Cost Concepts¶

Opportunity cost vs. implementation cost¶

Every cost in the model is an annual cost in DKK/ha/yr representing what the farmer forgoes or spends per year if a measure is implemented on their land.

Implementation cost¶

The direct cost of establishing and maintaining the measure: seed cost, construction cost, labour, equipment. Examples: 3,486 DKK/ha/yr for WL construction; 27,270 DKK for a MW1 (one-time, treated as annualized); 384 DKK/ha/yr for CCS seed and management.

Opportunity cost (`prodcost(i)`)¶

The gross margin foregone — the profit the farmer gives up because the land is taken out of its highest-value crop. This is field-specific and computed as:

prodcost(i) = Sum(cy, CostE(i,cy)) / Countcy(i)

The average gross margin over 5 crop years, using only years where the crop is "acceptable" for production.

CostE(i,cy) is determined by: 1. The crop code in year cy (MarkAccess(i,cy)) 2. The farm type: organic (J) or conventional (N) 3. Livestock density: high (hoej ≥ 0.8) or low (lav < 0.8) 4. Soil type: sand (< 5) or ler/clay (≥ 5)

These four factors define the gross margin lookup from Cost_new_avg.inc.

Gross margin data (`Cost_new_avg.inc`)¶

The Cost(o, l, h, c) parameter — gross margin (DKK/ha) by: - o = oeko (J/N) - l = livestock (hoej/lav) - h = soil (sand/ler) - c = crop code

Provides the financial value of each crop under each farm type × soil combination. This is the core economic data underlying all opportunity costs.

Where opportunity cost appears in measure costs¶

Measure	Opportunity cost component
BZ10, BZ20	100% of CostM = prodcost(i)
LRl, LRh	prodcost(i) + fixed component
WL, SA, FO	prodcost(i) + fixed component
EC	prodcost(i) ± adjustment (EC gross margin vs current crops)
PPC	10% of prodcost (small fraction)
CCS, CCW, IC, EW, N10, N20, NPB10/20, OT	Fixed costs only (no prodcost component)
IBZ	Fixed cost only (7,938)

Livestock surcharge (200 DKK/ha/yr)¶

Added to the cost of permanent retirement measures (WL, SA, FO, LRl, LRh) for fields where livestock(i) ≥ 0.8. Added 2021-11-05. The rationale: high-livestock farms have higher fixed costs associated with adjusting their manure management if productive land is retired.

Combined measure cost (comb2 measures)¶

For combined NPB+BZ measures, the cost is:

CostM = NPB_cost × (NPB_area − BZ_area) + prodcost × BZ_area

This reflects that the BZ portion of the field has both NPB cost (50 or 100 DKK/ha) AND the full opportunity cost (prodcost), while the rest of the NPB area only has the NPB per-ha cost. These measures are therefore multiplied by 1 in the total cost equation (not by PotV again).

Units and conventions¶

Item	Unit
All field measure costs	DKK/ha/yr (annualized)
MW construction costs	DKK per wetland (one-time, treated as annual in model — ⚠️ verify if annualized)
Stream measure costs	DKK per watercourse / DKK/km (one-time or annual?)
WWT upgrade costs	DKK per plant-upgrade combination
Total cost (y)	DKK/yr
Penalty values	DKK/ton N or DKK/kg P

Confirmed (2026-04-04): All costs in the model are annual running costs (DKK/yr), not one-time capital costs. For infrastructure measures like MW construction (27,270–53,171 DKK) and stream measures (e.g. 121,537 DKK for ochre traps), these are annualized representations of the total investment, already expressed on a per-year basis.

Model structure: - Objective & Costs - Measures overview - Data: Cost_new_avg.inc — gross margin lookup table

Opportunity cost measures (prodcost component): - BZ10, BZ20 — 100% opportunity cost, no fixed component - LRl, LRh — prodcost + small fixed; livestock surcharge applies - WL — prodcost + 3,486 DKK/ha/yr construction; livestock surcharge applies - SA — prodcost + fixed; spatially differentiated - FO — prodcost + fixed component - EC — prodcost ± adjustment (energy crop margin vs current crop) - PPC — 10% of prodcost only - PWET — prodcost + 9,733 or 13,200 DKK/ha/yr depending on wtype

Fixed-cost-only measures (no prodcost): - CCS, CCW — catch crops; fixed seed/management cost - IC, EW — fixed cost - N10, N20 — reduced N application; fixed cost - NPB10, NPB20 — fixed cost per ha - OT — fixed cost - IBZ — fixed cost (7,938 DKK/ha/yr)

Infrastructure (one-time annualized costs): - MW — 27,270–53,171 DKK per wetland (annualized) - Stream measures — per watercourse / km - WWT — per plant-upgrade combination