An environmental-economic model at farm level to analyse institutional and technical change in dairy farming

A deterministic static linear programming model of a dairy farm is presented and tested. The objective function of the model maximizes labour income. The model will be used for determining the effects of institutional, technical and price changes on the farm plan, economic results and nutrient losses to the environment. In this paper attention has been paid to the way in which animal production, feed production and environmental aspects were incorporated in the model. Optimizations were made for a typical dairy farm facing a levy on N losses and an increase in milk and plant production. Results are consistent and can be explained from the assumptions made. They show that negative economic effects of environmental legislation can be compensated by positive effects of technical improvement.