Manure policy

The transformation of livestock manure from a valuable agricultural input to a pollutant is a great story of economics in action. Once upon a time, when small and mid-sized livestock operations were an important part of mixed farming systems across the country, livestock manure was an essential source of fertilizer for nearby farms. Now, immense factory farms are so concentrated in some counties -- notably in North Carolina in recent years -- that there is not enough cropland to dispose of all the waste that is created.

Keith Keplinger and Larry Hauck recently gave the economic account of this story in the August 2006 Journal of Agricultural and Resource Economics:

When supplies of manure become large, its value falls and an incentive is created to apply manure at rates exceeding crop requirements or to otherwise dispose of manure as inexpensively as possible, despite negative externalities. Consistent with externality theory, degradation of public resources (air and water) has occurred in regions of the country with high concentrations of livestock.

Keplinger and Hauck point out that the ratio of nitrogen to phosphorous required for most crop fertilization exceeds the ratio of nitrogen to phosphorous found in most manure from factory farms. So, when the manure is dumped on fields as a disposal mechanism, the phosphorous becomes a key pollutant.

Below is a map from an article by Marc Ribaudo at USDA/ERS of counties where the amount of phosphorous in manure that must be disposed exceeds the entire assimilative capacity of the county's farmland.

[I heard a very clear-headed account of these issues from Elanor Starmer, a graduate student at the Friedman School at Tufts, who has written a thesis on environmental issues connected with hog farming (among other publications). It is the sort of issue frequently addressed in the school's program on Agriculture, Food, and the Environment.]