RISK CONSIDERATIONS IN THE REDUCTION OF NITROGEN FERTILIZER USE IN AGRICULTURAL PRODUCTION

Nonpoint pollution problems resulting from current agricultural practices are forcing policymakers to examine alternative mitigation strategies. Two mechanisms suggested to control the use of nitrogen fertilizer, a source of potentially harmful contaminants of water sources, are quantitative standards and incentives through per-unit taxation. Impacts of both policies on the distribution of farm net returns are analyzed. Risk attitudes are observed to influence the magnitude of farmer response to alternative policies.