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TREATMENT VERSUS PREVENTION OF NITROGEN FERTILIZER POLLUTION: AN INTER‐SECTORAL EXTERNALITY POLICY MODEL

Abstract This article presents an economic, hydrological, dynamic optimization model, which describes the negative external effects of nitrogen fertilizers on groundwater quality. The relative merits of treatment versus prevention of nitrogen pollution were analyzed. A dynamical water and nitrogen flow between land surface, the unsaturated zone, and groundwater was employed. A specific treatment technology, which gives rise to a discontinuous cost function, was also used. Applying the model to the coastal aquifer in Israel, our results showed that in a joint (agricultural and domestic) water source area that supplies a relatively small quantity of drinking water, it is more efficient to combine a policy that imposes restrictions on the use of nitrogen with a drinking‐water treatment process. However, when a relatively large quantity of drinking water is involved, imposing restrictions on the use of nitrogen only is more efficient. The paper, thus, is useful to planners of fast growing urban population centers with regard to regulation and can be used to calculate and evaluate specific policies.