Identifying spatially targeted organic fertilizer subsidies for water pollution control: An interactive hydro-economic model

Developing a reasonable subsidy policy for organic fertilizer use can enhance manure recycling and mitigate non-point source (NPS) pollution. However, traditional policy analysis methods face challenges in capturing the interactions between real-world hydrological and economic processes, hindering accurate policy assessment and spatially targeted policy formulation. To address this gap, a hydro-economic model was proposed for policy analysis by coupling a microeconomic module based on positive mathematical programming with a semi-distributed eco-hydrological module (the SWAT model). This hydro-economic method overcomes the limitations of traditional models in capturing mutual feedback between hydrological and economic systems by using an iterative algorithm to reveal the interactions among water quantity, pollution loads, and agricultural practices. The pervasive scale mismatches between economic and eco-hydrological modules are also bridged by introducing a hydro-economic decision unit. Moreover, this approach advances previous models by formulating spatially targeted agri-environmental policies and identifying the spatiotemporal variations in NPS pollution under policy incentives. The hydro-economic model was applied to a typical agricultural watershed in northern China. The results indicated that increasing organic fertilizer subsidies from 0 to 1000 yuan/ton led to increased organic fertilizer use and higher farmer income, as well as spatiotemporal variations in NPS pollution and hydrological factors. The total phosphorus (TP) load, water yield, and surface runoff declined as subsidy levels increased, while the total nitrogen (TN) load fluctuated and evapotranspiration increased. The greatest reductions in TN loads occurred in spring (9510 kg), while TP loads were most reduced in summer (2680 kg). Priority areas for policy implementation were identified, where the same subsidies resulted in larger pollution reductions and greater benefits. Targeted subsidy levels have been suggested for each region to maximize the subsidy’s marginal utility in pollution mitigation. The proposed hydro-economic model could be widely applied to policy formulation and planning decisions in other resource management fields.