B. Delworth Gardner

Optimal Regional Conjunctive Water Management

An optimal control model is used to determine the socially optimal spatial and temporal allocation of groundwater and surface water among agricultural and urban uses. The control model is described briefly and its advantages over other dynamic models are enumerated. Optimal rates of groundwater pumpage over the planning horizon were highly sensitive to increasing energy costs. Groundwater basins are shown to react differently to alternative economic and hydrological parameters. In a dynamic setting, a policy of pump taxes was shown empirically to be superior to pro-rata quotas and uncontrolled pumpage.

Multiple Use Benefits on Public Rangelands: An Incentive-Based Fee System

A grazing fee system is developed which induces multiple-use compliance by present-value-maximizing permittees with stewardship responsibilities. The fee system increases grazing fees per animal stocked when needed to induce permittees to supply increased vegetation for nongrazing uses competing with livestock. The negative impact of increased fees on permittee wealth is offset by compensatory transfer payments. Taken together, grazing fees and compensation payments induce the multiple-use required by the Federal Land Policy and Management Act and protect against the economic disruption of the western livestock industry as required by the Taylor Grazing Act.

Discussion on Firch, Baker and Lins

Lins makes the pertinent point that instability is important because it creates risk; yet not all fluctuations create risk. It is possible for changing events to be predictable. Unfortunately, it is difficult to separate predictable and unpredictable fluctuations empirically. All three authors apparently agree that trend changes in a variable should not count as instability. Thus, inflation is equally stable if it occurs at any constant rate in Firchs approach, whether that rate is 10% per year, 5%, or 0. Baker uses the coefficient of variation around trend for his interest rate calculations, which is almost the same as Firchs approach. For Baker, an arithmetic .trend counts as stability, while for Firch an exponential trend counts as stability. Lins does not make as definite a commitment, providing measures both of the coefficient of variation around trend and of the coefficient of variation around the mean. None of the authors provide a convincing rationale for excluding trend, and only trend, from instability measures. In many cases it is reasonable to treat a trend, either arithmetic or exponential, as not contributing meaningfully to instability because the trend can be readily adapted to by economic agents so that change does not imply risk. But some cases do not fit this idea. The interest rate trends in Bakers data do not seem to have been adapted to, since expectation of a continuation of these trends would imply longterm interest rates far higher relative to shortterm rates than in the term structure that

To Violate or Not Violate the Law: An Example from Egyptian Agriculture

Egyptian agriculture is heavily regulated by laws and administrative regulations. This paper explores some of the economic implications of two laws that are widely violated: the land allotment to cotton and the imposed quota for rice. Logit and probit models are utilized to assess factors which are associated with law violations in two villages. Violators of both laws tend to be poorer, have less owned land, have fewer number of land pieces, have fewer cattle, and are located nearer the free village markets than the nonviolators.