Hongli Feng

Least‐cost control of agricultural nutrient contributions to the Gulf of Mexico hypoxic zone

In 2008, the hypoxic zone in the Gulf of Mexico, measuring 20 720 km2, was one of the two largest reported since measurement of the zone began in 1985. The extent of the hypoxic zone is related to nitrogen and phosphorous loadings originating on agricultural fields in the upper Midwest. This study combines the tools of evolutionary computation with a water quality model and cost data to develop a trade-off frontier for the Upper Mississippi River Basin specifying the least cost of achieving nutrient reductions and the location of the agricultural conservation practices needed. The frontier allows policymakers and stakeholders to explicitly see the trade-offs between cost and nutrient reductions. For example, the cost of reducing annual nitrate-N loadings by 30% is estimated to be US

Environmental conservation in agriculture: Land retirement vs. changing practices on working land

1.4 billion/year, with a concomitant 36% reduction in P and the cost of reducing annual P loadings by 30% is estimated to be US

Impacts of Ethanol on Planted Acreage in Market Equilibrium

370 million/year, with a concomitant 9% reduction in nitrate-N.

The time path and implementation of carbon sequestration

The study develops a conceptual framework for analyzing the allocation of conservation funds via selectively offering incentive payments to farmers for enrolling in one of two mutually exclusive agricultural conservation programs: retiring land from production or changing farming practices on land that remains in production. We investigate how the existence of a pre-fixed budget allocation between the programs affects the amounts of environmental benefits obtainable under alternative policy implementation schemes. The framework is applied to a major agricultural production region using field-scale data in conjunction with empirical models of land retirement and conservation tillage adoption, and a biophysical process simulation model for the environmental benefits of carbon sequestration and reduction in soil erosion.

When Should Uncertain Nonpoint Emissions Be Penalized in a Trading Program

Land use impacts of biofuel expansion have attracted a tremendous amount of attention because of the implications for the climate, the environment, and the food supply. To examine these impacts, we set up an economic framework that links input use and land allocation decisions with ethanol and agricultural commodity markets. Crops can be substitutes or complements in supply depending on the relative magnitude of three effects of crop prices: total cropland effect, land share effect, and input use effect. We show that with unregulated free markets, total cropland area increases with corn prices whether crops are substitutes or complements in supply. Similarly, higher corn yields from exogenous technical changes lead to cropland expansion. The impacts of yield increases for other crops are ambiguous. With a quantity mandate for ethanol, higher mandates mean larger cropland area if corn and other crops are substitutes in demand. For a given mandate, yield improvement causes total cropland to expand if crop demand is elastic enough, or to contract under a very general condition if crop demand is sufficiently inelastic.

Sodbusting, Crop Insurance, and Sunk Conversion Costs

We develop a dynamic model to investigate the optimal time paths of carbon emissions, sequestration, and the carbon stock. We show that carbon sinks should be utilized as early as possible, and carbon flow into sinks should last until the atmospheric carbon concentration is stabilized. We rule out any cyclical patterns of carbon sequestration and release. We propose and assess three mechanisms to efficiently introduce sequestration into a carbon permit trading market: a pay-as-you-go system, a variable-length-contract system and a carbon annuity account system. Although the three mechanisms may not be equally feasible to implement, they are all efficient.

The dynamics of carbon sequestration and alternative carbon accounting, with an application to the upper Mississippi River Basin

When nonpoint source pollution is stochastic and the damage function is convex, intuition might suggest it is more important to control a nonpoint pollution source than a point source. Earlier research has provided sufficient conditions such that the permit price for a unit of ex-ante expected emissions should be higher than the permit price for a unit of certain emissions. Herein we provide a set of necessary and sufficient conditions such that this is the case. An approach to testing for the validity of the condition set is available, and has been applied to a related problem.

Land Resilience and Tail Dependence among Crop Yield Distributions

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

Land Use Change and Policy in Iowa’s Loess Hills

43.7/acre). Omitting cropping-return risk across time underestimates the sodbusting cost threshold by 23% (or

NONPOINT SOURCE NEEDS ASSESSMENT FOR IOWA PART III: ECONOMIC AND ENVIRONMENTAL OUTCOMES

24.35/acre) and hence underestimates sodbusting caused by crop production. (JEL Q18, Q38)