of these grains. Soybean costs are not
affected, but wheat, because of its high nitrogen requirement, follows
roughly the same pattern as corn. The cost of producing oats, a rather
minor crop, is lowered slightly. Apparently in the process of rearrange-
ment, oats become more favorably located with respect to the cost of
production.
Production costs, and hence price increases, are the most obvious for
corn and wheat because they require more intensive nitrogen application
than any other crops. Price changes for output are reflected in farm in-
come changes. The 1969 Census of Agriculture estimated that those Illi-
nois farms producing only corn, wheat, soybeans, and oats earned an
average of $6,327 annually. With the quantity of rights set at 519,000
short tons, this income would decline 6 percent; at 198,000 tons it would
be reduced by 12 percent. Even though the price of corn and wheat rises,
the increase is insufficient to offset the smaller acreages of these crops
in Illinois.
26 BULLETIN NO. 757
RESTRICTIONS ON NITRATE CONCENTRATION
IN GROUNDWATER BELOW THE ROOT ZONE
If all of the nitrogen fertilizer applied were to be taken up by the
crop, the agricultural use of nitrogen would not affect the nitrate con-
centration of water in the soil. In reality, a certain amount of nitrogen
inevitably leaches into the soil and groundwater below the root zone of
the plants. In this phase of our investigation we analyzed the effects of
varying the allowable level of nitrate concentration below the root zone.
Of particular interest are the effects that this control method would have
on cropping systems, management practices, and farm income. We asked
the question: If farmers were required to meet various standards for
nitrate concentration, what would be the best cropping systems and man-
agement practices for maximizing net farm income excluding land costs ?
We also examined the results of measures taken to control soil erosion
and sedimentation, although these problems are not central to the study.
Because the choice of crops and management practices also affects soil
erosion, we briefly considered these interactions by simultaneously put-
ting certain restrictions on both nitrate concentration and sedimentation.
Watershed Model
Using a linear programming model developed for a watershed
(Onishi, 1973; Onishi et al, 1974; Onishi and Swanson, 1974), we
studied the Forest Glen watershed near Danville, Illinois. This watershed
contains 1,200 acres (486 ha.), about two-thirds of which are considered
suitable for crops. The area is of practical interest because it has been
proposed that a reservoir be constructed nearby at the head of a tributary
of the Vermilion River and that public recreation facilities be provided.
Water quality standards would be a major consideration for such a fa-
cility. The cropland in this area is classified into tracts by ownership of
land, type of soil, slope length and gradient, and elevation above the sur-
face of the proposed reservoir. Four different elevations were taken into
account, because the distance from the initial erosion affects the amount
of sediment entering the reservoir.
The goal of an assumed five-year planning period is to maximize
net farm income. There are three constraints on maximizing income:
( 1 ) acreages of different types of land available for particular crops for
each of the five years, (2) the allowable nitrate concentration in the
leachate below the root zone, and (3) the amount of sediment entering
the reservoir. Alternative cropping systems (crop combinations, tillage
ECONOMIC EFFECTS OF CONTROLS — 27
methods, and nitrogen fertilizer levels) are taken into account for sixty-
three separate tracts for each of the five years. The land availability con-
straint provides a way to make sure that acreages for all crops and land
left idle equal the total area available for the various tract classifications.
Three basic assumptions were made with respect to cropping systems
and management practices. First, the nineteen farmers in the watershed
concentrate on cropping operations with no livestock enterprises. Sec-
ond, any one of three tillage methods can be used for corn grown on the
same land year after year: conventional, plow-plant, and chisel plow.
However, only the conventional method is used for the following rota-
tions involving corn (C), soybeans (S), wheat (W), wheat with alfalfa
as a catch crop (Wx), and alfalfa meadow (M): C-C-S-WX, C-S-WX,
and C-S-W-M. Finally, nitrogen applications of 50, 100, and 140 pounds
per acre (56, 112, and 157 kg./ha.) are available for consecutive plant-
ings of corn. Rate adjustments are made for corn in the rotations to
allow for the nitrogen furnished by the legumes (soybeans and alfalfa).
The universal soil loss equation (Wischmeier and Smith, 1965) and
a sediment-yield ratio equation based on drainage areas (Roehl, 1962)
were used to calculate sediment coefficients. To estimate the amount of
sediment entering the reservoir, the gross erosion predicted for each
cropping system was adjusted by sediment-yield ratios.
An equation for the potential nitrate-nitrogen (NO3-N) concentra-
tion in water leaching below the root zone was developed by Stout and
Burau (1967). In this equation, corn fertilized at the rate of 100 pounds
or less of nitrogen per acre does not release any nitrogen into ground-
water because the nitrogen uptake by the grain portion of the corn is
greater than the amount of nitrogen supplied. Theoretically, no nitrogen
leaches into groundwater because the equation assumes an equilibrium
between nitrogen application and uptake; in reality, some nitrogen is
released in the leachate even at the lower rates. Accordingly, we made
an adjustment in the equation by assuming that the amount of nitrogen
available in a given area for a crop is the sum of the amount applied
plus the amount already in the soil. The amount already in the soil is
estimated by calculating the nitrogen taken up by the crop if no nitrogen
fertilizer is applied. The total amount of nitrogen thus calculated was
inserted in the Stout-Burau equation to estimate the potential NO3-N
concentration in the leachate below the root zone.
SEDIMENT CONTROL MEASURES
On the basis of selected sediment control measures, we analyzed two
groups of problems. The first group requires complete dredging of the
28 — BULLETIN NO. 757
$60,000
g 50,000
I 40,000
£
o 30,000
3
C
< 20,000
o>
S 10,000
I
Case B
\
Case A
10 20 30 40 50 60 70
Potential N03-N Concentration, mg./liter
80
Figure 5. Effect on net farm income when potential NO3-N is restricted in
leachate below the root zone. Case A: Charges made for dredging all sedi-
ment from reservoir. Case B: Charges made for dredging sediment in excess
of 8,498 short tons (7,711 metric tons) accumulated over five years.
reservoir, with the farmers bearing the cost. In this case there is no
upper limit on sedimentation in the reservoir. The second group of prob-
lems sets an upper limit of 8,498 short tons of sediment (7,711 metric
tons) accumulated over the five-year period. Dredging is required for
any sediment above this limit, with the farmers bearing the cost. It is
estimated that sediment accumulating at this rate would fill half of the
proposed reservoir in three hundred years. For each of these two groups
we assumed three situations for potential NO3-N concentration in sedi-
ment: upper limits of 10 and 20 milligrams per liter, and no upper limit.
CHANGES IN INCOME
Several general patterns emerge when crop production is constrained
by dredging charges for sediment released into the reservoir and at the
same time by placing limits on potential NO3-N in the leachate below the
root zone ( Figure 5 ) . In this figure the curve rises from left to right as
the allowable nitrate concentration in the root zone increases. Conversely,
as the restriction on this concentration is tightened, the curve descends
from right to left, quite rapidly when the level is reduced from 20 to 10
milligrams per liter. In terms of income, farmers lose more when they
are required to pay for dredging all of the sediment from the reservoir
(case A) than when charged for dredging only the sediment above the
8,498-ton limit (case B). However, in both cases A and B the rates of
income reduction increase as nitrate restrictions are tightened.
ECONOMIC EFFECTS OF CONTROLS 29
A TOTAL-FARM NITROGEN BALANCE
Because crops do not absorb all of the nitrogen fertilizer applied, the
amount remaining in the soil becomes a potential source of water con-
tamination. A surplus of residual nitrogen produces a positive balance,
while a deficit produces a negative balance. This section examines how
this balance is affected when restrictions are put on the total amount
of commercial nitrogen fertilizer available to individual farms. With
his given allotment of nitrogen fertilizer, the farmer is free to choose
the cropping system and fertilizer rates that will maximize his farm in-
come above direct costs. We have varied the size of the allotment in
order to examine the effects of such a control program on the nitrogen
balance and farm income.
Farm Model
To estimate the average annual farm income above direct costs, we
used a five-year linear programming model for an Illinois farm of 293
acres (119 ha.), which is the average size for Champaign County. Al-
though this is a cash-grain farm, the analysis can be extended to a grain
and livestock farm. We developed an accounting procedure for deter-
mining the nitrogen balance. A detailed discussion of the method and
results is presented in Walker (1974). The nitrogen accounts recognize
two sources of nitrogen, namely, commercial nitrogen fertilizer and
legume crops (soybeans, alfalfa, and clover). The nitrogen from these
two sources either remains on the farm or is removed in harvested crops.
The balance is positive if the sum of the two sources is greater than the
amount removed in harvested crops, and negative if the sum is less.
Nitrate pollution of water becomes more likely as the nitrogen balance
becomes increasingly positive.
The model activities are production, purchasing, marketing, and finan-
cial management. Crop production encompasses corn, soybeans, wheat,
alfalfa, and sweet clover, each of which is produced by different methods
and in different rotations. Purchasing and marketing activities include
buying inputs and selling farm outputs, with all grain being sold at har-
vest. Financial management includes credit, debt, and investment or loan
management. These financial activities run on an annual basis for the
entire five-year planning period.
The resource constraints are land, labor, and capital. Land is con-
sidered homogeneous. The number of acres remains constant because no
land is purchased or sold. The constraint on labor is the amount of labor
30 BULLETIN NO. 757
available in each month of the year. Capital is limited to operating ex-
penses only; no long-term investment credit is considered.
The solutions for the model give the nitrogen balance, farm income,
and optimal cropping systems for each of the commercial nitrogen fer-
tilizer allotments. These allotments, established by a regulatory agency,
are the amounts that the farmer may purchase each year. The five levels
considered available for this 293-acre farm are as follows :
Total- farm Per unit area
jLevei
I...
short ton
. . 0
metric ton
o
Ib./acre
o
kg./ha.
0
II...
. . . . 7.33
665
50
56
Ill
14.65
13.29
100
112
IV. .
21 98
1994
150
168
V..
.29.30
26.58
200
224
At each of these five allotment levels the resulting nitrogen balances
for the entire farm range from —11.59 short tons ( — 10.52 metric tons),
when no commercial nitrogen fertilizer is allowed and only corn is grown,
to 8.54 short tons (7.75 metric tons), when commercial nitrogen is, for
all practical purposes, unlimited and hence not an effective constraint on
the choice of cropping systems and fertilizer practices.
OPTIMAL CROPPING SYSTEMS
Table 10 presents the optimal cropping systems resulting from each
fertilizer allotment combined with the given nitrogen balance. Various
cropping systems are possible in this model. For example, 40 percent
of the farm can be planted to corn and 60 percent to soybeans. The
following year these two crops are rotated, and so on throughout the
five-year planning period. Crops in the possible systems are corn-C,
soybeans-S, wheat with a meadow catch crop-W(M), and legume
meadow-M.
With a commercial nitrogen fertilizer allotment of zero (level I),
the optimal cropping system begins with 100 percent of the farm acreage
being planted to continuous corn (only corn planted year after year)
and shifts to continuous soybeans at the zero point on the nitrogen bal-
ance scale (Table 10). As the crop combination shifts to 20% Ci50(i68),
60% S, 20% M, the nitrogen balance becomes positive. Note that even
though no commercial nitrogen is available, the nitrogen use rate for
this crop combination, as indicated by the subscript, is 150 pounds per
acre because of the nitrogen contributed by the legume meadow.
ECONOMIC EFFECTS OF CONTROLS 31
CHANGES IN INCOME AND NITROGEN BALANCE
At level I the cropping system that produces the highest income witli
no commercial nitrogen used is continuous soybeans (Table 11). Weed,
disease, and insect problems, however, may occur with this cropping sys-
tem. At level III with a total-farm fertilizer allotment of 14.65 short tons,
the highest income occurs when there is a positive nitrogen balance of
2.5 short tons. The cropping system that maximizes income at this allot-
ment level is 60% Ci65(185), 40% S. At the highest level, 29.30 short tons
Tcrb/e 70. — Optimal Crop Comb/naf/ons and Total-Farm Nitrogen Balances for Various
Commercial Nitrogen Fertilizer Allotments, 293-Acre Cash-Grain Farm,
Champaign Counfy, Illinois
Nitrogen
balance,
short tons
(metric tons)
Total-farm fertilizer allotment, short tons (metric tons), levels I-V
I
0
II
7.33
(6.65)
III
14.65
(13.29)
IV
21.97
(19.94)
V
29.30
(26.58)
-11 59..
Cn/ffi*
Co(0)
Ci9(21)
C49(55)
80% Ce,(7«
20% S
60% C88(96)
40% S
40% Cl29<144)
60% S
25% C200(224)
75 %S
25 % C200(224)
50% S
25%W6o(67)(M)
30% C200(224)
10% S
30%W60(67)(M)
30% M
30% C200(224)
20% S
10% WoO(67)(M)
40% M
Co(0)
Cl9(21)
C48(64)
C?8(87)
90% Cl05(118)
10% S
80% Ci29(144)
20% S
60% CiS5(186)
40% S
50% C200(224)
40% S
10%W60(67)(M)
50% C200(224)
20% S
20%W60(67)(M)
10% M
60% C2IW224)
10% S
10% W60(67)(M)
20% M
Co(o)
Cl9(21)
C48(64)
C78(87)
Ci06(ll«)
Cl29(144)
Cl62(170)
83% Cl79(200)
17% S
80% C200(224)
10% S
10% W60(67)(M)
80% C200(224)
5%S
15%W60(67)(M)
Co(0)
Cl9(21)
C48(64)
C78(87)
Cl06(119)
Cl29(144)
Cl52(170)
Cl72(193)
ClJ2f215)
C200(224)
(-10.52)
— 10 00
90% Co<o>
(-9.07)
-7.50
10% S
. 60% Coco
(-8.40)
-5 00. . . .
40% S
. 40% C0(o)
(-4.54)
-2.50
60% S
, . 20% Coco)
(-2.27)
0
80% S
S
2.50. .
(2.27)
5.00. .
60% S
20% M
(9.07)
7.50
25 %S
50% M
. No solution
(8.40)
8.54..
possible
. No solution
(7.75)
possible
a Crops in the possible systems are corn - C, soybeans - S, wheat with a meadow catch
crop-W(M), and legume meadow -M. Subscripts indicate the total legume and commercial
nitrogen rate in Ib./A. (kg./ha.). When soybeans or corn alone is the optimal crop, 100% is
understood.
32 BULLETIN NO. 757
Table 11. — Crop Comb/naf/ons and Nitrogen Balances That Maximize In-
come for Total-Farm Commercial Nitrogen Fertilizer Allotments,
293-Acre Cash-Grain Farm, Champaign County, Illinois
Total-farm fertilizer allotment,
short tons (metric tons), levels I-V
I
0
II
7.33
(6.65)
III
14.65
(13.29)
IV
21.97
(19.94)
V
29.30
(26.58)
Crop or crop
combination
Sa
40% Ci2»(144)
60% Ci«iU8i'
Farm income above
direct costs
$26,617
60% S
$28,378
40% S
$30,447
$32,436
$34,025
Nitrogen balance, short
tons (metric tons) . . .
0
0
2.50
(2.27)
2.50
(2.27)
8.54
(7.75)
• Crops in the optimal systems are corn - C and soybeans - S. Subscripts indicate
the total legume and commercial nitrogen rate in Ib./A. (kg./ha.). When soybeans or
corn alone is the optimal crop, 100% is understood.
(level V), the allotment is completely used when the nitrogen balance is
8.54 short tons. The cropping system here is 100% C2oo<224), that is, con-
tinuous corn with the nitrogen application rate increasing up to 200
pounds per acre. Both farm income and the nitrogen balance are at their
highest when the fertilizer allotment is completely used.
Using Table 11, we can compare the effects on net farm income,
nitrogen balance, and optimal cropping systems for each commercial
nitrogen fertilizer allotment. Comparison of the nitrogen balance and
income permits us to assess public gains in terms of reduction in the
nitrogen balance and private losses to farmers. Because solutions for
the farm model were obtained by establishing both a nitrogen fertilizer
allotment and a nitrogen balance at intervals of 2.5 short tons, the opti-
mal cropping systems are approximations; the exact solutions fall be-
tween the arbitrarily chosen levels of the nitrogen balance.
By comparing the change between levels V and IV with the change
between levels III and II, we can see the relative effects on income and
the nitrogen balance. Farm income drops $1,589 (from $34,025 to $32,-
436) for the V to IV allotment reduction, and $2,069 (from $30,447 to
$28,378) for the III to II reduction. The sacrifice in income for the same
absolute reduction in the nitrogen fertilizer allotment becomes greater
as the allotment decreases. The corresponding decline in the nitrogen
balance between levels V and IV is 6.04 short tons (from 8.54 to 2.50
ECONOMIC EFFECTS OF CONTROLS — 33
tons). In contrast, the nitrogen balance declines by only 2.50 short tons
(from 2.50 to 0 tons) between levels III and II. Thus the first reduction
in allotment, V to IV, is less expensive in terms of income loss than the
third reduction, III to II, but more effective in terms of decreasing the
nitrogen balance and hence the water pollution potential.
SUMMARY
In this bulletin we examine six control methods that might be used
to reduce nitrate concentration in water. We focus primarily on the esti-
mated effects that these methods might have on agricultural production
and farm income. Except in the watershed study (pages 26 to 28), we
do not consider how effective these various control measures might be in
reducing the nitrate concentration in water. Also, we do not analyze the
relative costs of administering the different programs. Three basic types
of control are considered: education, regulation, and economic incentives.
Education
Education might be a way to reduce nitrate concentration in water
if farmers are applying more nitrogen fertilizer than necessary to maxi-
mize economic returns. The data available from commercial farms and
farm experiments, however, indicate that in terms of the farmer's eco-
nomic interests there is very little overapplication of nitrogen fertilizer.
We concluded that an educational program based on economic self-
interest would have very limited value in reducing fertilizer applica-
tions and hence decreasing nitrate concentration in water.
Regulation
Regulating the use of nitrogen fertilizer can be accomplished in sev-
eral ways. First, limits can be established for per-acre application rates
for major crops. Some type of surveillance by an administrative agency
would of course be needed to enforce these limits. Second, the nitrate
concentration in the leachate can be restricted, but again some system of
inspection would be necessary to determine if the leachate concentration
were acceptable. Third, limits can be placed on the total nitrogen fer-
tilizer available for a single farm, thus permitting the farmer to allocate
his quota among crops as he prefers. Enforcement procedures are apt
to be simpler for this method than for either of the other two regulatory
34 BULLETIN NO. 757
methods. In contrast to an educational program, regulation does have
the potential for effectively reducing nitrogen fertilizer use. However,
the impact on agricultural production and the implications of this impact
should be included as a part of the basis for choosing a control method.
Economic Incentives
Two types of economic incentives are discussed in this bulletin: first,
a tax on nitrogen fertilizer, which would probably reduce application
rates because of the diminishing-returns relationship between the amount
of fertilizer applied and the crop yield; and second, a market for rights
to purchase commercial nitrogen. Both of these measures would require
less administrative supervision, but might also in practice be less effec-
tive than direct regulatory methods. Nevertheless, economic incentives
have a greater potential for reducing nitrogen fertilizer use than infor-
mational programs, which are designed to improve decision making on
nitrogen application rates at the level of the individual farm.
Conclusions
Units of analysis varying from the nation to an individual farm were
used to assess the changes in crop production and farm income resulting
from the various control methods. However, not all of the controls were
evaluated at all units of analysis. Although the regulatory controls and
the economic incentives have different administrative arrangements, our
principal concern in this study has been the consequences to agricultural
production if nitrogen fertilizer use were to be reduced, regardless of
the method.
Reducing nitrogen rates nationwide to 100 pounds per acre (112
kg./ha.) on corn, sorghum, and wheat would require a very minor in-
crease in acreage to meet either low or high export demands. However,
if export demands are high and the nitrogen limit is set at 50 pounds
per acre (56 kg./ha.), then 16 percent more land would be required
than when there are no limits on fertilizer use. Controls only in Illinois
reduce Illinois' competitive advantage in corn production, and even
though the nation's soybean production becomes more concentrated in
Illinois than under the current no-restriction system, Illinois farmers
would experience serious economic setbacks as the level of restriction
increases. A 50-pound-per-acre limit in Illinois only, for example, would
reduce Illinois farm income about 17 percent, as shown in the national
model.
ECONOMIC EFFECTS OF CONTROLS 35
When fertilizer use is initially reduced to a range between 10 and 25
percent, the effects on cropping patterns, acreage requirements, and in-
come are moderate. The impact becomes increasingly severe, however,
when nitrogen use is further restricted. In the total-farm analysis, a re-
duction of 25 percent in the nitrogen allotment causes a decline of about
5 percent in farm income above direct costs, whereas a reduction of 75
percent in the allotment results in an income decline of nearly 20 percent.
Improvements in health and in the quality of the environment are
the reasons for examining the effects of various control measures. There-
fore, for a complete evaluation of these measures public policy makers
should place the production and income consequences of controls side-
by-side with the expected benefits. The combined information will then
form the base upon which policy decisions can be made.
BIBLIOGRAPHY
Aldrich, S. R. 1972. Some effects of crop production technology and environmental
quality. BioSci. 22 :90-95.
Allison, F. E. 1966. The fate of nitrogen in soils. Advan. Agron. 18:219-258.
Finke, J. 1973. Nitrogen fertilizer : Price levels and sales in Illinois, 1945-1971. 111.
Agr. Econ. 13(1) :34-40.
Finke, J., and E. R. Swanson. 1973. Diversification in Illinois crop production :
1938-1970. 111. Agr. Econ. 13(1) :8-ll.
Frohberg, K. K. 1975. Optimal level of nitrogen fertilizer for corn in Illinois. Un-
published M.S. thesis, Univ. of Illinois at Urbana-Champaign.
Frohberg, K. K., and C. R. Taylor. 1975. The influence of risk arising from weather
variability on the optimal nitrogen fertilization level of corn. 111. Agr. Econ.
15(2) :23-26.
Gros, J. G., and E. R. Swanson. 1976. A framework for evaluating public policy
on the use of agricultural chemicals. J. Environ. Manage. 4:403-411.
Ibach, D. B., and J. R. Adams. 1968. Crop yield response to fertilizer in the United
States. U.S. Dep. Agr. Econ. Res. Serv. Stat. Bull. 431.
Illinois Pollution Control Board. 1972. Opinion of the Board in the matter of plant
nutrients. R-71-15.
Leonard, D. 1974. Competitive equilibrium and welfare maximization in an economy
containing public nuisances. Unpublished Ph.D. diss., Univ. of Illinois at Ur-
bana-Champaign.
Lijinski, W. 1971. Regulation of food additives and medicated animal feeds. Testi-
mony before the Subcommittee of the Committee on Government Operations,
House of Representatives. Washington, D.C. : U.S. Government Printing
Office.
Onishi, H. 1973. Spatial and temporal resource allocation methods for agricultural
watershed planning. Unpublished Ph.D. diss., Univ. of Illinois at Urbana-
Champaign.
36 BULLETIN NO. 757
Onishi, H., A. S. Narayanan, T. Takayama, and E. R. Swanson. 1974. Economic
evaluation of the effect of selected crop practices on non-agricultural uses of
water. Water Resources Center Res. Rep. 79. Univ. of Illinois at Urbana-
Champaign.
Onishi, H., and E. R. Swanson. 1974. Effect of nitrate and sediment constraints on
economically optimal crop production. J. Environ. Qual. 3 :234-238.
Palmini, D. J. 1975. The regional impact on Illinois agriculture of environmental
controls on nitrogen use : A linear programming analysis. Unpublished Ph.D.
diss., Univ. of Illinois at Urbana-Champaign.
Roehl, J. W. 1962. Sediment source areas, delivery ratios and influencing morpho-
logical factors. International Association of Scientific Hydrology, Commission
of Land Erosion, Publ. 59 :202-213.
Stout, P. R., and R. G. Burau. 1967. The extent and significance of fertilizer
buildup in soils as revealed by vertical distributions of nitrogenous matter
between soils and underlying water reservoirs. Pages 283-310 in N. C. Brady,
ed., Agriculture and the quality of our environment. American Association for
the Advancement of Science. Washington, B.C.
Swanson, E. R. 1971. Economic impact of regulations to limit use of nitrogen fer-
tilizer. Pages 29-33 in Environmental quality and agriculture : What are the
options? Proc. Second Allerton Conference, December, 1971. College of Agri-
culture Spec. Publ. 26. Univ. of Illinois at Urbana-Champaign.
. 1975. Problems and policy alternatives — agriculture. Pages 14-19
in W. D. Seitz, ed., Proc. : Workshop on non-point sources of water pollution,
Allerton House, March 20-21, 1975. College of Agriculture Spec. Publ. 37.
Univ. of Illinois at Urbana-Champaign.
Swanson, E. R., C. R. Taylor, and L. F. Welch. 1973. Economically optimal levels
of nitrogen fertilizer for corn : An analysis based on experimental data. 111.
Agr. Econ. 13(2) : 16-25.
Swanson, E. R., and C. R. Taylor. 1977. Potential impact of increased energy costs
on the location of crop production in the Corn Belt. J. Soil Water Conserv.
32(3) :126-129.
Taylor, C. R. 1973. An analysis of nitrate concentrations in Illinois streams. 111.
Agr. Econ. 13(1) : 12-19.
. 1975. The nitrate controversy : Three proposed policies and their
economic effects. 111. Res. 17(2) :6-7.
-. 1975. A production function model for aggregate time series
data. Amer. J. Agr. Econ. 57(1) :122-123.
-. 1975. A regional market for rights to use fertilizer as a means of
achieving water quality standards. J. Environ. Econ. Manage. 2(1) :7-17.
-. 1976. Alternative nitrogen pollution control policies : Their eco-
nomic effect and interaction with other pollution sources. Unpublished paper
presented at annual meeting of American Association for the Advancement
of Science. Boston, Mass.
Taylor, C. R., and K. K. Frohberg. 1977. The welfare effects of erosion control,
banning pesticides, and limiting fertilizer application in the Corn Belt. Amer.
J. Agr. Econ. 59(1) :25-36.
Taylor, C. R., and E. R. Swanson. 1973. Experimental nitrogen response functions,
actual farm experience, and policy analysis. 111. Agr. Econ. 13(2) :26-32.
. 1974. Economic impact of imposing per-acre restrictions on use of
nitrogen fertilizer in Illinois. 111. Agr. Econ. 14(2) :l-5.
ECONOMIC EFFECTS OF CONTROLS — 37
. 1975. The economic impact of selected nitrogen restrictions. Agr.
Econ. Res. Rep. 133. 111. Agr. Exp. Sta,, Univ. of Illinois at Urbana-Cham-
paign.
Walker, M. E., Jr. 1974. An economic evaluation of the impact of commercial
nitrogen control at the farm level. Unpublished Ph.D. diss., Univ. of Illinois
at Urbana-Champaign.
Walker, M. E., Jr., and E. R. Swanson. 1974. Economic effects of a total farm
nitrogen balance approach to reduction of potential nitrate pollution. 111. Agr.
Econ. 14(2) :21-27.
Wischmeier, W. H., and D. D. Smith. 1965. Predicting rainfall erosion losses from
cropland east of the Rocky Mountains. U.S. Dep. Agr. Agr. Res. Serv. Handb.
282.
4M— 4-78— 40130— SW
30112019531091
UNIVERSITY OF ILLINOIS-URBANA
Live Music Archive
Librivox Free Audio
Metropolitan Museum
Cleveland Museum of Art
Internet Arcade
Console Living Room
Books to Borrow
Open Library
TV News
Understanding 9/11