The overarching goal of this thesis is to develop integrated and spatially explicit environmental-economic models to assess cost-effective policy options concerning water quality improvements. More specifically, the thesis focuses on non-point source pollution from agriculture and applies the models to Danish river basins. Additionally, it investigates the potential for integrating marine-based nutrient mitigation measures (mussel farming) and land-based nutrient mitigation measures implemented by agricultural farmers into a common framework to enable assessments of cost-effective solutions.

The thesis includes three papers. In the first paper, the goal is to assess the impact of introducing mussel cultivation in the mix of nitrogen reduction measures in three Danish catchments that are subject to reduction targets for nitrogen loads. Additionally, the study explores the implications of a possible reduction in the productivity of mussel farms due to water quality improvements and consequent decrease in food availability. The paper contributes to the current literature by examining the effects of incorporating the production of mussel feed to the nitrogen reduction effort; by addressing the impact of long-term reduction in mussel productivity; and by analyzing how the price of mussel-based animal feed affects the cost-effectiveness of nitrogen abatement by mussel farming relative to land-based measures.

In the second paper, the aim is to identify cost-efficient allocations of land-based and marine measures and to discuss the impact of introducing mussel farming on the distribution of different types of land measures (set-aside, agricultural practices and wetlands as sinks). Different scenarios are setup to explore the implications of varying the baseline load estimates connected to the national N load targets and to improve our understanding of the implications of introducing mussel farming on the total cost to reach the target reductions and the spatial distribution of land-based measures.

The third paper simulates a water quality trading market in a catchment located in northern Denmark. It includes mussel farmers in the trading market and analyzes scenarios of decreasing levels of participation. By integrating agricultural farmers and mussel farmers, it seeks to assess the effects of such integration on a water quality trading market and on the costs of mitigating non-point source pollution using the smart market approach. Additionally, by setting-up scenarios of decreasing levels of participation, it aims to estimate the effects of an important concern regarding water quality trading markets – low participation. Both contributions offer novel additions to the literature and have important policy implications for the design of instruments to improve environmental conditions in coastal and marine areas.

The studies presented in this thesis show the potential of integrating land and marine based farmers in one policy framework to reduce nitrogen load to coastal and marine areas. Respecting the specificity of each catchment and its water body, such integration should be considered when designing instruments to improve environmental conditions in coastal and marine waters. In light of the pressing need to meet water quality targets, the potential contribution of mussel farming may increase the level of policy support for this measure.

Although developing robust models to regulate agricultural emissions remains a challenge, the research presented in this thesis contributes to bridging the gap between integrated models developed for research and simple assessment frameworks developed for use by agencies to support the regulation of agricultural emissions.