Tradable Substitution Rights: Simulation of the Cost-Efficiency of a Nitrogen Reduction in the Pig Finishing Sector

To comply with the European Nitrate Directive, the Flemish manure policy has been elaborated mainly on the base of command and control measures (maximum fertilisation limits etc.). In literature, however, tradable permits are described as a cost efficient and effective instrument. Applied to nutrient emission they might offer an alternative for the current, expensive manure policy. In this publication both policy instruments are compared by means of simulation models. Based on accountacy data from 190 pig finishing farms, it is shown that tradable rights may result in cost savings of over 88%, compared to the most cost efficient command and control model. This result indicates that tradable permits at least need to be considered as a plausible policy instrument for the agricultural sector.