Kuba writes*
There were three significant crises under the reign of Mark Rutte, the longest serving prime minister in Dutch history. However, it has been the nitrogen crisis (stikstofcrisis) that has proven to be the most challenging in terms of the governance issues it raises. So how did the government respond?
Initially, the government mostly did nothing. Nitrogen emissions reduction plans existed, but lacked clear targets, incentives or hard interventions. In 2019, the Raad van State, a kind of Dutch supreme court, finally forced the government to face reality. Its judgement was that the further provision of rights to emit nitrogen had to stop immediately, as further emissions expressly violated European law. Therefore, the construction of buildings, extension of highways, and the scaling up of farms had to come to a sudden stop until a solution was found to reduce emissions. Emergency measures were announced for some easy fixes to allow for reduced emissions so that sectors such as construction could, at least temporarily, continue growing. However, a long-term plan to reduce emissions was clearly necessary. One of the most interesting solutions to arise came originally from the 2021-2025 coalition agreement. It stated that €25bn would be made available for agriculture to ‘transition’ away from nitrogen intensive activity. Although the language was vague, there was the strong implication that this would in large part involve the closure of a great number of farms, in order to achieve some of the agreement’s most ambitious goals.
Well-known mandarin Johan Remkes (VVD) was then in 2022 commissioned to write a report, providing a more concrete vision of this ‘transition’. Its title ‘Wat wel kan’ (that which is possible) showcases its almost comically direct Dutch nature and pragmatism. The report recommended, explicitly, that hundreds of piekbelasters (key emitters), which are mostly farms, should be bought out in the short and medium term. Spatial concerns would also dictate that certain areas would need to reduce emissions more steeply than others (see image). Areas around Natura 2000 sites, areas to be preserved for their biodiversity, would have to reduce emissions the most – which again, would mostly concern farms.
In 2023 a parliamentary brief, later to become law, stated that the government would offer subsidies to 3000 piekbelasters, concentrated around Natura 2000 sites, so that they close shop. Wishing to speed things along, some agencies and businesses, like Royal Schiphol Group started to buy out farms so that they could shut them down – allowing them to effectively buy nitrogen emissions rights for expansion.
Clearly, the nitrogen crisis was developing into one of Coasian rights allocation and more of a sort of static cap-and trade scheme for nitrogen. However, farmers are very culturally attached to their farms. As farms are so disproportionately responsible for damaging nitrogen emissions, this sentimentalism imperils the feasibility of such a system as it currently stands. Equally, the farmers do not need to pay for their existing rights to emit nitrogen. Therefore the market is incomplete and is stifled by the political power of farmers in the Netherlands – which can rarely be exaggerated. The current far right-led government is trying to ignore this issue, with the reactionary pro-farmer party BBB being part of the governing coalition.
Reducing nitrogen emissions won’t ever be easy in the Netherlands, but it would be a great start if its politicians stopped sounding like adverts for FrieslandCampina, a Dutch dairy giant. The future of the nation’s economy and environment may depend on such a seemingly simple cultural shift.
Bottom Line: The Dutch nitrogen crisis has developed into an issue of rights allocation. This demands the creation of a complete market for the trade of nitrogen emissions. Farmers can no longer benefit from disproportionately high bargaining power and free lunches in the form of no-cost emissions rights. However, farmers’ political strength is overwhelming.
* Please help my Environmental Economics students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).
Good work Kuba! Your analysis offers a clear overview of the Dutch nitrogen crisis, highlighting the governance and economic challenges Rutte had to face. I truly appreciate the integration of Coasian rights allocation creating a link to the course material of EE. Here are a few tips for refinement:
Farmers’ Political Power: While you emphasize their influence, it would help to compare it to other lobby sectors. Why do farmers have so much lobby power and where has this been played out before?
Buyouts and Subsidies: The €25 billion plan is significant and you highlight its pitfalls and vagueness. You could add a point on how this plan compares to similar transitions in other countries, if it does.
Cultural Resistance: You mention farmers’ sentimental attachment without a citation. It could be helpful to provide an example or reports on these sentiments.
Just a few ideas, I hope they prove helpful to you!
Overall, the commentary effectively connects political, economic, and cultural aspects of this crisis and I am excited to read your final paper on this topic!
Thanks for your response!
a) Whilst, farming in the Netherlands is more or less marginal compared to other industries in terms of what it contributes to national income, it has a lot of power. As I hinted in this post, the farming industry has a lot of power because of its cultural power. Part of this is highly effective PR from big players in the industry but it also stems from a deeply-rooted ‘peasant-farmer’ ideal that is common in many Western European countries – apart from the UK, where the aristocrats unsubtly dominate the rolling hills. Politicians in the Netherlands fear violating the ‘don’t criticse the farmers’ social norm due to the risk of losing swathes of voters. The cultural element is demonstrated by the fact that most BBB (farmer’s party) voters are not farmers – or even involved somehow in agriculture. The BBB in provincial elections won swathes of urban and peri-urban areas, as the urban Dutch love the myth of the farmer equally as the farmers themselves.
b) The problem in the Netherlands, in regards to Europe, is fairly unique. The density and intensity of farming in the Netherlands is far greater than elsewhere in Europe and much of the world. Therefore emissions of nitrogen are far higher from agriculture as a result. Nitrogen emissions are viewed as an issue elsewhere, but responses are far less radical (not because of ideology but because of reduced pressure) and focus mostly on reducing urban air pollution and protecting waterways from runoff.
c) It is difficult I agree to prove, without a Dutch-specific anthropological study, the cultural attachment of farmer’s to their way of life. However, farmers have acted as if they possess this attachment. Demonstrated by dramatic and violent protests and in tense bargaining or complete refusal to bargain, farmer’s view the value of their farms ranging far, far beyond what a cold business profile would suggest.
Hope this helps!