The use of nitrogen (N) fertilizer substantially contributes to greenhouse gas (GHG) emissions due to N₂O emissions from agricultural soils and energy-intensive fertilizer manufacturing. Thus, a reduction of mineral N fertilizer use can contribute to reduced GHG emissions. Fertilizer tax is a potential instrument to provide incentives to apply less fertilizer and contribute to the mitigation of GHG emissions. This study provides model results based on a production function analysis from field experiments in Brandenburg and Schleswig-Holstein, with respect to risk aversion by calculating certainty equivalents for different levels of risk aversion. The model results were used to identify effective and cost-efficient options considering farmers’ risk aversion to reduce N fertilizer, and to compare the potential and cost of GHG mitigation with different N fertilizer tax schemes. The results show that moderate N tax levels are effective in reducing N fertilizer levels, and thus, in curbing GHG emissions at costs below 100 €/t CO₂eq for rye, barley and canola. However, in wheat production, N tax has limited effects on economically optimal N use due to the effects of N fertilizer on crop quality, which affect the sale prices of wheat. The findings indicate that the level of risk aversion does not have a consistent impact on the reduction of N fertilizer with a tax, even though the level of N fertilizer use is generally lower for risk-averse agents. The differences in N fertilizer response might have an impact on the relative advantage of different crops, which should be taken into account for an effective implementation of a tax on N fertilizer.

Nitrogen use in agriculture has been intensified to feed the growing world population, which led to concerns on environmental harms, including greenhouse gas emissions. A reduction in nitrogen fertilization can abate greenhouse gas emissions, however, it may result in crop yield penalties and, accordingly, income loss. Assessment tools are necessary to understand the dynamics of nitrogen management issues both in environmental and economic aspects and both at low and high aggregation levels. Our study presents a model approach, estimating yield-zone-specific costs of greenhouse gas mitigation by moderate reduction of mineral nitrogen fertilizer application. Comparative advantages of mitigating greenhouse gas emissions by nitrogen fertilizer reduction were simulated for five yield-zones with different soil fertility in the state of Brandenburg, Germany. The results suggest that differences in yield response to nitrogen fertilizer lead to considerable differences in greenhouse gas mitigation costs. Overall cost-efficiency of a regional greenhouse gas mitigation by nitrogen fertilizer reduction can be substantially improved, if crop and yield-zone-specific yield responses are taken into account. The output of this study shall help to design cost-efficient agro-environmental policies targeting with specific crop yield response functions at different sites.

Fens are organic sites that require drainage for agricultural use. Lowering the groundwater level leads to trade-offs between economic benefits and environmental impacts (i.e., CO₂ and nutrient emissions). To identify management options that are both environmentally and economically sustainable, a propaedeutic systematic analysis of the costs, income and profit of different land use and management systems on fenlands is necessary. This study provides an overview of the profitability, labor demand and comparative advantages of feasible management systems on German fenlands. Twenty management practices in four land use systems are analyzed. The results indicate that most management systems are profitable only with subsidies and payments for ecosystem services. In addition to sales revenue, these payments are indispensable to promote peat-saving agricultural practices on fenlands. Regarding the labor aspect, intensive management systems caused an increase in working hours per hectare, which may positively affect employment in rural areas. The calculations obtained in this study can be used as a basis for estimations of greenhouse gas (GHG) mitigation costs when management systems are associated with GHG emission values.