Eithan Hochman

Estimation of Multicrop Production Functions

This paper considers whether separability or nonjointness is the better approach for attaining tractability for multicrop production function estimation. Characteristics of agricultural production associated with allocated inputs, physical constraints, and output determination imply sufficient nonjointness for estimation, whereas separability is less plausible. The paper also addresses estimation of production functions with allocated inputs where allocations are not observed and demonstrates a proposed approach by way of example.

Input Allocation in Multicrop Systems

Using data only on aggregate variable input use and land allocation, this paper suggests a methodology for allocating variable input use among crops and improvement of regional crop budget information. Two approaches for estimation of variable input allocations among production activities are examined. One relies on behavioral rules whereby input allocations follow accepted rules of thumb. The alternative approach is derived from profit maximization where input use responds instantaneously to changes in input and output prices. The behavioral rules dominate instantaneous response to prices in explaining the data analyzed in this paper and suggest the validity of a simple behavioral approach for developing enterprise budgets and cost of production estimates.

Allocation and Pricing at the Water District Level

Efficient water pricing schemes are introduced for nonprofit water agencies, where members have property rights based upon historical usage. The existing average cost rate design is compared with the proposed designs, “active trading” and “passive trading.” Both schemes lead to efficiency, but “passive trading” has operational advantages since it generates less transaction costs than “active trading.” Block rate pricing is shown to be suboptimal and inferior to “passive trading.” An example from the Israeli water economy is used as an empirical illustration. Copyright 1997, Oxford University Press.

Optimal Scheduling in Shrimp Mariculture: A Stochastic Growing Inventory Problem

Appropriate management tools are required for the successful introduction of advanced intensive technology in shrimp mariculture. This paper presents a stochastic dynamic decision model for evaluating the potential of the round pond technology practiced at the Oceanic Institute in Hawaii. The model provides the optimal stocking and harvesting schedules for a shrimp pond using a set of intra- and interseasonal decision rules. These rules are expressed as cutoff revenues when both prices and weights are considered random and as cutoff prices and cutoff weights when only prices or weights are considered random. The pond is not harvested if the current realized revenue is less than the cutoff revenue. The model simulates optimal scheduling using a set of 1986 shrimp prices for the case of random prices. Net profits are approximately doubled using the optimal schedules compared to conventional fixed scheduling schemes. The model also evaluates the economics of controlled environment.

Optimal Advertising Signals in the Florida Citrus Industry: A Research Application

A sales response to advertising for the Florida citrus industry is estimated and used to explore optimal levels of advertising. Results of an optimal control model show the gains that can be realized through inter- and intraseasonal changes in the level of advertising expenditures. These gains are generated by using imputed prices that take into account future gains of current advertising. An optimal path of adjustment in both advertising and sales over time is obtained which provides signals for an effective advertising policy.

The Dynamics of Agricultural Development in Sparsely Populated Areas: The Case of the Arava

Many societies have attempted to settle sparsely populated regions. These are regions in which ecosystems have not been especially favourable to human survival and, thus, have not been settled. Nevertheless, societies may believe that, in spite of the adverse conditions, the settlement of these frontier regions and utilization of their resources can enhance societal welfare. Thus, large-scale development efforts are undertaken to settle sparsely populated regions. Some examples include the development of Siberia, attempts at cultivation of the Amazon tropical forest, and experiments in settling the sub-Saharan Desert. This paper considers the development of the Negev desert in Israel and, in particular, the Arava region, which provides an example of settlement of a sparsely populated area for which a rich information base is available.

Approximation of expected returns and optimal decisions under uncertainty using mean and mean absolute deviation

We consider economic decision problems under uncertainty consisting of choosing an optimal decisionX, so as to maximize to expected value of an objective function depending on a stochastic parameterp. The paper establishes an optimal policy intervalXA ⩽X1 ⩽XB, where the boundsXA,XB are given in terms of simple parameters of the distribution ofp, in particular the meanμ, and the mean absolute deviationd=E ¦p−μ ¦. The convexity assumptions needed to establish such bounds are shown to hold naturally in some classical problems of production under uncertainty.ZusammenfassungWir betrachten wirtschaftliche Entscheidungsprobleme mit Unsicherheit, in denen eine optimale EntscheidungX so getroffen werden soll, daß der Erwartungswert einer Zielfunktion, abhängig von einem stochastischen Parameterp, maximiert werden soll. In dieser Arbeit wird ein IntervallXA ⩽X1 ⩽XB für die optimale Politik angegeben, wobei die SchrankenXA,XB durch einfache Größen der Verteilung vonp ausgedrückt werden, im besonderen durch den Mittelwertμ und die mittlere absolute Abweichungd=E ¦p−μ ¦. Ferner wird gezeigt, daß die für die Herleitung der Schranken benötigten Konvexitätsannahmen in natürlicher Weise für einige klassische Produktionsprobleme mit Unsicherheit gelten.

Optimal exploitation of energy resources: Solar power and electricity generation in below sea level basins☆☆☆

Abstract This paper analyzes the generation of hydroelectric power by the transfer of seawater to locations which are significantly below sea level (e.g., the Dead Sea in Israel and the Qatara depression in Egypt) combined with solar energy that via evaporation will perpetuate the hydroelectric power capacity. Two scenarios are depicted. The first focuses on optimal planning of the canal capacity and optimal use of its water to generate hydroelectric power while filling the basin to its steady-state level. The second includes the impact of solar pools as a new technology whose date of adoption is a random event. It is shown that the optimal flow of water through the canal depends on the relationship between optimal canal capacity and the rate of water evaporation in the basin. The optimal design of the canal can be considered a hybrid between depletion of a natural resouce (the height differences in filling up the basin) and use of a renewable resource (solar energy to evaporate the basin water). The optimal policy is shown to consist of sequential intervals, some of which may vanish under certain conditions: first, the operation of the canal at full capacity; then the gradual decrease of water flow at a rate equal to the elasticity of the marginal product of electricity generation times the sum of interest rate and the marginal evaporation rate; and, finally, the stabilization of the water flow at the rate of steady-state evaporation. The stochastic model with the introduction of solar pools technology treated as a random event is formulated as a two-stage maximization problem. It is shown that, in contrast to the scenario without solar pools, the canal may be operated underutilizing its capacity in the initial period. But even in this case, the quantity of water flowing through the canal is a nonincreasing monotonic function over time with a jump in the quantity of flow at the date the solar pools are introduced.

Dynamic Considerations in the Design of Drainage Canals

This chapter develops a dynamic framework addressing soil waterlogging and drainage problems. It suggests that optimal resource allocation may be obtained by a multifaceted policy where water conservation, pollution abatement, and disposal of drainage through a canal are induced by financial incentives and public funds are allocated to research leading to improved drainage technologies. An increase in the cost of disposal, reflecting concerns of environmental quality, may lead to a delay (or even elimination) of the use of disposal through a canal as a policy option and raise the importance of conservation and abatement prices. Higher water prices may induce conservation and reduce the severity of drainage problems.