Every farmer uses one type of input, either limited or potentially polluting, to make sure their field crops produce quality yields. Limited inputs are natural resources, such as water, that have limitations to how much is available for usage. Potentially polluting inputs, such as nitrogen, are resources that have the potential to negatively impact the ecosystem.

Because of this, policies are put in place to protect and prohibit excessive uses of natural resources.

Karina Schoengold, associate professor in the Department of Agricultural Economics at the University of Nebraska–Lincoln, explores how environmental policy design influences how Nebraskans make decisions regarding limited and polluting inputs.

“Nebraska is fortunate to have such a large aquifer, like the Ogallala Aquifer,” Schoengold said. “There are also rivers that depend on the same water, so we must find a way to jointly manage those resources when using an input like water.”

Erin Haacker, courtesy assistant professor in the School of Natural Resources at the university studies groundwater extraction, particularly with the Ogallala Aquifer that is in western Nebraska which allows us to know more about this scarce resource.

“Through making groundwater models, the physical limits of the aquifer can be determined,” Haacker said. “Then, changes can be observed, and groundwater measurements can be gathered.”

Having the basic understanding of how people use inputs leads to better decisions when using natural resources, which can ultimately lead to a more sustainable future.

“The main focus is to ensure that inputs are used in an efficient and effective manner that accounts for current and long-term impacts of the resources,” Schoengold said.

Possible Impacts of Using Inputs

Knowing how to properly use water and distinguish the amount needed to perform a task can help determine how to use this resource and make decisions in the future.

Because water is a limited input, policy design affects how people use it as well as how they make decisions about its use.

“Policies are constructed to help people understand how to use natural resources safely and efficiently,” Schoengold said.

These policies impact the economics across the state as well. 

“Economics is all about scarce inputs because all natural resources are scarce to some extent,” Schoengold said. “Policies can also help manage potentially polluting inputs.” 

Polluting inputs have negative effects on people and the ecosystem. For example, water contamination and air pollution are two possible impacts from using polluting inputs.

“People use nitrogen fertilizers to increase productivity in their plant and crop yields,” Schoengold said. “However, if there is runoff or flooding, that resource can pollute the water or create algae blooms that have negative impacts on the environment.” 

Algae blooms are the rapid growth of algae in water that can cause harm to the local ecosystem, humans, and animals. To avoid these issues, people need to understand how inputs should be applied.

Decision-Making Regarding Inputs

Ways individuals make decisions with polluting and limited inputs is critical because it leads to the longevity of natural resources in the environment. Further, people can gain useful information from understanding what others in their area are doing with these resources. 

“If people are given information about the amount water their neighbors are using, that could potentially affect how they manage their water resources,” Schoengold said. 

However, assumptions about inputs can potentially have negative impacts on how humans make decisions. For example, many misunderstand the design of an aquifer.

“The Ogallala Aquifer base has a slight tilt to it,” Haacker said. “The natural flow is from west to east.”

For those who do not understand that there is a tilt, they could believe that excessive extraction of groundwater in Texas would deplete water availability in Nebraska.

Further, water being extracted at a higher rate in Texas does not mean that there will be less water in Nebraska. This is because water in the aquifer flows from west to east and not north to south.

“Enough people could have the same misconception about groundwater which could then turn into mistaken common knowledge,” Haacker said.

What Drives Policy Design?

Policy design is essential for Nebraskans to understand inputs because it directly impacts how they use different resources. Further, how individuals make decisions regarding inputs can directly impact how environmental policies are designed. 

Schoengold said it is critical for policies to be designed that ensure natural resources are used effectively and efficiently.

“Policies can directly be affected by incentives,” Schoengold said. “For instance, putting a tax on a resource could potentially limit the usage of it.”

An incentive is something that motivates an individual to do something. Within environmental policy, tax incentives are one tool to reduce environmental damages when using inputs.

For example, in the San Luis Valley of Colorado, the local community imposed a variable tax to limit water extraction for irrigation. Based on this, withdrawals of water were reduced by 32% (on average) across all crops after the self-imposed tax was put into place.

Tax incentives greatly affect the role of policy but can also affect one’s decision making as well.

For more information about polluting and scarce inputs and the research Schoengold is conducting, please visit https://agecon.unl.edu/faculty or the Nebraska Water Center at https://watercenter.unl.edu.

Key Takeaways

1. Having the basic understanding of how people use inputs leads to better decisions when using natural resources, which can ultimately lead to a more sustainable future.
2. Limited inputs are natural resources that have limitations to how much is available for usage. Potentially polluting inputs are resources that have the potential of negatively impacting an individual or ecosystem.
3. Policies are put in place to protect and prohibit excessive uses of natural resources.
4. Ways individuals make decisions with polluting and limited inputs is critical because it leads to the longevity of natural resources in the environment.
5. For more information about polluting and scarce inputs and the research Schoengold is conducting , please visit https://agecon.unl.edu/faculty or the Nebraska Water Center at https://watercenter.unl.edu.