ABSTRACT

This chapter assesses how the Nitrate Directive, a possible 50 percent tax on nitrogen fertilizer, and the package of Common Agricultural Policy (CAP) reforms adopted by the E.C. Agricultural Ministers on May 21, 1992, may affect residual nitrogen levels, E.C. agricultural production and input use, and world prices and trade. It also assesses the possible impact of the Nitrate Directive on production. The chapter examines residual amounts of nitrogen on a per hectare basis for each country and identifies those countries that exceed the maximum annual residual. It describes the 1992 proposal for CAP reform and the 1986 version of the static world policy simulation model. The chapter also describes the effects of the Nitrate Directive, nitrogen tax, and CAP reform on nitrate levels, agricultural production, input use, trade, and world prices. Excessive amounts of nitrate in surface water precipitate algae blooms, which, in turn, take oxygen out of the water.