Impacts of policies to implement the EU Water Framework Directive on development strategies and income of typical pig farms in an intensively farmed region of Germany

Agriculture is to a large extent responsible for missing the objective of the EU Water Framework, a good condition of water bodies in Germany and other parts of Europe. In Germany, in order to reach this target in future, the Fertilization Ordinance will be amended. Economic instruments would be another option to improve water quality. Against this background, the study examines impacts of such policies on farm strategies and income for certain fictitious, but typical farms that can be seen as representative for the most common pig farm types in the Muensterland, an intensively farmed region in Germany. From a number of farm development strategies, a mixed integer linear programming model identifies the best individual strategy for each policy and the resulting investments, production changes and income effects. The model results confirm that water protection policies decrease potential future incomes of typical pig farms. A tightening of the Fertilization Ordinance by reducing the phosphorus balances that must not be exceeded by the farms significantly reduces future income compared to an unchanged Fertilization Ordinance. The same applies to the introduction of levies on nutrient surpluses – along the lines of the Dutch policy. Nevertheless, future development strategies of the farms stay mainly the same in all scenarios with different water protection policies: Farms increase stable capacity in all scenarios. Along with this growth, manure export increases as well as the number of animals per hectare on the farms.