Impact of Spatial Differentiation of Nitrogen Taxes on French Farms’ Compliance Costs

The spatial differentiation of input-based pollution fees should in theory decrease compliance costs in the case of nitrate pollution of water bodies from agriculture because both the damage and the compliance costs vary over space. However, the empirical evidence in the literature does not agree on the extent of the potential savings from differentiation. We address this issue in the case of France, using a mathematical programming model of agricultural supply (AROPAj). The modeling approach used accounts for the spatial diversity of nitrate pollution and the heterogeneity of farming systems. Our results reveal the efficiency gains from differentiating pollution fees among polluters and water bodies. For instance, firm-specific and water body-specific taxes represent respectively 5.8 and 32.5 % of farmers’ gross margin in terms of compliance costs, whereas a uniform policy at the river-basin district or national level leads to major economic losses and abandonment of the agricultural activity. These results stem from the lower tax rates faced by farmers in less polluted areas, for scenarios based on spatial differentiation. Our estimates suggest that realistic regulation via input-based pollution fees should be differentiated in order to significantly reduce the financial burden on farmers of conforming to predefined pollution levels. Some potential adverse effects related to input-based taxation and land use change call for additional fine-scale nitrogen pollution regulation (e.g. limitations on crop switching).Cet article présente une comparaison des coûts pour les agriculteurs en France vis à vis d'une différentiation spatiale des taxes sur l'azote organique (d'origine animale) et minéral (via les fertilisants minéraux), sources principales de la pollution nitrique des eaux. L'analyse repose sur la combinaison d'un modèle de programmation de l'offre agricole (AROPAj), de systèmes d'information géographique, et d'un modèle statistique de la pollution nitrique des eaux à l'échelle de la France métropolitaine. Elle montre que viabiliser une politique publique fondée sur la taxation des intrants passe par la différentiation spatiale de la régulation