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Proxy Variables from Pollution Control¹

ABSTRACT

Where the level of pollution from one farm cannot be reliably measured or estimated, environmental policies may be difficult to formulate and enforce. For this situation, a policy approach is suggested, which focuses on variables other than direct output of pollution. The use of proxy variables is illustrated in an analysis of alternative policies for controlling agricultural soil loss in the United States. An interregional programming model of U.S. agriculture is used to analyze and compare the proxy variable approach to direct limits and taxes on gross soil loss, with soil management practices employed as proxy variables. In achieving targeted soil loss reductions, the soil management practice policy would be less costly to society than a direct limit of 12.5 t/ha of soil loss, but a tax on each t of soil loss would be the least costly approach, assuming that soil loss could be easily quantified.

Key Words: nonpoint pollution • soil loss • Universal Soil Loss Equation • soil conservation

¹ Journal Paper no. J-10498 of the Iowa Agriculture & Home Economics Experiment Station, Project 2501. The Center for Agricultural & Rural Development, Iowa State University, Ames, IA 50011.

² Research Associate, and Distinguished Professor of Economics and Director of the Center for Agric. & Rural Dev., Iowa State University, Ames, respectively.

Received for publication August 21, 1982.