The Implications of Environmental Policy on Nutrient Outputs in Agricultural Watersheds

We examine whether federally-sponsored voluntary environmental programs to reduce phosphorus pollution from agriculture have had any impact on water quality outcomes. Using daily observations on nutrient emissions taken over 37 years in two Great Lakes tributaries, we estimate an econometric model of phosphorus emissions. Phosphorus emissions are the most important contributor to harmful algal blooms, which have recently caused significant health concerns. Our results indicate that these voluntary programs have had very little effect on phosphorus outputs. In contrast, we show that an input tax could be very effective at reducing phosphorus pollution, and consequently the likelihood of future harmful algal blooms.