Examining the trade-offs between agri-environmental and manure policies in Dutch dairy farming

Farmers increasingly have to navigate through a complex web of agricultural and environmental regulations. In the EU, for example, the Nitrate Directive aims to control the nutrient levels in the water and agri-environmental schemes aim to protect habitats and increase biodiversity. The trade-offs between such environmental policies are not clear. Therefore, this paper studies the interaction between manure policy, especially derogation policy, and meadow bird schemes for the Netherlands. We develop a mathematical programming farm model with nine representative dairy farm types, based on location and economic size, that gain utility from both profit and agri-environmental services production. We show that the abolishment of derogation and the introduction of a low-protein feeding measure – both aimed at reducing nitrogen emissions – reduce total land contracted for meadow birds. This is because (1) without derogation makes farms switch to more maize production, hence reducing grassland, and (2) the protein measure requires extra feed production on-farm which most farms cannot accomplish and which makes contracting for the meadow bird scheme less attractive. Especially farms on peat and more intensive farms, who are more dependent on buying feed, reduce the amount of land contracted. We advocate that policy makers should become aware of how policies interact and that researchers do not study them in isolation.