Regulatory/Economic Instruments for Agricultural Pollution: Accounting for Input Substitution

In recent years, economists have explored the properties and relative merits of alternative instruments for the control of agricultural rnonpoint-source pollution, such as design standards or incentives applied to farm inputs and performance-based standards or incentives applied to pollutant discharges. For the most part, such explorations have led to the conclusion that it is currently impractical to target either standards or incentives on agricultural nonpoint-source discharges directly since their measurement is so difficult (e.g., Griffin and Bromley, 1982; Dunn and Shortle, 1988; Segerson, 1988). As a result, much of the discussion regarding potential policies for agricultural pollution has focused on restricting or providing negative incentives for the use of agricultural inputs and practices that yield pollution (such as nutrient fertilizers, pesticides, and erosive tillage systems).