Buy-out programmes on thin ice

Eduardo writes*

Two crucial issues in the Netherlands are deeply intertwined. On the one hand, nitrogen deposition levels are being contested by environmentalists and the European Court of Justice for threatening ecological quality (Economist, 2019). On the other hand, there is a huge housing shortage associated with rising prices, the lack of free space, tourism, and the nitrogen crisis (Lalor, 2021). Although nitrogen deposition in the Netherlands is mainly associated with ammonia emissions from intensive livestock farming, the housing sector is the second-highest domestic contributor (Rijksoverheid, 2019).

Aware of these issues, I went a few days ago to the housing crisis protest here in The Hague, and I noticed that the leading group in front of the march was the GreenLeft party followed by some members of the D66 and Bij1 parties. I thought to myself, isn’t that contradictory in some way? Measures within the nitrogen law passed in 2019 – and supported by D66 and GreenLeft – included cutting livestock herds by half and restricting construction emissions. is the nitrogen law perpetuating the housing crisis? D66 argues that livestock reductions will leave more “space” for the construction sector (Sawbridge, 2019).

When we look at the specific measures aimed at tackling the nitrogen crisis there is no evidence for quick ways to reduce emissions or ameliorate the housing crisis. The Dutch government is instead focussing on buying-out farms to reduce emissions (Flach, 2021). These buy-out programs involve the expropriation or voluntary sale of farms near nitrogen-sensitive areas (Boztas, 2021). In this way, farmers are paid an amount to relocate (or shut down) their farm and agree to a limit of nitrogen emissions from livestock. Simultaneously, the natural areas that are freed up are used for nature restoration and developments (Rijksoverheid, 2020).

These buy-out programs seem to offer an innovative solution to both the nitrogen and housing crisis. Farmers are paid and ecosystems at risk are protected. At the same time, the reduction in nitrogen from livestock production allows space for more houses to be built. Nevertheless, these measures face limitations. Buy-out programs may induce farmers to move to cities, increasing the demand for housing. Moreover, leaving more space for housing construction will only lead to increased emissions of both nitrogen and CO2. A reduction of livestock production may reduce exports and shrink markets for dairy, pig, and poultry, leaving animal-product consumers worse off.

It is necessary to estimate the benefits and costs of these measures. Are the environmental benefits from buy-out programs sufficient to cover its costs and potential impacts on housing? An “environmental equivalent” approach (calculating the environmental value of buy-out programs) can provide useful information (Schmitz, 2012).

* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

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