Economic impact of reductions in exposure of agricultural crops to nitrogen- and sulphuroxides in the Netherlands

This paper measures the economic impact of reductions in the exposure of agricultural crops to mixtures of nitrogen oxides (NOx) and sulphurdioxide (SO2) in the Netherlands. This provides an indication of the benefits of policy measures directed to reducing nitrogen and sulphur emissions. A reduction in air pollution raises crop yield and supply. The prices of some crops are regulated by the EU. An increase in the supply of these crops affects farmer income through the effect on the quantity sold. The price of non-regulated crops, however, decreases with a rise in supply. For these crops, farmer income is affected both by the effects on quantity and price. Consumer surplus is positively affected by price decreases. A reduction in NOx and SO2 of 20% and 60% respectively is estimated to increase producer income with 96 million guilders annually and consumer surplus with 90 million guilders. These increases sum to 1% of crop turnover and 6% of total income from crop production.