Evaluating sectoral effects of agricultural nitrogen pollution reduction policy in Croatia within a CGE framework

Abstract

Environmental policies are becoming an important part of agricultural policy portfolio in the EU, which is binding on Croatia. This paper seeks to evaluate potential sectoral effects of several nitrogen pollution reduction policy measures within CGE model for Croatia. Finding appropriate agri-environmental policy design represents a typical optimization problem. Thus, the paper attempts to find potential agri-environmental measures which comply with supranational directives without jeopardizing other economic policy goals. Results show that polluter-pays principlebased measures, if not accompanied by the provider-gets principle measures, could have relatively large negative economy-wide effects in Croatia. However, these effects can be reduced by the appropriate policy mix.

Monitoring the use of mineral fertilizers in rural areas of the region

“…Program activities of the European Union to reduce the use of mineral fertilizers by 20% and achieve at least 25% of the area of agricultural land included in organic farming [11], without taking into account the growing needs of the world population, raise serious concerns. At the same time, the issue of an excess of chemicals and their compounds in agricultural lands [12], in particular nitrates [13], cannot be ignored, especially in highly industrialized states with their accumulated environmental problems, risks and threats.…”

Market impacts of Farm to Fork: Reducing agricultural input usage

“…CGE models are often used to evaluate the potential impacts of a policy, as they provide economy‐wide and commodity‐specific effects while considering inter‐industry linkages. For example, a recent CGE study demonstrated that taxes on undesirable agricultural inputs (e.g., nitrogen fertilizer) in combination with general farm subsidies is the most effective means of achieving farm‐level input reductions while maintaining the greatest level of output and trade (Nadoveza Jelić & Šimurina, 2020). Other examples of CGE‐based studies that consider the market impacts of agricultural input reduction include Bareille and Gohin (2020), who find that a 50% tax on pesticide usage in France would reduce farmers' pesticide consumption by 37%—and lead to reductions in production and exports.…”