renewable natural resource management and use without markets natural resources by their nature are not readily bent to the status of private property efficient resource use is complicated by jurisdictional externalities public goods non use values and beneficiaries spatially separated from the location of resources the task is made more challenging by ecological complexity that obscures cause benefits and effects costs and dramatic time lags between individual actions and subsequent social consequences that together with substantial uncertainty introduce the chance of irreversibilities resource economists have played a major role in the literature on externalities the development of individual transferable quotas non market valuation techniques and common property management

temporary import and export quotas and the current account abstract this paper provides a comprehensive analysis of temporary import and export quotas in a two period optimization model imposing much weaker restrictions on preferences and production technologies than in the existing literature we demonstrate that under net substitutability the imposition of a temporary quota which reduces imports by a small amount improves the current account and causes an appreciation of the real exchange rate if the initial equilibrium is quota restricted the effects of tightening the quota are ambiguous by contrast under substitutability a tightening of export quotas necessarily leads to a current account deficit regardless of the nature of the initial equilibrium

property rights externalities and resource degradation locating the tragedy abstract resource degradation in the third world is largely driven by the demands of farm households for fuelwood and land for agriculture since resources are often controlled through indigenous systems of property the tragedy of the commons has been used to explain resource degradation as a result private property is suggested as a solution to resource degradation a dynamic model capable of examining household incentives for resource use under private and common property is developed results of the model reject the conventional wisdom that gives rise to the presumed optimality of private individual property in natural resources and the correlated indictment of group management regimes

debt futures and options optimal price linked financial contracts under moral hazard and limited liability this paper characterizes the optimal financial contract between a risk neutral entrepreneur and risk neutral lender investors when the entrepreneur has limited liability there is moral hazard and the investor payoff function can depend on both output and output price but is nondecreasing in output in this setting the optimal contract is a price contingent commodity bond that can be replicated by combining pure debt commodity futures and commodity call option contracts although a pure commodity bond contract is sometimes optimal a pure debt contract is almost never optimal various properties of the entrepreneur s optimal price contingent promised payment are described copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

income insurance with uncertain output this paper examines the properties of a market solution to the output uncertainty problem faced by unincorporated primary producers an insurance contract is formulated and shown to provide income insurance to producers without exposing insurers to moral hazard the equilibrium relative to this contract is shown to be equivalent to that effected by a stock market available to all producers copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

a dynamic approach to the measurement of waste in an open economy abstract the paper develops a methodology for evaluating the cost of distortions within the production sector of a small open growing economy quadratic approximations to the loss of output are developed the main new result is that the dynamic loss due to distortions generally exceeds the discounted sum of static type losses due to distortions at least to the second order another new result derives a quadratic approximation to the output loss that can be calculated using information on the size of the distortions and on producer substitution matrices evaluated at an observed distorted equilibrium rather than at a hypothetical undistorted equilibrium

valuation of landmass degradation using fuzzy hedonic method a case study of national capital region a hedonic model to determine the revealed willingness to pay for landmass of different suitability classes based on landmass functional characteristics obtained through subjective assessments is developed for the national capital region in india the inherent non specificity involved in subjective evaluation is minimized using fuzzy logic based regression technique the proposed fuzzy regression involves regression using central values of triangular fuzzy number and minimization of non specificity using linear programming the revealed willingness to pay for landmass of different suitability classes is used for valuation of disbenefits due to urban expansion on landmass of different agricultural suitability classes in national capital territory of delhi appropriate pricing policies to prevent the future inappropriate landuse practices are developed using the landmass valuation

trust and communication mechanisms for increasing farmers participation in water quality trading trust and communication barriers have contributed significantly to the lethargic performance of many point nonpoint source water quality trading programs farmers are often reluctant to participate despite direct financial incentives yet the literature lacks a comprehensive investigation of how the social context affects trading outcomes we draw on social embeddedness theory to analyze three mechanisms of communicating with farmers and conduct a case study analysis of 12 water quality trading programs we find that employing trustworthy third parties or embedded ties may reduce farmers reluctance to participate although the most effective mechanism ultimately depends on local conditions and program objectives

soil conservation as an investment in land abstract most studies on the problem of optimal soil conservation have analyzed soil conservation measures as being time limited in their effect this paper extends previous analyses of the soil conservation decision by allowing farmers to make investments in soil conservation structures such as terraces bundles and ditches it shows that the main conclusions arrived at in previous studies remain valid the long term effects of unanticipated permanent changes in prices and discount rates may go either way independent of whether conservation measures are time limited or have lasting effects on the soil base

an economic model of soil conservation by introducing soil depth and soil loss into a simple model of agricultural production this paper seeks to determine when the private path of erosion differs from the socially optimal path considering the depletion of soil only and abstracting from the environmental disruption caused by erosion the paper argues that under most institutional arrangements the social and private rates of erosion are the same the paper concludes that public policy should be directed toward reducing erosion only when it leads to significant pollution externalities

welfare analysis of tax reforms using household data abstract this paper discusses a methodology for calculating the distribution of gains and losses from a policy change using data for a large sample of households estimates are based on the equivalent income function which is money metric utility defined over observable variables this enables calculations to be standardised and a computer program to compute the statistics presented in the paper is available for a general demand system equivalent income is related to measures of deadweight loss and standard errors are computed for each of the welfare measures an application to u k data for 5 895 households is given which simulates a reform that involves eliminating housing subsidies

option values to conservation and agricultural price policy application to terrace construction in kenya policy reforms to liberalize agricultural markets in developing countries are likely to influence both the level and the variability of prices while considerable attention has been given to the impact of changes in price level on soil and water conservation there has been relatively little analysis of the role of price variability in conservation decisions we present a model of investment under uncertainty to analyze the effect of both level and variability of prices on the decision to invest in conservation the model is applied to adoption of fanya juu terraces in eastern kenya

creating incentives for the adoption of sustainable agricultural practices in developing countries the role of soil carbon sequestration sustainable agricultural development is widely acknowledged as a critical component in a strategy to combat both poverty and environmental degradation yet sustainable agricultural development remains an elusive goal particularly in many of the poorest regions of the world soil degradation continues to be a key factor in unsustainable production systems despite decades of research on soil conservation and other sustainable practices hudson scherr barrett place and aboud sanchez various studies stress the role played by resource poor farmers in human induced natural resource degradation bruntland commission reardon and vosti barbier the prevailing economic explanation for the continuing trend toward resource degradation in many parts of the world is that economic incentives often encourage degradation and discourage conservation these incentive problems have been attributed to poor farmers high discount rates lack of capital markets high transport costs and other market imperfections adverse government policies insecure property rights and limited availability of fodder for grazing or fuel for cooking and heating e g lutz pagiola and reiche heath and binswanger from this perspective the challenge facing researchers and policy analysts is to understand the factors and processes causing the use

a soil quality index and its relationship to efficiency and productivity growth measures two decompositions this article reconciles two notions of soil quality indexes with the economic concepts of technical efficiency and productivity growth an example uses data from the u s department of agriculture s experimental fields in maryland and data envelopment analysis techniques to estimate a soil quality index consistent with the notion of technical efficiency common regression techniques shed additional light on the role of individual soil quality properties in a very restricted linear approximation of the estimated soil quality index

land degradation and property regimes this paper addresses the relationship between property regimes and land degradation outcomes in the context of peasant agriculture we consider explicitly whether private property provides for superior soil resource conservation as compared to common property and open access to assess this we implement optimization algorithms on a supercomputer to address resource decision making of individual households we find that conditions exist under which private property does not lead to the best environmental outcome access to farming technology and off farm employment opportunities are key factors in this result

a stochastic dominance comparison of reduced tillage systems in corn and soybean production under risk returns per acre of reduced tillage systems including conventional chisel till plant and no till are examined under general assumptions concerning risk these returns are calculated using com and soybean experimental plot yields stochastic dominance rankings indicate an advantage second degree of conventional and chisel over no till when soil loss costs are not assigned annual per acre soil loss costs of 5 15 shift rankings towards the reduced tillage systems a 10 per acre cost results from corn yield losses of 0 06 per year 170 bushel per acre yield base over fifty years with a 5 real discount rate

income distribution evaluation and the law of one price abstract the growing literature on evaluating changes in the distribution of income has led recently to a consideration of the conditions under which such evaluation is possible without reference to existing prices this paper provides a complete characterization of the class of preferences social orderings for which this is possible in the case where the law of one price is not assumed different individuals may face different price vectors the relationship of this result to those which are known for the one price case is also briefly considered

natural resource economics and conservation contributions of agricultural economics and agricultural economists research by agricultural economists on natural resources has been distinguished by an interdisciplinary emphasis and a dynamic perspective it has recognized technological and institutional constraints has been oriented toward solving concrete resource management and policy problems and has emphasized empirical and quantitative analysis agricultural economists have introduced methods for evaluating natural resource conservation efforts for predicting adoption of resource conservation technologies and for designing efficient and sustainable resource management policies they have identified ways of improving land management and preventing land degradation proposed reforms of institutions governing water allocation and water quality and introduced policies for balancing environmental and efficiency considerations in the management of pests biodiversity and livestock diseases their research has had substantial impacts on the formulation of resource conservation policies

poverty consumption risk and soil conservation abstract this paper studies the impact of poverty and uninsured consumption risk on incentives to invest in soil conservation a stochastic dynamic model is used to show how consumption risks and costs of investment influence incentives to adopt soil conservation measures on low income farms the model is calibrated using production data from hillside farms in the philippines simulations with the model demonstrate how the value of soil conservation depends on the cost of investing the risk characteristics of the soil conservation method and differences among households in capacity to bear risk model predictions are compared with empirical adoption patterns as described by a probit model and nonparametric kernel regressions of adoption probability empirical findings show how differences in farm size tenure security risk exposure and access to credit help to explain patterns of soil conservation adoption implications for policy are discussed

an index of inequality with applications to horizontal equity and social mobility horizontal equity and social mobility are discussed in terms of a non utilitarian social welfare function which takes account of the process by which an ex ante distribution is mapped into an ex post distribution by the tax system for example an index of inequality is proposed which decomposes into two components corresponding to vertical and horizontal equity respectively a functional form for the social welfare function is derived for the purposes of empirical work and an application to data for 5895 uk households is presented the paper contains a theoretical application of the index to a model of optimal taxation it is conventional to assess the merits of alternative public policies in terms of a trade off between equity and efficiency in practice however a change in say the tax system involves three effects first it may have incentive or disincentive effects leading to efficiency gains or losses secondly it may alter the distribution of welfare levels thirdly it may alter the ranking of individuals or households within the distribution these three effects correspond to efficiency vertical equity and we shall argue certain aspects of horizontal equity respectively and any assessment of a tax change must take into account all three the principal assumption of this paper is that government is concerned about the trade off between these three effects a strict utilitarian is concerned only with the consequences of an action and in the evaluation of a particular reform a utilitarian measure of social welfare is defined over the vector of ex post utilities no account is taken of the process by which the vector of ex ante utilities is mapped into the ex post vector and no ethical status is awarded to the ex ante distribution one does not have to adopt an entitlement theory of justice to believe that the utilitarian approach may ignore some relevant considerations such as the fairness of the redistributive process a striking example of this arises in the model used by mirrlees 11 to examine optimal income taxation in that model individuals have identical preferences defined over consumption and leisure and differ only in respect of their potential wage rates or ability levels clearly in the absence of taxation individual utility is an increasing function of ability suppose the government uses redistributive lump sum taxes to achieve the first best optimum then as mirrlees 11 12 shows the first best optimum for a utilitarian social welfare

forest conservation in costa rica when nonuse benefits are uncertain but rising stochastic dynamic programming is used to investigate optimal holding of primary tropical forest in humid costa rica when future nonuse benefits of forest conservation are uncertain and increasing the quasi option value of maintaining primary forests is included as a component of investment in natural capital although the impact of uncertainty on conservation incentives is substantial our results indicate that a rising trend in future benefits and compensation by the international community for beneficial spillovers are more important factors in determining optimal holdings of forest stocks without compensatory payments however further deforestation may be warranted

natural resources agriculture and property rights abstract the study explores empirically forest resource and soil quality degradation under different property rights regimes in a subsistence agriculture framework the quantitative analysis is a direct test of the theoretical hypothesis of larson and bromley 1990 larson b bromley d 1990 property rights externalities and resource degradation locating the tragedy journal of development economics 33 2 that common property and private property rights may lead to similar incentives for resource protection a household model is formulated and applied empirically with data from indonesia to test rates of forest biomass and soil quality degradation under private and common property rights results show that the two regimes may equal each other by including bequest value sensitivity analysis is conducted by changing model parameters

tenants landlords and soil conservation it has long been argued that tenants tend to overexploit land but this conventional wisdom has been derived largely without consideration of landlords actions we examine what happens when landlords can invest in durable conservation measures in addition to choosing rental contract terms when tenants are risk neutral landlords overinvest in conservation under cash rental contracts but can achieve first best levels of output and protection against land degradation when conservation investment is combined with share rental when tenants are risk averse the first best is unattainable in this case conservation investment combined with share rental results in output levels below the first best while equilibrium conservation investment may be greater or less than the first best these results suggest that contract form and conservation investments are likely made simultaneously so that econometric studies of conservation practice adoption that treat rental status as exogenous are likely subject to bias

influence of soil conservation on farm land values worldwide concern for the loss of agricultural soil has led many governments to establish programs to slow the loss of soil from farms mcconnell 1983 has shown however that in the absence of externalities farmer decisions on investment to reduce onfarm soil loss can be socially optimal and concludes p 188 as follows increasing soil loss does not imply that farmers ignore physical production relations if farmers know that the soil base affects farm resale value they will conserve it it suggests that the impact of soil depth on the value of farms be investigated earlier rausser 1980 reached a similar conclusion suggesting that land values which fail to reflect soil quality encourage the farmer to ignore his long run impact on the resource two recent studies failed to find clear cut relationships between soil erosion and farm land prices ervin and mill 1985 942 in a cross section study of farm land prices in page county iowa concluded the group of variables measuring past and future erosion damages and conservation structures did not exhibit large and reliable effects gardner and barrows 1985 studied the capitalization of the value of soil conservation practices into farm land prices in southwestern wisconsin and concluded p 946 the most reasonable conclusion is the most obvious conservation

the elasticity of derived net supply and a generalized le chatelier principle the marshall 1920 hicks 1963 rules for the elasticity of derived demand for an input which demonstrate how the price elasticity of demand for the input changes as the price elasticity of demand for the product the price elasticity of supply of a competing factor the first factor s cost share and the elasticity of substitution between the two factors change have been generalized to the case where there are n inputs and one output by sato and koizumi 1970 1973 andrieu 1974 and razin 1974 have also generalized the marshall hicks rules to the case where there is one output and three inputs but one of the inputs is fixed however since most real life firms or industries produce a wide variety of products it would appear to be useful to obtain rules for the price elasticity of derived supply for an output where other output and input markets are allowed to adjust to the change in the price of the first output the recent increases in energy prices have perhaps provided a reason for renewed interest in the microeconomic determinants of industry supply in section 5 below we derive analogues to the marshall hicks sato koizumi rules in a multiple output framework in section 2 we list our assumptions on the technology and note some preliminary results from duality theory in section 3 we define the elasticity of derived net supply and we show that it will always be nonnegative in our model we also compare the elasticity of derived supply which takes into account adjustments induced by an increase in the price of the output in other input and output markets with an ordinary price elasticity of supply which holds the prices of the other inputs and outputs fixed we also compare the above two elasticities with intermediate elasticities of derived supply that are obtained by assuming that some input and output prices are fixed but others are not we find that the more markets that adjust to the price increase in the first market the smaller the elasticity of derived supply becomes in the first market we could term this an inverse le chatelier principle since it acts in a manner which is seemingly opposite to the usual le chatelier principle cf samuelson 1947 pp 36 39 which says that the more markets that we allow to adjust to the effects of a price increase in the first market the larger is the elasticity of supply in the first market however the two le chatelier principles are not really opposed as we shall see later our inverse le chatelier principle formally contains samuelson s le chatelier principle as a special case in section 4 we consider the comparative statics effects of an exogenous increase in the price of the first good on a weighted average of other prices as well as on a weighted average of changes in the industry supply of other outputs and changes in the industry demand for other inputs taking into account the general equilibrium repercussions on other markets of the increase in the price of the first good

population growth soil fertility and agricultural intensification abstract this paper presents a renewable resource model of soil fertility with a nonconvexity in the net benefit function in this setting recurring cycles of cropping and fallow can be the optimal soil management strategy the model is used to illuminate the boserup discussion of agricultural development in which population growth leads to agricultural intensification defined as an increase in cropping frequency previous formal models of the boserup hypothesis focus on the land labor ratio rather than cropping frequency and have not directly incorporated soil fertility dynamics these models assume a convex production technology and are not optimistic about the prospect for agricultural development without technological progress this paper explicitly models soil fertility dynamics and demonstrates that nonconvexities in the production technology are an important feature of the use of long fallow periods for soil management as population grows and the demand for food increases the importance of the nonconvexity diminishes and more frequent cropping becomes economical given a nonconvexity in the production technology it is possible though not necessary that average labor productivity increases with agricultural intensification thus it is possible to reconcile the greater labor requirement of intensive farming with an increase in average labor productivity in addition boserup argued that a larger and denser population facilitates the development of economic and social infrastructures which improve agricultural productivity

crop insurance in a political economy an alternative perspective on agricultural policy lawmakers often subsidize farmers in times of financial distress this article models this political impulse as a constraint on government farm policy describing how ex ante government farm insurance can deter ex post disaster relief and improve production incentives by countering the moral hazard that otherwise prevails absent ex ante government policy ex post relief takes the form of revenue insurance which prompts excessive entry into farm production and under production by operating farmers ex ante government policy can raise economic and political welfare by buying out low productivity farmers and offering profitable farmers a combination of revenue insurance price supports and a program participation fee copyright 2003 oxford university press

economic valuation of biodiversity sense or nonsense this paper critically evaluates the notion and application of economic monetary valuation of biological diversity or biodiversity for this purpose four levels of diversity are considered genes species ecosystems and functions different perspectives on biodiversity value can be characterized through a number of factors instrumental vs intrinsic values local vs global diversity life diversity vs biological resources etc a classification of biodiversity values is offered based on a system of logical relationships among biodiversity ecosystems species and human welfare suggestions are made about which economic valuation methods can address which type of biodiversity value the resulting framework is the starting point for a survey and evaluation of empirical studies at each of the four levels of diversity the contingent valuation method is by far the most used method an important reason is that the other valuation methods are unable to identify and measure passive or nonuse values of biodiversity at first sight the resulting monetary value estimates seem to give unequivocal support to the belief that biodiversity has a significant positive social value nevertheless most studies lack a uniform clear perspective on biodiversity as a distinct concept from biological resources in fact the empirical literature fails to apply economic valuation to the entire range of biodiversity benefits therefore available economic valuation estimates should generally be regarded as providing a very incomplete perspective on and at best lower bounds to the unknown value of biodiversity changes 2001 elsevier science b v all rights reserved

interactive dynamics between natural and man made assets the impact of external shocks abstract this paper studies a two sector economy in which one of the sectors the commodity sector depends in part on the exploitation of a renewable natural resource and examines the issue in an economy wide context where both natural resources and a man made asset change endogenously over time we show that under an open access resource regime i a resource rich capital poor economy may experience a natural resource curse phase and under certain conditions may even follow a non sustainable path leading to complete natural resource depletion ii a labor inflow results in a higher steady state per capita income with unchanged natural resources though it makes the economy more prone to reach a path that converges to resource collapse iii the introduction of a small import tariff or export tax results in larger steady state natural resources and commodity output and renders the economy less vulnerable to resource collapse we also contrast the open access case with the other polar case of perfect property rights showing that in this case the economy experiences neither a resource curse nor a resource collapse

valuing soil conservation benefits of agroforestry contour hedgerows in the eastern visayas philippines abstract trees can be considered as investments made by economic agents to prevent depreciation of natural assets such as stocks of top soil and water in agroforestry systems farmers use trees in this manner by deliberately combining them with agricultural crops on the same unit of land although advocates of agroforestry have asserted that soil conservation is one of its primary benefits empirical estimates of these benefits have been lacking due to temporal and spatial complexity of agroforestry systems and the nonmarket aspect of soil capital assets this study designs and applies a bio economic framework for valuing the soil conservation benefits of agroforestry the framework is tested with econometric analysis of data from surveys of households in eastern visayas philippines where usaid government of philippines introduced contour hedgerow agroforestry in 1983 by constructing a weighted soil quality index that also incorporates measures of soil fertility texture and color in addition to erosion we extend previous economic studies of soil resources this index is regressed on a variety of farming and site specific bio physical variables next we use a cobb douglas profit function to directly relate agricultural profits and soil quality thus the value of soil conservation is measured as a quasi rent differential or the share of producer surplus associated with a change in soil quality because this framework assumes the existence of markets the assumption is tested by analysing the statistical significance of consumption side variables e g number of household members on production side variables e g profits instrumental variables are used to handle the endogeneity of the soil index in the profit equation seemingly unrelated regression sur analysis is used to accommodate correlation of errors across the soil and profit equations regression results reveal the importance of agroforestry intensity private ownership land fragmentation and familiarity with soil conservation as positive covariates of soil quality analysis of production data indicate the importance of market prices education farming experience farm size topography and soil quality as positive covariates of household profits investments in agroforestry to improve or maintain soil capital can increased annual agricultural profits by us 53 for the typical household which is 6 of total income however there are significant up front costs given that small farmers in tropical uplands are important players in the management of deteriorating soil and forest resources policy makers may want to consider supporting farmers in the early years of agroforestry adoption

review the economics of soil health abstract soil health plays an important role in agricultural productivity food quality environmental resiliency and ecosystem sustainability consequently there is great interest from policymakers for evidence based research on the benefits and costs of investing in healthy soils in this article i endeavor to build a common understanding between economists soil scientists and policymakers about how to pursue research on the economics of soil health first i summarize the current understanding of soil health as a holistic and multidimensional concept beyond that of mere soil fertility second i argue that optimal control models are particularly well suited to capture the underlying economics of soil management finally i outline relevant implications of such an approach for setting soil health policy

policy instruments for sustainable land management the case of highland smallholders in ethiopia degradation of land continues to pose a threat to future food production potential in many developing economies various approaches mainly based on command and control policies have been tried with limited success in the past to encourage adoption of erosion control practices by farm households high transactions costs and negative distributional impacts on the welfare of the poor limit the usefulness of standards and taxes for soil and water conservation one innovative approach is the use of interlinked contracts which create positive incentives for land conservation this study analyses the social efficiency of such policies for erosion control in the ethiopian highlands using a non separable farm household model incentive contracts linked with conservation seem to be promising approaches for sustainable resource use in poor rural economies this may suggest that conservation programs should give greater consideration to better fine tuning and mix of policies that help achieve both economic and environmental objectives

price determinants of foreclosed urban land foreclosure proceedings are the primary cause of real estate auction sales in the us given the added legal constraints and risk associated with foreclosure proceedings it is an empirical question as to whether the resulting prices are a function of the usual underlying factors of physical characteristics locational benefits and neighbourhood effects which motivate normal market sale pricing using a hedonic pricing model common in the analysis of market sale prices we find systematically determined price behaviour which replicates market pricing

optimal soil conservation and the reform of agricultural pricing policies abstract soil degradation is often blamed for the poor performance of agriculture in developing economies so too are policies which keep the prices of both outputs and inputs artificially low some economists have argued that pricing reforms will encourage soil depletion others say that such reforms will encourage soil conservation to evaluate these claims this paper develops models of the optimal control of soil erosion and soil fertility it is shown that the effect could go either way but that there are strong reasons for suspecting that pricing reforms will not affect soil conservation dramatically

examining the use of national databases in a hedonic analysis of regional farmland values hedonic techniques have attracted the interest of economists as a means of measuring values of nonmarket goods by studying the market transactions of differentiated products such as automobiles and houses implied values and corresponding demand schedules can be estimated for underlying characteristics such as automobile safety features two car garages and air quality of residential neighborhoods the subject of this paper is farmland and estimating the values of characteristics such as soil productivity and erodibility in 1974 rosen and freeman independently developed theoretical models for differentiated consumer products that now serve as the basis for empirical estimates of marginal prices of product characteristics procedures to estimate demand schedules of underlying characteristics were outlined in palmquist 1984 palmquist 1989 further extended rosen s theoretical model to consider land as a differentiated factor

sustainable farm income in the presence of soil erosion an agricultural hartwick rule soil erosion is a physical and economic problem of natural capital degradation even along an intertemporally efficient trajectory one can have in a loss of soil fertility and a continuous decline of agricultural net revenue moreover soil erosion is a major source of surface water pollution in rural areas erosion control is thus a challenge for sustainable resource management and internalizing external effects to sustain the level of farm income an agricultural hartwick rule is proposed which addresses both on farm and off farm effects of soil erosion first it requires the investment of the soil rents into alternative capital second additional measures are required to comply with an ambient quality target a charge subsidy scheme proves the most adequate from a perspective of cost effectiveness and sustainability if effluent charge revenues are earmarked to subsidize cropland retirement at the watershed scale in combination with the investment of soil rents this enables to maintain the level of farm income constant over time while respecting the ambient quality target altogether this fulfills the requirements of efficiency and sustainability 2003 elsevier science b v all rights reserved

agricultural productivity and soil carbon dynamics a bioeconomic model we examine the dynamic management of a soil resource the issue at the core of both environmental and development challenges in developing countries our theoretical framework extends the traditional bioeconomic model of renewable resources to soil carbon management and investigates the effects of changes in agricultural practices on farmers natural resource base and livelihoods we parameterize the model using an eight year panel data set from an agronomic experiment and data from household and market surveys in the western kenyan highlands the optimal maize yields and soil carbon stocks are higher than those observed in the region this divergence is partly explained by farmers heterogeneous time preferences with the implied discount rates of 5 to 25 information barriers and market imperfections the steady state shadow price for soil carbon ranges from 95 mg to 168 mg indicating a significant opportunity cost for soil mismanagement

reference price independent welfare prescriptions abstract a number of studies have evaluated the social welfare impact of price and income changes using equivalent incomes that are computed at some reference price vector and an aggregator with these equivalent incomes as arguments in place of a social welfare function this paper investigates the impact of the choice of the reference price vector on the results of such exercises distinguishing the case of individualized prices from the constrained case where all individuals face the same price vector we characterize preferences and aggregators leading to reference price independent welfare prescriptions

structural adjustment and soil degradation in tanzania a cge model approach with endogenous soil productivity abstract in this paper a model of the nitrogen cycle in the soil is incorporated in a computable general equilibrium cge model of the tanzanian economy thus establishing a two way link between the environment and the economy for a given level of natural soil productivity profit maximising farmers choose input levels and hence production volumes which in turn influence soil productivity in the following years through the recycling of nitrogen from the residues of roots and stover and the degree of erosion the model is used to simulate the effects of typical structural adjustment policies like a reduction in agro chemicals subsidies reduced implicit export tax rate etc after 10 years the result of a joint implementation is a 9 higher gross domestic product gdp level compared to the baseline scenario the effect of soil degradation is found to represent a reduction in the gdp level of more than 5 for the same time period

implicit prices of soil characteristics for farmland in iowa arguments have long persisted that purchasers pay too much for poor land i e less productive more erosive relative to the higher quality counterpart in other words purchasers are either irrational or poorly informed relative to the differences in land productivity between poor and good farmland similar arguments have been advanced concerning the willingness to pay rent on the part of tenant operators little empirical evidence exists to support or reject this hypothesis farmland appraisals are sometimes cited as evidence to support the contention but such empiricism may indicate more about the quality and biases of appraisers than about the behavior or efficient functioning of the farmland market resolution of this issue is extremely important to the formation of soil conservation policy designed to protect soil productivity irrational behavior on the part of land purchasers may lead one to infer that the market system is failing to recognize adequately the soil productivity consequences of soil erosion if this oversight consistently leads to excessive soil erosion from society s perspective then some form of government intervention may be necessary to protect the welfare of society assuming that such intervention is capable of correcting the market failure

current issues in the economics of groundwater resource management the issue of groundwater management remains a practical concern in many regions throughout the world while water managers continue to grapple with the question of how to manage this resource in this article we attempt to bring the most advanced and appropriate tools to bear on the issue of resource allocation involving groundwater our objective is to demonstrate the state of the art in the literature on ways to think about this complex resource and to deal with the important economic issues emanating from its complexity we present the conceptual framework within which economists examine the elements interacting in the management of groundwater resources indicate why the role of the market is limited with respect to the price of this very complex resource and point to the mechanisms that can pull competitive groundwater price and quality graded quantity of groundwater in line with their equilibrium levels in particular we critically review economic models of groundwater use examine the potential for groundwater management discuss the difficulties encountered in the estimation of the relevant control variables of such models and identify the advantages and limitations of the instruments devised for the efficient use allocation of this resource finally we argue that devised regulatory schemes usually ignore the information and knowledge needed for their implementation and we suggest a core of conditions necessary for successful groundwater management reforms

an analysis of growth of u s farmland prices 1963 82 increases in expected inflation or real growth in net rental income to land have been proposed as alternative explanations of the dramatic real growth in u s farmland prices in the 1970s in this paper the effect of inflation is shown to be theoretically ambiguous an empirical analysis using u s and international farmland prices suggests that most of the real land price growth can be explained by real growth in net rental income to land increases in expected inflation have had a negative effect on real land prices but the effect of inflation has been comparatively small

principles of stochastic dynamic optimization in resource management the continuous time case abstract a wide range of problems in economics agriculture and natural resource management have been analyzed using continuous time optimal control models where the state variables change over time in a stochastic manner using a firm level investment model and a model of environmental degradation this paper provides a concise introduction to continuous time stochastic control techniques the process used to derive the differential of a stochastic process is stressed and in turn is used to explain ito s lemma bellman s equation the hamilton jacobi equation the maximum principle and the expected dynamics of choice variables a basic extension of the dynamic duality literature is also provided where the hamilton jacobi equation is used to derive a stochastic and dynamic analogue of hotelling s lemma

hedonic analysis of a housing market in disequilibrium abstract this paper tests the hypothesis that information about housing market activity and about specific dwellings becomes capitalized into single family dwelling prices through a disequilibrium adjustment process a dynamic price adjustment model which is an extension of the standard hedonic model widely used in the literature is derived specified and tested with both micro and aggregated data from the city of chicago and for the period 1972 1976 the results show that from 32 to 75 of the variance in dwelling prices unexplained by the standard hedonic attributes under assumptions of equilibrium is explained by market activity signals such as mortgage interest rates and neighborhood transaction rates of the preceding period dwellings about which there is less information making comparison pricing difficult are shown to command a price premium the standard equilibrium hypothesis appears readily rejectable and better predictions are obtained from the disequilibrium specifications several directions for extending this line of research are discussed

investment in soil conservation in northern ethiopia the role of land tenure security and public programs abstract a double hurdle statistical analysis of 250 farms in the tigray region of ethiopia reveals different causal factors for soil conservation adoption versus intensity of use farmers reasons for adopting soil conservation measures vary sharply between stone terraces and soil bunds long term investments in stone terraces were associated with secure land tenure labour availability proximity to the farmstead and learning opportunities via the existence of local food for work ffw projects by contrast short term investments in soil bunds were strongly linked to insecure land tenure and the absence of local food for work projects public conservation campaigns on private plots reduced adoption of both stone terraces and soil bunds whereas capacity factors largely influenced the adoption decision expected returns carried more influence for the intensity of stone terrace adoption measured as metres of terrace per hectare more stone terracing was built where fertile but erodible silty soils in higher rainfall areas offered valuable yield benefits intensity of terracing was also greater in remote villages where limited off farm employment opportunities reduced construction costs these results highlight the importance of the right kind of public interventions direct public involvement in constructing soil conservation structures on private lands appears to undermine incentives for private conservation investments when done on public lands however public conservation activities may encourage private soil conservation by example secure land tenure rights clearly reinforce private incentives to make long term investments in soil conservation

globalisation and factor returns in competitive markets abstract the standard competitive trade model extended to include many goods and factors is used to analyze the effect of goods and factor market integration on average international disparities in the real returns of internationally immobile factors it is shown that goods market integration decreases international real return differentials for all factors we derive sufficient conditions for this result to hold for the subgroup of internationally immobile factors as well while there is a presumption for similar results to hold with international factor market integration we show that this is true for international migration but in general not for international investment

on the economics of the optimal fallow cultivation cycle abstract this paper considers the so called fallow cultivation problem in traditional agriculture the paper specifies the problem and determines the optimal duration of the fallow cultivation cycle we study and deduce results on the impact of the switching costs and the output price on this cycle finally we discuss the relation between soil fertility and the output price the fallow cultivation problem is an important economic problem since traditional farming provides the food in most low income countries however it is also worth studying since it is an interesting specimen case in a class of dynamic models in which sensible controls split process variables in distinctive phases

hedonic prices demands for urban housing amenities and benefit estimates abstract this paper uses a rosen two step hedonic price trait demand approach to estimate demand functions for a vector of urban amenities to ascertain whether this theoretically preferred approach yields benefit estimates which differ from the oft used ridker henning one step hedonic approach we conduct a sensitivity analysis we find that the two step approach does yield different benefit estimates and that the differences are large for some amenities the estimates are sensitive to the functional form of the hedonic equation when the forms are significantly different according to modified box cox results but are not particularly sensitive to specification of the amenity demand equation

debt poverty and resource management in a rural smallholder economy this paper develops a model to capture the key features of poverty credit constraints and resource management faced by poor rural households we assume that due to the existence of asymmetric information and moral hazard the household faces an increasing cost of credit as its debt equity ratio rises a household exploiting a natural resource may fall into a poverty trap but only if it is unable to afford the increasing borrowing costs implied by increasing debt to allow it to avoid such a trap or if it discounts future utility so much that a balanced growth path cannot be financed at any level of long run borrowing in contrast along an optimal balanced growth path the household s asset wealth purchased inputs resource stock and consumption increase at the same constant rate however over the long run there may be carrying capacity limits that prevent the resource from improving further the household may then direct its savings to accumulating financial assets and eventually under certain conditions may become a net creditor with resource exploitation becoming a less and less important source of its income

agricultural land markets and soil erosion policy relevance and conceptual issues farmland values dwarf all other asset values in agricultural production therefore understanding the formation and roles of farmland prices should command high research priority while we have seen some clarification of the pricing of farmland through time from an aggregate perspective other questions remain enigmas one is the relationship among land prices soil erosion and conservation investments understanding that relationship is critical to designing effective public soil conservation policy in the past the notion that the farmland market was generally not sensitive to varying erosion conditions was seemingly endorsed without systematic data analysis miranowski and hammes note the paucity of good empirical evidence for testing the effect of erosion on farmland prices two probable reasons for this lack of empirical study are worth citing first the legitimacy of public soil conservation assistance programs was not challenged then unlike the present thus there was not a compelling social need to understand whether farmland markets were transmitting proper signals to landowners with regard to erosion s effects second thorough and rigorous empirical tests of the relationship between land prices and erosion or conservation conditions are painstakingly detailed work fraught with many conceptual and measurement complications this paper has three sections in the first the policy context surrounding land prices and soil erosion is discussed we then report some empirical work on the erosion land price question with emphasis on specification issues surrounding an implicit price model implications for soil conservation policy and further research close the discussion

further toward a theory of agricultural insurance the economic theory of contracts is applied to agricultural insurance to show that given full information pareto optimal insurance contracts are actuarially fair provide full coverage and differ for each individual the information problems of moral hazard and adverse selection prevent pareto optimality from being attained several second best solutions to these problems are applied to agricultural insurance it is shown that information collection and the application of contract design principles are second best solutions which may achieve the benefits of insurance at less cost than the current practice of public subsidies in theory agricultural insurance is an efficient risk sharing mechanism in practice however agricultural insurance has been a costly means of transferring risk from farmers to governments and or other insurers to induce farmers to participate in agricultural insurance governments have borne significant subsidy costs hazell pomareda and valdes p 295 in a recent study ahsan ali and kurian aak concluded that public subsidies are necessary to make agricultural insurance viable they also showed that insurance will increase output relative to a case with no insurance thus insurance is beneficial particularly in less developed countries where increasing food supplies is a policy goal for this reason they concluded that public subsidization of insurance also is desirable their conclusions are derived from a simplified model of production with one output and one input in this article we consider a more general production model with multiple inputs and outputs we show that aak s conclusion about the benefits of insurance may not hold depending on the nature of the inputs and outputs as defined by the production function carl h nelson is an assistant professor of agricultural economics

technical change in agriculture and land degradation in developing countries a general equilibrium analysis this paper analyzes the role of economic linkages between upland agriculture lowland agriculture and other sectors in developing economies and the potential for welfare enhancing shifts from more to less erosive upland land use patterns comparative statics results are obtained from analytical and numerical general equilibrium models they indicate that the green revolution in lowland agriculture helped alleviate upland land degradation and that policies aimed at slowing land degradation through technical progress in upland crops may have the opposite of their intended effects the results highlight the need for integrated policy packages to reduce upland land degradation in developing countries

on market equilibrium analysis in this paper we develop the implications of competitive market equilibrium for production and household behavior when some prices are endogenously determined the properties of market equilibrium functions are explored including the effects of pricing policy a slutsky type equation relating compensated and uncompensated market equilibrium functions is derived implications for multimarket welfare analysis are presented focusing on the effects of pricing policy and technical change

user costs of soil erosion and their effect on agricultural land prices costate variables and capitalized hamiltonians whether land markets efficiently capture the degradation in soil quality caused by erosion is an empirical question but the degree of efficiency cannot be ascertained from statistical estimates alone these must be compared to the effect erosion would have on the value of land in a perfectly functioning market the purpose of this paper is to provide the needed benchmark for comparison will an inefficient land market cause farmers to overexploit the soil do renters erode more than owners how much does erosion cost if soil is becoming more valuable over time how should current decisions be altered to conserve soil for future generations these are ancillary questions we will address as well we begin by sketching a model for the dynamically optimal adoption of soil conserving technologies crop rotations pesticide regimens and other management practices in a special but important case we are able to calculate the difference in land prices that would be observed in a completely inefficient versus a perfectly efficient market a sensitivity analysis is performed finally we draw upon the theoretical and empirical results to discuss estimation strategies and offer concluding remarks

deprived land use intensification in shifting cultivation the population pressure hypothesis revisited this article provides a theoretical framework based on optimal control theory to analyze farm households land use intensification decisions in forest based shifting cultivation slash and burn agroecosystems the main results from the analysis generally coincide with the population pressure hypothesis pph as an important driver of soil degradation due to the so called fallow crisis or deprived land use intensification in shifting cultivation however the model also shows from a supply perspective that such a vicious circle of lower yields and greater forest land clearing may be avoided when the production elasticity of on farm labor outweighs the elasticity of substitution between farm labor and soil fertility furthermore using data from shifting cultivating households from yucatan mexico we calibrate the effect of changes in population density the numerical analysis suggests that by contrast to better off households when population density increases poorer shifting cultivating households optimal labor allocation strategy is to further extensify land use by clearing more forest in the village common property land or ejido land

sodbusting crop insurance and sunk conversion costs we build a real option model that articulates sodbusting incentives arising from risk interventions in the presence of conversion costs the model shows that risk interventions reduce expected costs of switching land use between cropping and noncropping activities and hence incentivize sodbusting based on data for south central north dakota over 1989 2012 our simulations show that offsetting 20 of a cropping return shortfall by a risk intervention increases the sodbusting cost threshold below which sodbusting will occur by 41 or 43 7 acre omitting cropping return risk across time underestimates the sodbusting cost threshold by 23 or 24 35 acre and hence underestimates sodbusting caused by crop production

hedonic prices property values and measuring environmental benefits a survey of the issues this paper provides a review of the theoretical basis and the assumptions required in order to use hedonic price equations derived from property value data to obtain measures of the prices and the inverse demand functions for environmental amenities such as air quality it also includes a review and assessment of existing empirical applications of the technique to problems of air and water quality and urban noise

agricultural insurance and soil depletion in a simple dynamic model we study the effects of agricultural insurance on farm production choices soil depletion and the environment when there are two related risks one in short to medium run production revenues and the other in land value the analysis considers pure and truncating insurance programs that stabilize linear combinations of short run revenue risk and land price risk production revenue stabilizing insurance is often found to elicit increased farmer output thus exacerbating environmental externalities and causing further soil depletion land value stabilizing insurance typically elicits lower output thus mitigating environmental externalities and pushing farmers closer to their complete insurance output levels

price formation in farm land markets four models of price formation incorporating search and bargaining concepts were specified for an australian farm land market the models were estimated using primary data obtained from land buyers a sequential four equation model of buyer seller behavior was selected as conceptually superior substantively final prices were closer to buyers bid prices than sellers offer prices buyers valued soil conservation and proximity to town more highly and property productivity and size less highly than the sellers and market information had a positive influence on price in this area education may be preferable to subsidies for achieving soil conservation

insurability and moral hazard in agricultural insurance markets pareto optimal and constrained pareto optimal all risk insurance contracts are studied conditions required for emergence of competitive insurance markets are isolated and discussed full insurance contracts are shown to be dominated by contracts involving coinsurance and deductibles if insurers are pseudo risk averse the effect of moral hazard on all risk agricultural insurance indemnity schedules is examined results for indemnity schedules under moral hazard and constant absolute risk aversion show that providing farmers with the incentives to take appropriate actions may imply lower deductibles in the presence of moral hazard than in the absence of moral hazard

a model of shifting cultivation can soil conservation reduce deforestation shifting cultivators manage soil not only by adjusting soil use on already cleared lands as in continuous cultivation but also by clearing forests to obtain new fertile soils this study examines the crucial link between on farm soil conservation and deforestation in shifting cultivation by modeling forest clearing as an investment in soil for a private farmer more generally by doing so the study attempts to integrate deforestation and soil conservation models which have been separately developed in the literature our policy goal is to arrest tropical deforestation as destruction of global commons caused by land degradation in shifting cultivation while improving the well being of poor shifting cultivators our integrated approach enables joint policy analyses of deforestation and land degradation three welfare enhancing policies are considered the first is agricultural and nonagricultural subsidies affecting farm and nonfarm income opportunities the second is fiscal and tenure policies affecting discount rates our question is whether the link between forest clearing and soil fertility alters the outcomes of these two standard macroeconomic policies commonly found in the literature the third policy or program is various soil conservation measures affecting soil regeneration and erosivity on already cleared lands this article examines a very important question which has received little attention in previous theoretical works can soil conservation reduce deforestation this study confirms anti deforestation effects of the promotion of nonfarming activities a common and often emphasized finding in previous works among shifting cultivators more importantly it also demonstrates that improving various soil conservation measures not only discourages forest clearing among shifting cultivators but also tends to have greater effects on forest protection than promoting nonfarming activities contrarily agricultural price subsidy or technological progress gives rise to the opposite outcome and lowering the farmer s discount rate or improving tenure security encourages him her to clear more forests just to accumulate soil

economic development on a finite planet with stochastic soil degradation abstract world economic development is associated with growing food consumption agricultural land however suffers from over exploitation and is subject to environmental shocks which are projected to become more severe due to climate change we present a stochastic model of a dynamic economy where soil is an essential input and natural disasters are sizeable multiple and random expansion of economic activities raises effective soil units but contributes to an aggregate loss of soil protective ecosystem services which exacerbates soil degradation at the time of a shock we provide closed form analytical solutions and show that optimal development is characterized by a constant growth rate of stocks and consumption until an environmental shock arrives causing all variables to jump downwards optimal soil management consists of spending a constant fraction of output on preservation measures which is an increasing function of the shocks hazard rate degradation intensity of agricultural practices and the damage intensity of environmental impact we derive the optimal propensity to save and discuss the impact of human pressure and risk exposure on soil and output we also discuss quantitative impacts of climate change on optimal soil management

a note on soil depth failing markets and agricultural pricing comment abstract bulte and van soest bulte e van soest d 1999 a note on soil depth failing markets and agricultural pricing journal of development economics 58 245 254 argue that higher agricultural output prices result in greater soil conservation when labor markets function well but have ambiguous effects when labor markets are absent the latter result is not attributable to labor market failure but rather occurs whenever labor supply is less than perfectly elastic consistent with the more general model presented here empirical evidence from a number of developing countries suggests that well functioning labor markets are associated with decreases in investment in soils

soil conservation and governmental policies in tropical areas does aid worsen the incentives for arresting erosion this paper focuses on how farmers respond with respect to the adoption of soil conservation measures to governmental agricultural policies aiming at supporting smallholders a simple micro economic framework was chosen to undertake an analysis of farmer choices among three activities farming adoption of soil conservation measures and off farm work the model shows that governments have to be cautious when designing support measures if improved resource management is a policy goal in the design of such measures attention has to be paid both to 1 the distribution in land quality and 2 the distribution in the net returns from adopting soil conservation measures

optimal management of soil quality stocks and long term consequences of land degradation for smallholder farmers in malawi while soil degradation has long term consequences static models which form the bulk of studies on this topic in africa do not account for the inter temporal dimensions of optimal resource management this paper used an inter temporal optimisation framework which considered soil in a time dependent resource extraction perspective we have demonstrated that soil degradation is causing an enormous reduction in productive value of smallholder land in malawi current user cost of soil quality among smallholder farmers which represents annual loss in productive value of land was estimated to be us 21 per hectare based on this value and land area under smallholder agriculture in malawi economic costs of soil degradation among smallholder farmers were estimated to amount to 14 of the agricultural gdp for malawi although smallholder farmers current practices are sub optimal to steady state solutions they are above static solutions this demonstrates that smallholder farmers have some private incentives to invest in the soil quality stock smallholder farmers internalise some of the dynamic costs of soil degradation under the current practices however a sensitivity analysis on a slightly higher discount rate indicates that ss solutions closely resemble the prevailing smallholder farming practices this suggests that smallholder farmers may be overexploiting soil quality stock because they have a high time preference that is they value the current consumption more than their future consumption and wellbeing high levels of poverty in malawi and serious lack of viable alternatives to subsistence farming may be influencing such behaviour promoting more viable land use alternatives than subsistence farming and formuling policies that help transform smallholder agriculture into a profitable enterprise will not only increase the cost of degrading the soil but also encourage farmers to invest in the soil quality stock

simple analytics of productive consumption productive consumption adds to utility and income at the same time the shadow price of a productive good is equal to its money price less its marginal product as more of the good is consumed its shadow price rises because of diminishing productivity and the consumer s full income also rises because the marginal product is positive this paper uses a simple method to derive the comparative statics of the demand system when shadow prices and full income are endogenous the direction of the overall bias induced by endogenous prices and income is found to be determinate we demonstrate that the demand for productive goods tends to be relatively unresponsive to exogenous changes in prices and income we also show that labor supply will be relatively unresponsive to wage and unearned income if market work causes fatigue

hedonic price analysis and selectivity bias hedonic valuation of quality attributes can be misleading when theassumption that these attributes are exogenous to sample selection isviolated this paper considers the simultaneity between hedonic valuationand sample selection in the context of a model of producer behavior andinvestigates empirically the case where land is demanded for use as an inputeither in agricultural production or in touristic development the empiricalanalysis suggests that failing to correct for sample selection results in abiased valuation of the effect of water salinity on agricultural land