Exploring Policy Alternatives for Controlling Nitrate Pollution from New Mexico’s Dairies

Exploring Policy Alternatives for Controlling Nitrate Pollution from New Mexico’s Dairies by Jingjing Wang and Janak Raj Joshi, University of New Mexico New Mexico has ranked at the top in the average stocking density of large dairy farms (with 500 or more milk cows) since 2002 and the state’s average stocking density was up to 3,000 milk cows per farm in 2012. However, this significantly large average fails to reflect the magnitude of the mega-farms in the highly concentrated industry, subject to economies of scale. For example, in 2012, the average stocking density on dairy farms that accounted for 10% of total milk sales in New Mexico was 10,200 milk cows, and the average stocking density on dairy farms that accounted for 25% of total milk sales in New Mexico was 5,410 milk cows. Another characteristic of the dairy sector in New Mexico is that most cows are spatially concentrated in a small agricultural area. The dairy sector has been an economic development driver in parts of eastern and southern New Mexico and has a significant economic impact on the rural economies of these regions. However, large dairy farms in New Mexico lead to challenges in proper manure management. In this study, we used a combination of life-cycle assessment (LCA), cost-benefit analysis (CBA), and sensitivity analysis to investigate policies for controlling nitrogen pollution from large dairy farms in New Mexico. We first constructed an integrated farm-level model that is suitable to investigate alternative policies for controlling nitrate pollution from a stylized, typical large dairy farm in New Mexico. Based on this typical dairy farm, we then conducted the LCA and CBA analyses of dairy manure management under three cases: direct land application of dairy manure (DLA), anaerobic digestion of dairy manure (AD), and anaerobic digestion of dairy manure coupled with microalgae cultivation (ADMC). Four environmental impacts (energy balance, water balance, eutrophication potential, and global warming potential) of the alternative manure management cases are assessed in the LCA analysis and net benefits of each case were evaluated in the CBA analysis under a baseline scenario and different incentive-based policy scenarios. We also conducted sensitivity analysis of cropland availability, rangeland availability, and policy strength to check the robustness of our results. Our results suggest that nutrients (especially nitrogen) in dairy manure on large dairy farms of New Mexico can potentially be converted into various valuable products (e.g., nutrient supplement and renewable energy) while maintaining compliance with regulatory requirements. We recommend incentive-based policies including subsidies, tax credits, nutrient credits, and carbon credits for controlling nitrate pollution from large dairy farms in order to achieve the lowest environmental-compliance cost to the dairy industry in New Mexico. Education and outreach programs on alternative best manure management practices are also recommended. Given the ongoing consolidation in the dairy industry both within and beyond New Mexico’s borders, our results can inform local, state, and federal policymakers working on water quality management programs. A comprehensive summary report of this NM WRRI funded project has been published as Technical Completion Report No. 369 and can be viewed in its entirety by clicking here. Project funding was made available by the New Mexico State Legislature in 2014.