Economic instruments can be used to control groundwater nitrate pollution due to the intensive use of fertilizers in agriculture. In order to test their efficiency on the reduction of nitrate leaching, we propose an approach based on the combined use of production and pollution functions to derive the impacts on the expected farmer response of these instruments. Some of the most important factors influencing nitrate leaching and crop yield are the type of soil and the climatic conditions. Crop yield and nitrate leaching responses to different soil and climatic conditions were classified by means of a cluster analysis, and crops located in different areas but with similar response were grouped for the analysis. We use a spatial economic optimization model to evaluate the potential of taxes on nitrogen fertilizers, water prices, and taxes on nitrate emissions to reduce nitrate pollution, as well as their economic impact in terms of social welfare and farmers' net benefits. The method was applied to the Mancha Oriental System (MOS) in Spain, a large area with different soil types and climatic conditions. We divided the study area into zones of homogeneous crop production and nitrate leaching properties. Results show spatially different responses of crop growth and nitrate leaching, proving how the cost-effectiveness of pollution control instruments is contingent upon the spatial heterogeneities of the problem.
Keywords: Economic instruments; Nitrate leaching; Soil and climate heterogeneity.
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