Marginal costs of reducing nitrogen losses to water and air in Denmark Senior Researcher Brian H. Jacobsen Institute of Food and Resource Economics University of Copenhagen Nitrogen and Global Change 12 th April 2011

Danish analyses of costs of reducing N-leaching Denmark has implemented 3 actions plan with focus on nitrogen and phosphorus Action Plan II in 1998 included both a preliminary, mid-term and ex-post analysis of cost- effectiveness (FOI report 169) Action Plan III in 2004, based on detailed work on scenarios and economics of different measures. Midterm (FOI report 167). Pre WFD analyses. Jensen et al. (2009)

N-surplus, N-leaching and N-loss to water in DK

WFD target Action plan II

Yearly cost of Water Action Plan II (€/kg N lost to water) MeasuresArea (1000 ha) Cost (€/ha) Efficiency (kg N/ha) Costeff. (€/kg N) Wetlands ESA-area Aforestation Organic farming Source: Jacobsen, 2004

Yearly cost of Water Action Plan II (€/kg N lost to water) MeasuresEfficiency (ton N) Costs (mill €) Costeff. (€/kg N) Feeding1, Lower livestock density Catch crops1, Increased utillisation of N in manure 3, Reduced N-norm4, Total12, Source: Jacobsen, 2004 * N-loss is to the water based on an average retention of 67%

Action Plan II - Cost curve for N-leaching (from rootzone)

When cost efficiency and ranking becomes difficult ! One source (e.g. N) in one area is easy To sources in one area is possible (e.g. N and P) – eutrophication index Several sources in several areas with interaction and synergies is difficult The ranking at national, region and farm level might be different – the geographical aspect.

Key issues From planning to implementation effect and costs can change substantially Data for new technology is often difficult to come by and it gets cheaper over time Cost approach used can vary Investment Running costs Direct costs Welfare costs Value of side effects (NH3, CO2,…) Optimal pollution level is difficult to find in practice so cost-efficiency is often used instead

Ammonia emissions in DK divided according to type of animal Danish ammonia emission

Danish measures ( ) Storage of slurry (natural cover or solid) Higher N-utilization on application - from broad spreading to injection - quicker incorporation Improved feeding (lower N) Ban on the use of ammonia in straw Reduction is 29% from 2000 to 2008

Future measures Pigs : - Stables (slatted surface < 50%) - Feeding (new and old stables) - Cooling of slurry - Air cleaning - Acidification - Air cleaning with biological filter Air cleaning with acid Partly slatted floor Tent as slurry cover

Costs of reducing ammonia emission (DKK pr. LU) Finishers Piglets Dairy cows Sows Reduction (%)

Regulation and effects Measures will effect farmers differently (depending of location) Regulation should give same cost per kg NH3 Large farms have lower unit costs (economies of size) Look at the entire chain (system analysis) Change in behavior can be difficult to model or predict, but might change costs significantly

Cost of implementation (selected measures) (€/kg NH3) CountryUSUKNLDK Replace urea0.25Cheap Injection /trailing shoe Solid cover on slurry tanks ExpensivePartly required Feeding Reduce slatted area Source: Jacobsen, 2011

NH3 emission from 2000 to 2020 (EU 27) (index 100 = year 2000) NEC2020 is based on a suggested target

Costs of reducing emissions increase over time in DK (€/kg N) 1990’ties2000’ties2010 Water (N loss to water) (expected)* 6.0 (6.6) 16.5 (7.7) ? (5-9) Ammonia (NH3-N)1.12(2-4) () Prediction * N-loss is to the water based on an average retention of 67%

Conclusions Important to make ex-post analysis as implementation might change the environmental effect and costs The starting point for the analyses is important as increasing marginal costs is expected New technologies help to lower costs The technology requirement with respect to ammonia in DK is based on abatement costs and sector costs Analysis indicate that costs of reducing ammonia emission is lowest in countries with strict regulation as the technology here is developed and tested Cost vary between measures but as with benefits is a question of magnitude which is important (marginal costs  marginal benefits)

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