Brian H. Hurd

Some Neglected Social Costs of Government Spending in Farm Programs

Economic welfare analyses of farm programs typically assume that the direct social opportunity cost of subsidy payments is one dollar per dollar of government spending. Recent literature suggests that the marginal opportunity cost of a dollar of U.S. federal government spending is more likely to be in the range of

Economic impacts of federal policy responses to drought in the Rio Grande Basin

1.20 to

Estimating economic effects of changes in climate and water availability

1.50. This implies that the net social costs of farm programs that involve government spending are significantly greater than the typical estimates. In addition, the normative efficiency ranking of alternative policies is sensitive to the marginal opportunity cost of government spending.

Economic Impact of Climate Change on Tunisian Agriculture: The Case of Wheat

region’s scarce water supply. This paper presents an analysis of the impacts of severe and sustained drought and of minimum in-stream flow requirements to support endangered species in the Rio Grande watershed. These impacts are investigated by modeling the physical and institutional constraints within the Rio Grande Basin and by identifying the hydrologic and economic responses of all major water users. Water supplies, which include all major tributaries, interbasin transfers, and hydrologically connected groundwater, are represented in a yearly time step. A nonlinear programming model is developed to maximize economic benefits subject to hydrologic and institutional constraints. Results indicate that drought produces considerable impacts on both agriculture and municipal and industrial (MI) uses in the Rio Grande watershed. In-stream flow requirements to support endangered species’ habitat produce the largest impacts on agricultural water users in New Mexico and Texas. Hydrologic and economic impacts are more pronounced when in-stream flow requirements dictate larger quantities of water for endangered species’ habitat. Higher in-stream flow requirements for endangered species in central New Mexico cause considerable losses to New Mexico agriculture above Elephant Butte Reservoir and to MI users in Albuquerque, New Mexico. Those same in-stream flow requirements reduce drought damages to New Mexico agriculture below Elephant Butte Reservoir and reduce the severity of drought damages to MI users in El Paso, Texas. Results provide a framework for formulating federal policy responses to drought in the Rio Grande Basin.

Effects of global climate change on agriculture: an interpretative review

Social, economic, and environmental systems can be vulnerable to disruptions in water supplies that are likely to accompany future climate changes. Coupled with the challenges of tightening environmental regulations, population growth, economic development and fiscal constraints water supply systems are being pushed beyond the limits of their design and capacity for maintenance. In this paper we briefly review key economic concepts, various economic measures and metrics, and methods to estimate the economic effects on water resources from water supply changes that could accompany climate change. We survey some of the recent empirical literature that focuses on estimates developed for U.S. watersheds at both national and regional scales. Reported estimates of potential damage and loss associated with climate and water supply changes that we observe are significant, though often the metrics vary and make valid and consistent direct cross-comparisons difficult. Whether in terms of changes in GDP or in terms of estimated changes in economic welfare based on associated changes in economic costs and benefits, both national and regional estimates suggest that governments and organizations incorporate prudent steps to assess vulnerabilities to plausible future water supply and demand scenarios and develop responsive adaptation strategies.

RELATIVE REGIONAL VULNERABILITY OF WATER RESOURCES TO CLIMATE CHANGE

This paper measures the potential economic impact of climate change on durum wheat in Tunisia using the Ricardian approach. A model using panel data was estimated for the period 1990–2010 over the main cultivation regions. Gross margin of the durum wheat under rainfed conditions was used as the dependent variable while the explanatory variables were mainly related to climate such as precipitation and temperature, technological progress, and type of soil. Empirical findings show that precipitations during different stages of the growing season affect positively net-income. In addition, the interactions variables between temperature and precipitation in different growth stages are negative. The assessment impact of technology shows a positive coefficient of trend parameter but not statistically significant. Finally, the soil quality index parameter is positively correlated with the net revenue per hectare. This finding indicates that good quality of soil may improve the net income of farmers by increasing wheat yields. Climate change impact was simulated using scenarios from the HadCM3 global circulation. Empirical results indicate that economic impacts are not uniformly distributed across the different regions of Tunisia. These impacts are likely to be more accentuated in the arid regions. A rise in temperature and a reduction in rainfall would cause reductions in gross margin by 4 % in sub-humid areas and 24 % in arid zones. The results further suggest the necessity for wider diffusion of drought-tolerant varieties among farmers and the identification of new agricultural practices as advisable adaptation strategies in order to alleviate the effects of climate change on farmer’s income.