Getting incentives right?: a comparative analysis of policy instruments for livestock waste pollution abatement in Yucatan, Mexico

Building on the extensive theoretical and empirical work regarding the cost-minimizing properties of economic instruments, this article describes and analyses the Mexican legislation relevant to the treatment/disposal of pig slurry in the state of Yucatan. Using a linear programming model to determine the optimal level of pig production and abatement processes simultaneously, different policy instruments and scenarios are compared. Serious shortcomings associated with the recently introduced command-and-control (CAC) legislation, which establishes concentration-based standards for discharges, are identified. It is shown that it will be extremely difficult and expensive to comply with (cost: US$41.8 million per annum). An alternative mass-based CAC approach, which instead regulates nitrogen applications to land, has compliance costs of US$3.5-US$9.4 million per annum, depending on the strictness of the standard. By contrast, an environmentally equivalent economic instrument approach results in additional cost savings of 22-25 per cent. The results are of relevance to Mexican policy makers, extensionists, researchers, and farmers.