We exploit the Nitrate Directive setting allowing for a geographical and temporal variation in policy implementation to investigate the impacts of a command-and-control policy on non-point source water pollution in France.
We combine novel datasets on surface water quality and hydrographic network, considering upstream/downstream interactions between watersheds, to disentangle the policy diffusion effects on physicochemical and biological outcomes. Our results suggest a decreasing dose-response effect of the policy on nitrate concentration and a global improvement of water quality. We show that wastewater treatments and land use changes are unlikely to drive our results.
We then explore changes in farmers behavior and practices as underlying explanatory mechanisms: the policy sharply increased the development of nitrate-fixing crops, improved the efficiency of nitrogen fertilizers use, decreased nitrogen losses to the environment and, perhaps surprisingly, boosted productivity while keeping the amount of nitrogen fertilizers used unchanged, revealing that the technological standards imposed by the regulation triggered a significant change in farmers behavior by better informing them on when and how to put fertilizers, ensuring in turn gains in productivity.