Can Dutch dairy farmers finance investments to reduce ammonia emissions?

The Dutch agricultural sector is emitting high levels of ammonia, which threatens the biodiversity of nature protection areas in the Netherlands. One solution to reduce emissions is to invest in cleaner technologies and structural changes on the farms, but a critical prerequisite is that farmers have sufficient accessible finance. The objective of our study is to identify promising investments that reduce ammonia emissions on Dutch dairy farms and to determine their financeability by farmers. Through a review of the relevant literature and a discussion round with experts, we identify 10 promising investments. Using accountancy data from 109 Dutch dairy farms from 2015 to 2020, we determine the investment prices for each farm based on farm characteristics. For the average Dutch dairy farm, the prices of the different investments range between 2,400 and 778,900 €. We then estimate the accessible finance for each farm based on farm savings and the size of accessible bank loans. On average, 42% of farmers in our sample can access less than 200,000 €, and 33% less than 50,000 € between 2018 and 2020. The financeability of the identified promising investments ranges then also from 88% for the cheapest investment in 2018 to 40% for the most expensive investment in the same year. In general, more than half of the farmers can finance some investments, but the currently accessible finances are quickly drained. Policy plans to stimulate the upscaling of investments should therefore include finance plans and take a holistic perspective considering the wider sustainability challenges.