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Ecological Economics 30 (1999) 317 – 331

ANALYSIS

Accounting for nitrogen in Denmark — a structural

decomposition analysis

Mette Wier

_{*, Berit Hasler}

a_AKF_,_{Danish Institute of Local Go}₆_{ernment Studies}_,_DK_-_L₆₀₂_Copenhagen_,_Denmark

b_{National En}₆_{ironmental Research Institute}_,_{Department of Policy Analysis}_,_P_._O_._Box₃₅₈_,_DK_-₄₀₀₀_Roskilde_,_Denmark Received 18 March 1998; received in revised form 20 August 1998; accepted 6 January 1999

Abstract

This paper examines the environmental-economic cycle for nitrogen in Denmark based on nitrogen input and output from different economic sectors. An input-output model is employed together with a nitrogen mass balance to apportion total nitrogen loading by final demand and estimate export and import of nitrogen from foreign trade. The changes in agricultural and industrial nitrogen loading from the mid 1960s to the late 1980s are broken down into changes related to different technological and economic factors. The analysis reveals that technological change (intensified agricultural production) and economic growth (especially rising exports) are the key factors, structural shifts (changes in commodity mix in the household and production sectors) generally being of less importance. © 1999 Elsevier Science B.V. All rights reserved.

Keywords:Marine nitrogen loading; Nitrogen mass balance; Decomposition analysis; Input-output modelling

www.elsevier.com/locate/ecolecon

1. Introduction

Nitrogen loading of the Danish aquatic envi-ronment has increased in recent decades, giving rise to serious problems with eutrophication of inland and marine waters throughout the 1980s. In the Øresund, the Kattegat and the Belt Seas, increases in the winter concentration of nitrogen were observed from the mid 1970s to the mid

1980s, in many cases leading to oxygen deficit1

(Danish Environmental Protection Agency, 1984; Christensen et al., 1994). In 1984, the Danish Environmental Protection Agency reported an oxygen deficiency in areas where it had not previ-ously been detected, including in the North Sea

1_{In Denmark, the term ‘oxygen deficit’ is used when the} water oxygen concentration falls below 4 mg/l. If the concen-tration falls below 2 mg/l, the term ‘severe oxygen deficit’ is used. Many fish species flee from areas affected by oxygen deficiencies. In the case of a prolonged severe oxygen deficit, benthic invertebrates that are unable to flee eventually die. * Corresponding author. Tel.: +45-33-11-03-00; fax +

45-33-15-28-75.

E-mail address:[email protected] (M. Wier)

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and other open marine waters (Danish Environ-mental Protection Agency, 1984). The frequency of the recorded episodes of oxygen deficit was also found to have increased. Both the extent and frequency of oxygen deficit have increased even more during the late 1980s, this being attributable to the increase in nitrogen loading of the aquatic environment (National Environmental Research Institute, 1990 – 1997).

The increase in nitrogen loading is attributable to increased production in the agricultural sector and growth in the amount of sewage effluent. The latter is the result of enhanced population growth and increased industrial production. The major part of the increase is attributable to increased agricultural production resulting from general in-tensification of production and to a lesser extent to the incorporation of marginal land in production (Christensen et al., 1994).

The negative environmental consequences of enhanced nutrient loading of the Danish aquatic environment led Parliament to adopt the Action Plan on the Aquatic environment in 1987 (Dub-gaard, 1990; Rude and Frederiksen, 1994). Among other things, this stipulated that nitrogen discharge from agricultural sources was to be reduced by

50% while discharges from other sources

(indus-try, sewage works) were to be reduced by 60%. The present article quantifies the change in marine nitrogen loading due to intensification of agricultural production, general economic growth and general structural shifts in the economy over two decades from 1965 to 1989. The purpose of this paper is to analyse the background for the serious situation at the end of the 1980s and place it in a historic perspective with a view to identifying the main shifts in the agricultural sector and economy that have been responsible for this change in loading. The intention is to identify the factors responsible for the development and quantify their respective contributions. The analysis follows a top-down approach, focusing on the main tenden-cies on both the environmental and economy sides. The analysis is made at the national level because the political goals are set at this level. Nitrogen loading is generally too high in the majority of the inner Danish marine waters and the adjoining marine waters2 _{(Christensen et al., 1994), and the}

political goal of halving nitrogen loss applies uni-formly to the whole country. An analysis at the national level is therefore meaningful.

The analysis was carried out by combining an input-output model with a nitrogen budget for agriculture and emission factors for sewage effluent. This comprehensive integrated model sys-tem enables behavioural and technological shifts in the household and production sectors to be related to changes in nitrogen loading, thereby revealing the economic reasons for the development.

This study distinguishes itself by relating nitro-gen loading to the whole economy, i.e. to produc-tion as well as consumpproduc-tion activities, and by applying input-output structural decomposition analysis on a new area. Furthermore, it covers a very long period, analysing input-output tables from 1966 to 1988, whereby it is possible to examine changes during three separate decades. A final distinguishing feature is that the study includes an assessment of the importance to nitrogen loading of foreign trade.

2. Model and data

The model consists of two parts, an economic input-output model and a nitrogen sub-model. The latter describes nitrogen loading from the different economic sectors, while the former describes inter-sectoral commodity flows within whole economy. The nitrogen flows from the nitrogen sub-model are linked to the input-output model by estimating emission coefficients, i.e. nitrogen discharges per unit of production per year from all sectors in the economy.

2.1. The input-output model

The model framework is the extended input-output system, as introduced by Leontief and Ford (1972). The strength of the model is that it

2_{While nitrogen is the primary factor causing} eutrophica-tion of marine waters, phosphorus is the main cause of eu-trophication in inland waters. Consequently, only marine nitrogen loading will be considered in this paper.

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M.Wier,B.Hasler/Ecological Economics30 (1999) 317 – 331 319

covers all sectors of the economy, operates on a very disaggregated level, and handles both direct and indirect use of goods.

Structural decomposition analysis has been widely applied to changes in output, use of primary factors, etc. (Fujimagari (1989), Forssell (1989), Skolka (1989)). With regard to environmental per-formance, energy consumption has been decom-posed in Denmark by Pløger (1984), in the USA by Rose and Chen (1991), Boyd et al. (1987), in Taiwan by Chen and Rose (1990), Li et al. (1990), in Singapore by Liu et al. (1992), and in five OECD countries by Howarth et al. (1993). In addition, Lin and Polenske (1995) have decomposed energy-de-mand changes in China, while Lin (1996) has examined the technological and energy-demand implications. With regard to decompositional anal-ysis of emissions, CO2emissions have been

decom-posed in Australia by Common and Salma (1992), in nine OECD countries by Halvorsen et al. (1991) in Taiwan by Chang and Lin (1997), in China, Taiwan and South Korea by Ang and Pandiyan (1997), in nine OECD countries by Torvanger (1991) and in Denmark by Wier (1998). The latter author also decomposed Danish SO2 and NOx

emissions.

This paper further expands the environmental use of decomposition analysis to nitrogen loading, presenting a decomposition of the changes in nitrogen loading in Denmark over the period 1966 – 1988.

The analytical framework is the static activityx

activity input-output model with endogenous im-port. At a given point in time, nitrogen loading is given by,

Nt=wt(I−At−1)Dtdt, (1)

whereNt, is a scalar3of total nitrogen loading,wt, is a 1×117 vector of nitrogen discharges from all sectors (i.e. the output of the nitrogen sub-model) per unit of production (i.e. wt, is a vector of emission factors), (I−A)−7

t is the 117×117

Leon-tief inverse matrix, Dt is a 117×9 matrix for the composition of final demand (final demand appor-tioned by economic activity) anddt, is a 9×1 vector for the absolute level of final demand for all categories. The nine final demand categories are private consumption, public consumption, exports, stock building, agricultural breeding stock build-ing, imputed bank service charges and investments (gross fixed capital formation) in machinery, in transport equipment and in construction.

The structural decomposition analysis is em-ployed to clarify how the different factors in Eq. (1) have affected nitrogen loading. Total change in loading is decomposed into the effects due to the four components; loading per unit produced (emis-sion factor effect), input mix in production sectors, commodity mix of final demand and level of final demand.

The analysis was performed by changing the components one by one in order to quantify the contribution of each effect to the total change in loading. This contribution may be weighted using either the base year values for the other three components or by the current year values. The interaction effect is quite large, and will therefore cause considerable bias. The effect of a change in each component has therefore been determined using an average of the two approaches, as pro-posed by Fujimagari (1989) and Sawyer (1992).

The change in emissions from sectors given by Eq. (1) from time t−1 until time t is

Nt−Nt−1=Dw+D(I−A)−1+DD+Dd

where the emission factor effect is Dw=([(wt−wt−1)(I−A)t−1

−1_D

t−1dt−1]

+[(wt−wt−1)(I−A)t

−1_D

tdt])/2 The input mix effect is

D(I−A)−1_=([

wt(I−A)t

−1

−(I−A)t−1

−1₎ Dt−1dt−1]

+[wt−1((I−A)t

−1₍_I₋_A₎

−1₎_D

tdt])/2 the composition of final demand effect is DD=([wt(I−A)t

−1

(Dt−Dt−1)dt−1]

+[wt−1(I−A)t−1

−1₍

Dt−Dt−1)dt])/2 and the level of final demand effect is

3_{Applying element-wise multiplication to the total loading} rather than matrix multiplication yields an activity x final demand matrix. This has been done to provide full informa-tion on changes in all sectors and demands, and will be referred to, but not presented in this paper.

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Dd=([wt(I−A)t

−1

Dt(dt−dt−1)]

+[wt−1(I−A)t−1

−1_D

t−1(dt−dt−1)])/2

The economic data used for the study are the Danish input-output tables (Statistics Denmark) from 1966 to 1988 expressed in constant (1980) prices. The tables encompass 117 sectors and nine categories of final demand. Data on nitrogen in-puts and outin-puts are from the Ministry of Agri-culture, Statistics Denmark, the Ministry of Environment and Energy, and the Danish Envi-ronmental Protection Agency. The data used in the nitrogen budget is documented in Section 2.2.2.

2.2. The nitrogen sub-model

2.2.1. The nitrogen budget at the close of the

1980s

The nitrogen budget for Denmark in the late 1980s is summarized in Fig. 1. The main tenden-cies are described here. This is the first time such a detailed national scale budget has been drawn up. The greatest uncertainty is related to the agricultural data, the loading data for sewage and atmospheric deposition being quite robust. The flows should be interpreted as an average for the period 1986 – 1989. In reality, large climate-depen-dent variation will occur every year.

The sectors of the economy mainly responsible for nitrogen loading are agriculture, industry and households, with the former accounting for the major part. Nitrogen balances for the agricultural sector can be calculated as farm-gate balances or soil-surface balances4 _{(Schleef and Kleinhanss,}

1997). The soil-surface approach was selected for

the estimations in the present study because this is the most appropriate balance when calculating the losses relating to nitrate leaching to the aquatic environment.

As is apparent from Fig. 1, the main nitrogen inputs are animal and commercial fertilizers. Other sources of nitrogen include nitrogen fixa-tion, sewage sludge and atmospheric deposition. Approximately one-third of the deposition takes place as NOx (nitrogen oxides) and two-thirds as

NHx (ammonia and ammonium). The major

sources of the NOx are the transport sector and

power plants, while the NHx is mainly derived

from volatilization from agriculture. (Asman, 1990; Asman and Runge, 1991).

According to the estimated nitrogen budget (see Section 2.3.2), 46% of the nitrogen input to the fields is removed with harvested crops. This up-take is in good agreement with other studies of Danish agriculture based on the soil-surface ap-proach, where estimates of uptake range from 41 – 44% (Nielsen, 1990) to 45% (Ministry of Agri-culture, 1991) to 48% (Schleef and Kleinhanss, 1997). Using the farm-gate approach, Andersen (1996) estimated a utilization rate of 49% (nitro-gen removed in the sold products expressed as a percentage of nitrogen input). Nitrogen balances have also been determined for the EU member states (EU 12) by Brouwer et al. (1995) using the farm-gate approach. From that study it can be estimated that 49% of the nitrogen input was removed in the sold products in Denmark in 1990/1991. The estimated utilization rate for the Netherlands was 31%, the difference between

the rates in the two countries mainly being expli-cable by differences in livestock production and density. The average utilization rate for the EU member states was 50%. The nitrogen utilization rate in Danish agricultural production is therefore average in a European context, and the estimated value for Danish agriculture reported by Brouwer et al. is in good agreement with the utilization rate estimated in the present study.

4_{With a farm-gate balance, the interface for the balance is} the farm as a whole, all nitrogen inputs to the farm being calculated, i.e. fodder, livestock and commercial fertilizer, as well as nitrogen fixed from the atmosphere, atmospheric depo-sition of nitrogen and nitrogen applied in sewage sludge. The outputs are calculated as the nitrogen in all sold products (crops as well as animals) and the loss to the environment. When using the farm-gate approach, the internal nitrogen streams in the farm are not explicitly calculated, i.e. the nitrogen in animal fertilizer and fodder crops. With the soil-surface approach, in contrast, the interface in the balance is the soil surface. In this case, the nitrogen inputs are commer-cial fertilizer and animal fertilizer, as well as nitrogen fixed

from the atmosphere, atmospheric deposition of nitrogen and nitrogen applied in sewage sludge. The outputs are calculated as harvested crops for both internal and external use, and loss to the environment.

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Fig. 1. Nitrogen budget for Denmark, late 1980s (metric tonnes N). * It is assumed that nitrogen in animal fertiliser is equal to nitrogen in fodder consumed less the nitrogen in livestock products. ** Includes a background load (i.e. loading that cannot be attributed to a specific source) of23 000 tonnes N. Approximately 175 000 tonnes are retained in inland waters. Sources: Asman (1990), Asman and Runge (1991), Runge et al. (1991), Ministry of Agriculture (1991), Danish Environmental Protection Agency (1991a,b, 1992a,b), Nielsen (1990).

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As is apparent from Fig. 1, losses to the atmo-sphere take place through denitrification in soil water and water bodies, soil erosion and ammonia volatilization from livestock housing and the stor-age and spreading of animal fertilizer. Loss to the aquatic environment takes place as leaching from the root zone, whereafter the nitrogen is trans-ported to lakes and watercourses and further on to the sea. As shown in Fig. 1, this amounted to 250 000 tonnes in the late 1980s. However, much of the nitrogen is retained during transport and, on average, only 75 000 tonnes of the nitrogen

leaching from rural land actually reaches the sea annually, 70%, of the total being retained in in-land waters (Danish Environmental Protection Agency, 1991a). Total input to the sea amounts to

110 000 tonnes (Danish Environmental

Protec-tion Agency, 1991a), including loading from agri-culture, industry, household sewage, deposition to inland waters, etc.

Atmospheric deposition and inflow from for-eign seas are sizeable, while direct nitrogen load-ing of marine waters by sewage effluent is minor. For inland water bodies, however, sewage effluent from households, industry and fish farming may constitute an important source of nitrogen input.

2.2.2. Historical de6elopment in the agricultural

nitrogen budget

In this section, leaching from the root zone of agricultural land every fifth year from the mid 1960s until the present is estimated according to the nitrogen mass balance principle as the residual of estimates of all nitrogen inputs and outputs. These estimated levels of leaching are not the actual leaching in the different years, but an ap-proximation of the expected leaching level given the actual harvest size, atmospheric deposition, input of animal and commercial fertilizers, etc., and assuming that climatic conditions in the en-tire period from 1960 – 1989 were the same as the average conditions during the late 1980s.

The elements of the nitrogen budget are shown in Table 1 below, inputs being listed in the upper half and outputs in the lower half. Note that the balance is based on the soil-surface approach.

A considerable number of statistics were needed to calculate the figures, and some assumptions

have been made in order to estimate the develop-ment in input and output flows. Biological fixa-tion at the end of the 1980s is estimated at 30 000 tonnes N/year (Ministry of Agriculture, 1991). The amount of nitrogen fixed depends on crop composition, in particular the area planted with pulses and clover grass, and is calculated on the basis of a constant fixation coefficient per hectare for each crop type multiplied by the total area of pulses and clover grass. The fixation coefficient is estimated on the basis of data from the end of the 1980s (Ministry of Agriculture, 1991). In other words, it is assumed that fixation by each crop type is constant per hectare over time, which implies that the percentage of clover in grass fields is also assumed to be constant. It is difficult to determine whether the percentage of clover in grass has changed during the early part of the study period, however. Thus based on the findings of Kyllingsbæk (1995), the percentage of clover in grass is assumed to have remained constant dur-ing the period 1965 – 1980. In the period from 1980 to the end of the 1980s, the clover content increased (Kyllingsbæk, 1995), but insufficient data is available to enable the increase to be quantified. Kyllingsbæk’s findings indicate that nitrogen fixation in the 1980s is underestimated in our study.

The figure for nitrogen input in sewage sludge is derived from Kyllingsbæk (1995), who calcu-lates this to be 3 million kg N/year in 1970, increasing to 5 million kg N/year in 1989. Based on these figures, we assume a constant input of 3 million kg N/year from the mid 1960s to the beginning of the 1980s, 4 million kg N/year in the mid 1980s, and 5 million kg N/year at the end of the 1980s. The estimates are subject to a consider-able degree of uncertainty, albeit that this is of little importance for the budget as a whole due to the small magnitude of these inputs.

Input from commercial fertilizers was taken directly from the agriculture statistics (Statistics Denmark, various years). Nitrogen input from animal fertilizers has been estimated to be 292 000 tonnes N/year in 1985/1986 (Laursen, 1989), 330 – 340 000 tonnes N/year in the late 1980s (Sibbesen, 1990), 330 000 tonnes N/year in the late 1980s (Ministry of Agriculture, 1991), and 337 000

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Table 1

Nitrogen budget for Danish agriculture (1000 metric tonnes N/year)a

NHx-deposition Commercial fertilizers Animal fertilizer Biological fixation

Input flows Sewage sludge NOx-deposition

30 206 270

1965/1966 36 3 13

285

34 290

1970/1971 34 3

34 330 285

1975/1976 31 3 15

315

3 375

1980/1981 28 20 38

380

30 4 22 39 320

1985/1986

39 390 320

1988/1989 5 20

Volatization from Dentrification Leaching from the Output flows Volatilization from comm. Fertil- Removed with harvested

root zone crops

manure izers

40 70

1965/1966 13 84 350

50 160

1970/1971 19 80 345

50 175

365

1975/1976 21 90

60 220

1980/1981 24 98 380

1985/1986 24 100 375 60 240

1988/1989 25 100 370 60 250

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nes N/year in 1987/1988 (Nielsen, 1990). As a compromise, input from this source is assumed to be 320 000 tonnes N/year in the present study. For the period 1965 – 1985, production of nitrogen in animal fertilizer was determined from the trend in consumption of animal fertilizer as estimated in Jensen and Reenberg (1986). It should be men-tioned that these estimates are subject to some degree of uncertainty. To validate the results, we have also calculated the input of nitrogen in ani-mal fertilizer based on the composition of the livestock and the current norms for the nitrogen content of manure per animal (Laursen, 1987), which are available for 1975 onwards. The find-ings with this method only deviate slightly (1 – 7%) from the estimates of Laursen (1987) except for 1965/1966, where the norm-based method yields an estimate that differs from ours by 14%.

However, the use of the norm-based estimation method in 1965/1966 poses considerable prob-lems. The protein content of the fodder is of decisive importance for the nitrogen content of the animal fertilizer. Since the protein content increased from the 1960s to the 1970s, figures for the nitrogen content of animal fertilizer in 1965/ 1966 based on 1975 norms will be overestimated. We have therefore chosen not to correct our estimates. It can be concluded, though, that the uncertainty in the estimates of the nitrogen con-tent of animal fertilizer is greatest in the first part of the period studied.

Atmospheric deposition of NOxand NHxin the

late 1980s was estimated from emission data for agriculture, transport and power stations using the TREND model for atmospheric transport and deposition (Asman and Runge, 1991; Asman and van Jaarsveld, 1992). Atmospheric deposition of NOx back through time was estimated on the

basis of information on NOx emissions

(CORI-NAIR database, National Environmental Re-search Institute), deposition being assumed to be proportional to emissions. While this approach does not take into account regional shifts in the geographic location of emission sources at home and abroad, only a small part of NOx emissions

are deposited locally (Asman and Runge, 1991) and this weakness is therefore of minor significance.

Atmospheric deposition of ammonia and am-monium back through time was estimated by assuming that these were proportional to the N content of animal manure and the N content of commercial fertilizer. The data used was from the end of the 1980s (Asman and Runge, 1991; Statis-tics Denmark (various years); Danish Environ-mental Protection Agency, 1991a).

Denitrification was estimated as a constant fraction of total fertilizer consumption (8%). Am-monia volatilization was estimated as constant fractions of animal and commercial fertilizer con-sumption (31 and 6%, respectively). The estimates are based on information from the end of the 1980s (Ministry of Agriculture, 1991; Danish En-vironmental Protection Agency, 1991a; Asman and Runge, 1991).

Note that changes in the handling of animal fertilizer are not taken into account. Depending on storage conditions and the time and method of application, between 3 and 40% of the nitrogen in animal fertilizer volatilizes in the form of ammo-nia (Danish Agricultural Advisory Centre, various years). Until the end of the 1980s, there was no decisive change in the utilization of animal fertil-izer, and this problem is therefore of limited sig-nificance. It should be mentioned, though, that there has been a general shift from solid to liquid manure which has not been taken into account. As a consequence, ammonia volatilization at the beginning of the study period has probably been overestimated to some extent.

Nitrogen removal in crops was assumed to be constant over time per kilogram of different crops. Information on nitrogen uptake by the various crops derives from Danish Agricultural Advisory Centre (various years), while the infor-mation on harvested crops derives from Statistics Denmark (various years). The uptake coefficients are from 1970, and are assumed to apply to the whole study period.

An uncertainty factor in the calculation of ni-trogen removal is that there has been a general increase in nitrogen uptake per kilogram crop (Kyllingsbæk, 1995). There is insufficient data to quantify this increase, however. Therefore, it can be assumed that our figures for nitrogen removal in the crops are underestimated in 1980 since the

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M.Wier,B.Hasler/Ecological Economics30 (1999) 317 – 331 325

Fig. 2. Marine nitrogen loading from industry and agriculture apportioned by demand (1988; metric tonnes N).

uptake coefficients used are from 1970. It should be mentioned, though, that our estimates are in full agreement with those of the Ministry of Agriculture (1991).

It should also be noted that nitrogen removal has not increased much during the study period (6%), which is in poor agreement with the far greater simultaneous increase in crop yield. This is attributable to changes in crop composition, primarily due to the decrease in areas planted with clover grass since the latter takes up three times as much nitrogen per hectare as cereals. Thus, clover grass fields accounted for 29% of the total area of arable land in 1965 but only 7.5% in 1988.

Finally, leaching was calculated as the resid-ual (rounded up). As such, leaching also in-cluded the non-quantifiable loss in connection with silage and changes in the soil nitrogen pool.

As there is a considerable time lag in the transport of nitrogen in soil and water bodies due to chemical and biological processes, 70% of the nitrogen leaching from the root zone was assumed to be retained in inland waters, with only 30% eventually reaching the sea (Danish Environmental Protection Agency, 1991a).

As is apparent from Table 1, leaching from the root zone has increased considerably since the mid 1960s especially in the first half of the period. This is due to the increase in nitrogen input from animal and commercial fertilizers, to-gether with almost unchanged nitrogen removal in crops. The nitrogen input surplus has more than tripled during the period.

2.2.3. Nitrogen loading from sewage effluents

The sewage part of the nitrogen sub-model is quite simple, concerning only loading from indus-trial sectors. Nitrogen loading from sewage works is measured in a nationwide monitoring pro-gramme, which was initiated in 1988 as part of the Action Plan on the Aquatic Environment. The estimates back through time were made by cor-recting 1988/1989 discharges with data on the development in sewage treatment technology (Tonni Christensen, Danish EPA, personal communication).

3. Nitrogen loading and the economy — results and discussion

3.1. Allocation of final demand

As already stated, agriculture is the main sector contributing to nitrogen loading. With regard to sewage effluent inputs to inland and marine wa-ters, the sectors which pollute most include the food industry (abattoirs in particular), the chemi-cals industry, fish farming and fish processing.

Production activities reflect the composition of the final demand, changing with changes in ex-port, consumption and investments. In Fig. 2, total nitrogen loading of marine waters in 1988 is shown apportioned by final demand, i.e. the direct and indirect loading due to each demand cate-gory. Total nitrogen loading of the sea by agricul-ture and industry amounted to 87 000 tonnes in the late 1980s, of which the industry accounted for 13%.

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Table 2

Decomposition analysis of changes in marine nitrogen loading from agriculture (1000 metric tonnes N)a

Technology Final demand Total

Emission factor Input mix Composition Level

30 520 60

1966–1976 −13 940 14 360 31 000

3330 −7130

1976–1986 2410 20 400 19 000

1986–1988 830 −1480 −2840 6490 3000

40 690 −6740

1966–1988 −14 920 33 970 53 000

a_{Source: The authors.}

As is apparent from Fig. 2, export and pri-vate consumption are by far the most important categories of final demand with regard to nitro-gen loading. Thus, export is responsible for 65% of the agricultural loading and 74% of the in-dustrial loading, while the corresponding figures for private consumption are 32 and 17%, respec-tively. In contrast, public consumption and in-vestments demand commodities from less polluting production sectors, accounting for only 3 – 4% of nitrogen loading.

3.2.Decomposition analysis

The calculations indicate that since the mid 1960s, nitrogen loading from the economy has undergone major change. According to the esti-mated nitrogen budget (Table 1) and the input – output calculations, nitrogen leaching from agriculture has risen by 240%, while loading from sewage effluent has fallen by 16%. Produc-tion technology, abatement technology, shifts in commodity mix in the production and house-hold sectors and economic growth are all of im-portance for this development. In the following, structural decomposition analysis is employed to clarify how these different factors have affected nitrogen loading. Total change in loading is de-composed into the effects due to the four com-ponents; loading per unit produced (emission factor effect), input mix in production sectors, commodity mix of final demand and level of final demand.

The emission factor effect incorporates techni-cal, chemical and legislative factors. For agricul-ture, the effect depends on production behaviour and other factors influencing nitrogen input to agricultural land. For industry, the emission fac-tor effect depends on production technology and legislation on sewage treatment.

The results of the decomposition analysis are presented in Tables 2 and 3 grouped in intervals of 10 years except from the third period, which is shorter because the data only runs to 1988. Please note that the total change cannot be derived by simple addition of the changes dur-ing the three intervals studied as all changes in a component are multiplied with the values which the other components initially have in the period (i.e. at time t−1).

Nitrogen loading from agriculture increased by 53 million tonnes from 1966 to 1988, due to increased nitrogen loading per unit of produc-tion and increased level of final demand (i.e. export, consumption and investment). Intensified nitrogen loading per unit of agricultural produc-tion was the most important factor in the first decade, whereafter growth in the level of final demand led to increased loading. More detailed decomposition shows that it is export in particu-lar that has grown markedly.

As is apparent from the agricultural nitrogen budget (Table 1), fertilizer inputs have been in-creasing without a corresponding increase in ni-trogen removal with harvested crops. This trend is attributable to the enhanced input of commer-cial fertilizer and the resulting poorer utilization

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M.Wier,B.Hasler/Ecological Economics30 (1999) 317 – 331 327 Table 3

Decomposition analysis of changes in marine nitrogen loading from sewage (1000 metric tonnes N)a

Final demand Total

Technology

Input mix

Emission factor Composition Level

460 2750 7260

1966–1976 −11 370 −900

420 1980

−10 500 6420

1976–1986 −1680

−1890

1986–1988 −20 −1210 1870 −1250

1966–1988 −27 150 880 6290 17 170 −2810

a_{Source: The authors.}

of animal fertilizer (Dubgaard, 1994; Hasler, 1998)5_{. The tendency is especially clear up to}

1980, whereafter fertilizer inputs stagnated. This is supported by the fact that the input – output anal-ysis (Table 2) shows that it is the first half of the period in particular that is characterized by in-creasing nitrogen intensity; in contrast, the second half of the period is characterized by an increase in the demand for agricultural products, and hence increased nitrogen loading. Thus, nitrogen loss during this second half of the study period cannot be chiefly explained by increased nitrogen input per unit of production, but rather by an increase in the production of both vegetable and animal agricultural products. The analysis thus indicates that even if the nitrogen input flows per unit of production had remained unchanged dur-ing the period, the growth in production would per se have led to an increase in nitrogen loading in the environment.

The environmental impact can thus be viewed as a resultant from a few dominant trends. The

economic driving force during the study period has been a high level of growth in agricultural exports. Due to Denmark’s small geographic size, this has necessitated particularly intensive agricul-ture with a high environmental impact per unit area. The agricultural production has been inten-sified through increasing the use of production inputs, including markedly growing use of nitro-gen, especially during the first half of the study period.

Thus, in order to reduce future nitrogen load-ing, policy measures should aim at controlling production by, e.g. approval schemes for or limits on livestock production. Also, levies on nitrogen loss would encourage more efficient use of nitro-gen input, i.e. by better utilization of animal fertilizers or by optimization of fodder mix.

Structural shifts, i.e. commodity composition in the household and production sectors have had minor effects, an exception being during the first decade, when a shift in the composition of final demand (commodity mix of export, consumption and investments) reduced loading by almost 14 000 tonnes. Further decomposition revealed this to be mainly due to a decrease in the agricul-tural exports during that period. From 1976 – 1986, changes in input mix also reduced nitrogen loading by 7130 tonnes as the production sectors reduced demand for inputs from agriculture per unit of production.

Table 3 summarizes the decomposition analysis of total change in nitrogen loading from sewage. This has fallen by 2.8 million tonnes and this again is mainly due to changes in emission inten-sity and level of final demand (particularly exports

5_{There are several explanations for this development.} Ac-cording to Hasler (1998), it is partly due to changes in crop mix, as different crops have different nitrogen requirements and nitrogen leaching per hectare differs. An example is clover grass which was substituted for grass during the period 1965 – 1975. Clover grass fixes nitrogen from the air, while grass requires nitrogen to be supplied in the form of fertilizer. This means that nitrogen input increased without a similar increase in nitrogen removal in the crops. Moreover, as commercial fertilizers are relatively cheap compared to other inputs, farm-ers are encouraged to apply surplus nitrogen. Finally, accord-ing to most functions of crop response to nitrogen, both yield and nitrogen uptake exhibit diminishing returns (Hasler, 1998).

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from abattoirs and the fish processing industry). In this case, however, emission technology lowers nitrogen loading, sewage treatment having inten-sified considerably during the whole period. In addition to the rising level of final demand, struc-tural shifts also increase nitrogen loading. How-ever, treatment technology is able to compensate for the effects of economic growth and structural shifts, ensuring a total decline in nitrogen loading of 2.8 million tonnes.

3.3. The global aspect

The above analysis is based exclusively on ni-trogen loading within Denmark. However, the import of commodities gives rise to loading in the countries from which they are imported. Analogously, foreign demand for Danish com-modities leads to loading in Denmark through Danish production of goods for export.

To obtain a full picture of the effects of Danish economic activities, nitrogen loading caused abroad as a result of Danish imports has to be included. Such estimates are based on two impor-tant assumptions. Firstly, foreign technology is identical to Danish technology, i.e. foreign pro-ducers use the same inputs per unit of production as the corresponding Danish producers. Secondly, foreign production activities generate the same nitrogen loading per unit of production as the Danish activities, i.e. the activities are assumed to have the same abatement technology. It is impor-tant to note that while these assumptions are critical and entail considerable uncertainty, they are nevertheless widely applied in input-output analysis.

The nitrogen-intensive imported goods primar-ily derive from the chemicals industry and the production of commercial fertilizer and pesticides (Danish Environmental Protection Agency). Dif-ferences in the production of these goods between countries are not taken into account as the tech-nologies used at home and abroad are assumed to be equivalent.

However, as our imports of agricultural goods are relatively small compared with production for export (Statistics Denmark), any major difference in agricultural practice between Denmark and the

Table 4

Import and export of nitrogen loading due to foreign trade (metric tonnes N)a

1966 1988 61 260 25 720 Loading due to export of goods, i.e.

import of nitrogen loading

6760 7460

Loading due to import of goods, i.e. export of nitrogen loading

54 500 18 260 Residual

a_{Source: The authors.}

countries we import from will be of limited signifi-cance in the present context. However, an excep-tion would include fodder, where imports are considerable. In this case, the assumption of equivalent technology at home and abroad is more problematic as agricultural conditions in the countries from which Denmark imports fodder deviate somewhat from those in Denmark.

The estimated nitrogen loading in Denmark and abroad resulting from foreign trade is shown in Table 4. The first row shows loading occurring in Denmark as a result of the export of goods (excluding the import content of the exports). This can be considered as ‘imported’ nitrogen loading as it would otherwise have occurred in the importing country had the goods instead been produced there. The next row shows nitrogen loading occurring abroad as a result of Danish imports of goods (exclusive of imports for export purposes). This corresponds to ‘exported’ nitro-gen loading as it would otherwise have occurred in Denmark. Finally, the third row shows the residual of loading due to exports minus loading due to imports. If the residual is negative, Den-mark is a net exporter of nitrogen loading (through the import of goods) whereas if the residual is positive, Denmark is a net importer of nitrogen loading (through the export of goods).

As is apparent from Table 4, Denmark is a net importer of nitrogen loading, loading due to ex-ports being much greater than imex-ports. The main reason for this is the sizeable Danish exports from agriculture and the food industry relative to total production, Denmark being the seventh largest exporter of agricultural products in the world (Statistics Denmark). International trade, in

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M.Wier,B.Hasler/Ecological Economics30 (1999) 317 – 331 329

which Denmark has specialized in the export of a number of agricultural products, thus entails en-hanced pressure on the environment.

The nitrogen loading ‘deficit’ was much smaller in 1966, however. While loading due to exports increased by 140% during the period, loading due to imports fell by 10%, thereby increasing the deficit. This development was partly a result of the growing agricultural exports, partly a result of difference in commodity mix in exports and im-ports. This is because nitrogen loading imports are mainly due to the export of agricultural prod-ucts, while loading exports are mainly due to imports from the pulp and paper, fertilizer and chemical sectors. As agricultural production has become more nitrogen-intensive, leaching from agricultural land has increased throughout the period and ‘imported’ nitrogen loading has there-fore increased. Conversely, improved abatement technology abroad has reduced ‘exported’ nitro-gen loading. Thus, the environmental impact of Danish exports has increased while that of im-ports has declined.

4. Conclusions

The model system described in this paper is an input-output model incorporating a nitrogen bud-get for the agricultural sector and emission factors for industry. The approach provides new informa-tion on major trends and development in nitrogen loading during the last decades and relates envi-ronmental impact to the responsible demand cate-gories in the economy. The analysis points out driving forces behind the development and hence which factors the policy measures should be di-rected towards. The main findings are as follows: Nitrogen loading in Denmark from the produc-tion sector is now chiefly attributable to leaching from agricultural land and sewage effluent from the food industry production mainly intended for export.

The agricultural sector has been responsible for the major part of nitrogen loading since the 1960s, but increased leaching throughout the pe-riod has made the sector even more dominant. The main factors behind this development include

an increase in leaching per unit production due to excessive nitrogen input, together with a growing level of final demand, especially exports. Struc-tural changes (i.e. changes in commodity mix in Danish production sectors and households) are generally less important.

The effect of increasing leaching per unit of production was most apparent in the period 1966 – 1976, while the effect of increasing demand dominated in the period 1976 – 1986. Thus, in contrast to what is often presumed, increasing nitrogen input is a characteristic of the 1960s and 1970s, excessive nitrogen input actually having stagnated in the 1980s, when eutrophication was mainly due to growth in agricultural production. Hence, in order to reduce future nitrogen loading, policy measures should aim at controlling live-stock production by, e.g. approval schemes or limits on livestock production. In addition, levies on nitrogen loss would encourage a more efficient use of nitrogen input, i.e. by better utilization of animal fertilizers or by optimization of fodder mix.

The period was also characterized by an overall decrease in nitrogen loading from sewage effluent due to the widespread application of treatment technology. This effect compensates the effect of economic growth and structural change, thereby providing evidence for the ability of cleaner tech-nology to offset economic growth.

As a result of foreign trade, Denmark is a net importer of nitrogen loading, domestic produc-tion of export goods being much more polluting than the production of imported goods abroad. Since the 1960s, nitrogen loading has increased due to increasing agricultural exports and increas-ing leachincreas-ing per unit of production from agricul-tural land.

In conclusion, the problems affecting the Dan-ish aquatic environment are closely associated with our role in international trade. Denmark has specialized in the export of agricultural products, the extent of which is considerable relative to the country’s size. This entails highly intensive pro-duction, high nitrogen consumption and high ni-trogen loading per unit area, thus leading to oxygen deficit in the marine environment.

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Acknowledgements

The authors would like to thank three anony-mous referees for helpful comments.

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. .

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Table 2

Decomposition analysis of changes in marine nitrogen loading from agriculture (1000 metric tonnes N)a

Technology Final demand Total

Emission factor Input mix Composition Level

30 520 60

1966–1976 −13 940 14 360 31 000

3330 −7130

1976–1986 2410 20 400 19 000

1986–1988 830 −1480 −2840 6490 3000

40 690 −6740

1966–1988 −14 920 33 970 53 000

a_{Source: The authors.}

3.2.Decomposition analysis

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Table 3

Decomposition analysis of changes in marine nitrogen loading from sewage (1000 metric tonnes N)a

Final demand Total

Technology

Input mix

Emission factor Composition Level

460 2750 7260

1966–1976 −11 370 −900

420 1980

−10 500 6420

1976–1986 −1680

−1890

1986–1988 −20 −1210 1870 −1250

1966–1988 −27 150 880 6290 17 170 −2810

a_{Source: The authors.}

of animal fertilizer (Dubgaard, 1994; Hasler, 1998)5_{. The tendency is especially clear up to}

The environmental impact can thus be viewed as a resultant from a few dominant trends. The

5_{There are several explanations for this development.}

Ac-cording to Hasler (1998), it is partly due to changes in crop mix, as different crops have different nitrogen requirements and nitrogen leaching per hectare differs. An example is clover grass which was substituted for grass during the period 1965 – 1975. Clover grass fixes nitrogen from the air, while grass requires nitrogen to be supplied in the form of fertilizer. This means that nitrogen input increased without a similar increase in nitrogen removal in the crops. Moreover, as commercial fertilizers are relatively cheap compared to other inputs, farm-ers are encouraged to apply surplus nitrogen. Finally, accord-ing to most functions of crop response to nitrogen, both yield and nitrogen uptake exhibit diminishing returns (Hasler, 1998).

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3.3. The global aspect

However, as our imports of agricultural goods are relatively small compared with production for export (Statistics Denmark), any major difference in agricultural practice between Denmark and the

Table 4

Import and export of nitrogen loading due to foreign trade (metric tonnes N)a

1966 1988 61 260 25 720 Loading due to export of goods, i.e.

import of nitrogen loading

6760 7460

Loading due to import of goods, i.e. export of nitrogen loading

54 500 18 260 Residual

a_{Source: The authors.}

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which Denmark has specialized in the export of a number of agricultural products, thus entails en-hanced pressure on the environment.

4. Conclusions

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Acknowledgements

The authors would like to thank three anony-mous referees for helpful comments.

References

Andersen, J.M., 1996. Foreløbigt notat om statistik over kvælstotbalancer i landbruget (Note on statistics on nitro-gen balances in the agricultural sector; in Danish). Statis-tics Denmark.

Ang, B.W., Pandiyan, G., 1997. Decomposition of energy-in-duced CO2emissions in manufacturing. Energy Econ. 19,

363 – 374.

Asman, W.A.H., 1990. A detailed ammonia emission inven-tory for Denmark DMU-LUFT Report A133. National Environmental Research Institute, Denmark.

variable-resolu-tion transport model applied for NHxin Europe. Atmos.

Environ. 26A, 445 – 464.

Boyd, G., McDonald, J.F., Ross, M., Hanson, D.A., 1987. Decomposition of changes in energy intensity. Energy J. 8, 77 – 96.

Brouwer, F.M., Godeschalk, F.E., Hellegers, P., Kelholt, H.J., 1995. Mineral Balances at Farm Level in the European Union. Agricultural Economics Research Institute (LEI-DLO), The Hague.

Chang, Y.F., Lin, S.J., 1997. Structural decomposition af industrial CO2 emission in Taiwan: an input-output

ap-proach. Energy Policy 26, 5 – 12.