The Economics of Nitrogen Fertilizer Cutbacks to Reduce Potential Ground Water Contamination: A Case Study of Selected Arizona Crops

Agricultural uses of nitrogen have contributed to the degradation of around water quality nationwide. Although the seriousness of nitrate contamination of Arizona around water has yet to be determined, nitrogen rates in Arizona agriculture are among the highest in the country. This study used experimental crop data for 11 Arizona crops to examine the relationships between nitrogen fertilizer use and short-run net returns and yield. The results showed that 1) farmers may apply nitrogen 20 to 30 percent above the profit maximizing level with little effect on profits; 2) a nitrogen tax will be ineffective in reducing nitrogen use; and 3) farmers could often reduce nitrogen applications 10 to 20 percent below the yield maximizing level with minor losses in net returns.

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