Cost-effective reductions of stochastic agricultural loads to the Baltic Sea

Overenrichment of nutrients is a major environmental problem in the Baltic Sea region. Large loads of nitrogen and phosphorus cause eutrophication in both the coastal regions and the open sea. The purpose of this paper is to calculate cost-effective solutions to nutrient load reductions to the Baltic Sea, while taking into account the stochastic relationship between abatement measures and the corresponding impact on nutrient loads. The role of variance of loads from different regions as well as covariance between loads is explored analytically and empirically. It is emphasized that within a large watershed, covariance between loads may be negative, zero or positive depending on the meteorological properties of the region. The results show that the cost of reducing nutrient loads from agricultural sources and coastal point sources by 50% can be 80% higher if policy-makers care about load variation and the reduction should be reached with 95% certainty, compared to a situation where they do not care. If covariance of loads between regions was ignored, the total cost would be underestimated by more than 20% if the target should be met with 95% certainty. The results are sensitive to assumptions about cost functions and nutrient transports. (C) 2003 Elsevier B.V. All rights reserved.