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Getting incentives right?: a comparative analysis of policy instruments for livestock waste pollution abatement in Yucatán, Mexico

Published online by Cambridge University Press:  23 April 2003

Adam G. Drucker  and
Uwe Latacz-Lohmann
Adam G. Drucker
Affiliation:
International Livestock Research Institute, PO Box 5689, Addis Ababa, Ethiopia. Tel: (via USA): 1 650 833 6696. Fax: +1 650 833 6697. Email: [email protected]
Uwe Latacz-Lohmann
Affiliation:
Department of Land Economy, University of Cambridge and School of Agricultural and Resource Economics, University of Western Australia.
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Abstract

Building on the extensive theoretical and empirical work regarding the cost-minimizing properties of economic instruments, this article describes and analyses the Mexican legislation relevant to the treatment/disposal of pig slurry in the state of Yucatán. Using a linear programming model to determine the optimal level of pig production and abatement processes simultaneously, different policy instruments and scenarios are compared. Serious shortcomings associated with the recently introduced command-and-control (CAC) legislation, which establishes concentration-based standards for discharges, are identified. It is shown that it will be extremely difficult and expensive to comply with (cost: US$41.8 million per annum). An alternative mass-based CAC approach, which instead regulates nitrogen applications to land, has compliance costs of US$3.5–US$9.4 million per annum, depending on the strictness of the standard. By contrast, an environmentally equivalent economic instrument approach results in additional cost savings of 22–25 per cent. The results are of relevance to Mexican policy makers, extensionists, researchers, and farmers.

Type
Theory and Applications
Information
Environment and Development Economics , Volume 8 , Issue 2 , May 2003 , pp. 261 - 284
Copyright
© 2003 Cambridge University Press

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Footnotes

We would like to thank colleagues at the Autonomous University of Yucatán (Mexico) for their technical assistance in the development and implementation of the project on which the results of this paper are based. The project was supported by Imperial College at Wye (London), DFID and Conacyt (Mexico). We are also grateful to three anonymous reviewers for their helpful comments on a previous draft.