The effects of direct and indirect economic instruments on two agricultural companies

Somogyi, Tamás – Hoffmann, András

Keywords: direct and indirect economic instruments, waste management, environmental protection cost

In our research we examined the effects of direct and indirect economic instruments on two agricultural companies. We established that the farms’ operations have become more environmentally-friendly in the last few years. Due to the direct regulations, both farms’ waste management has fulfilled the environmental protection regulations and manure storage facilities can also be found at animal colonies. However, the Nitrate Directive can cause competitive disadvantages for animal colonies situated in nitrate sensitive areas by increasing the cost of manure disposal.

The indirect economic instruments, despite their growing number and degree, have not influenced the decision-making of the managers concerning environmentally harmful input reduction. However, these economic instruments have made the farms’ financial position worse.

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