JunJie Wu

Slippage Effects of the Conservation Reserve Program

Each year, billions of dollars of public funds are expended to purchase conservation easements on farmland. One unintended impact of these programs is that they may bring non-cropland into crop production. Such a slippage effect can be caused by increased output prices and by substitution effects. This article shows that for each one hundred acres of cropland retired under the Conservation Reserve Program (CRP) in the central United States, twenty acres of non-cropland were converted to cropland, offsetting 9% and 14% of CRP water and wind erosion reduction benefits, respectively. Implications of these results for the design of conservation programs are discussed. Copyright 2000, Oxford University Press.

The influence of public open space on urban spatial structure

Abstract There is widespread public support for open space provision and for efforts to limit sprawl. We demonstrate that open space policies should not be viewed as independent of—or necessarily compatible with—growth management goals. We examine the impacts of open space designation on the urban landscape in a spatial city model with two important and empirically relevant features: (1) residents prefer to live close to open space and (2) open space amenities attract migrants to the city. Our main findings are that open space designation can produce leapfrog development; the effect of open space on the total area of developed land in the city is ambiguous; more dispersed forms of open space may be preferred when congestion externalities are present; depending on location, the provision of new open space may benefit some income groups more than others and may increase the income diversity of a city.

The Choice of Tillage, Rotation, and Soil Testing Practices: Economic and Environmental Implications

The management practices farmers choose have significant effect on agricultural pollution. The authors analyze the adoption of alternative combinations of conservation practices and their impacts on fertilizer use, corn yield, and soil erosion in the Central Nebraska Basin, using a polychotomous-choice selectivity model. The results suggest that soil N testing and corn-legume rotation complement each other, but that the interaction between conservation tillage and rotation is more complicated.

Contract Design for the Purchase of Environmental Goods from Agriculture

An environmental stewardship program, whereby farmers are paid directly for the environmental goods they provide, is developed by combining the microparameter distribution model with mechanism design principles. The program overcomes the information asymmetry between farmers and governments and accounts for the deadweight losses from distortionary taxes. The characteristics of optimal input and payment schedules of the program are derived. These optimal schedules are determined by the tradeoffs between farming profits, environmental benefits, and deadweight losses from taxes, and are second-best except under restrictive conditions on deadweight losses from taxes and on the marginal product of inputs and marginal pollution costs. Copyright 1996, Oxford University Press.

The Economics of a Public Fund for Environmental Amenities: A Study of CRP Contracts

The problem of targeting CRP purchases to buy environmental amenities under productivity and environmental heterogeneity is considered. Gini coefficients and Lorenz curves are used to measure the effectiveness of spending under alternative targeting criteria. The environmental benefits considered are water erosion, wind erosion, surface water quality, and wildlife habitat. The three alternative targeting criteria examined include purchasing land according to (i) the benefit-to-cost ratio, (ii) the level of benefits, and (iii) the level of cost. Results indicate that the degree of variability and correlation determine the extent to which suboptimal targeting achieves a significant portion of available environmental benefits. Copyright 1996, Oxford University Press.

The Impact of Policies and Land Characteristics on Potential Groundwater Pollution in Wisconsin

In this paper we present an empirical framework for quantifying the extensive margin effects of commodity programs and chemical-use taxes on potential groundwater pollution in Wisconsin. The approach emphasizes the role of the joint distribution of crops and site characteristics in determining policy impacts on groundwater contamination. The results indicate that for a given reduction in total polluting acreage an increase in the Acreage Reduction Program rate for corn is well targeted and would reduce high-polluting acreage more than a chemical-use tax or a target price policy in the areas where it might be needed most.

Crop Insurance, Acreage Decisions, and Nonpoint-Source Pollution

The redirection of farm policy in the 1996 farm bill has generated much interest in seeking environmentally friendly and economically viable ways to protect farm income. Agricultural insurance has been suggested as such an instrument. This article estimates the effect of crop insurance on crop mix and the resulting change in chemical use in the Central Nebraska Basin. Providing corn insurance will shift land from hay and pasture to corn, which will increase chemical use at the extensive margin. This extensive-margin effect dominates the effect of crop insurance on the application rate, leading to an increase in total chemical use. Copyright 1999, Oxford University Press.

Co-Benefits from Carbon Sequestration in Forests: Evaluating Reductions in Agricultural Externalities from an Afforestation Policy in Wisconsin

Besides climate change mitigation, policies encouraging the conversion of agricultural land to forest may generate additional environmental benefits. We estimate the reductions in agricultural externalities (soil erosion, nitrogen, and atrazine pollution) from an afforestation program in Wisconsin. Existing benefits estimates are used to quantify the value of reduced soil erosion and some benefits from enhanced wildlife habitat. These values are the same order of magnitude as the costs of the carbon sequestration policy, indicating that the co-benefits of forest carbon sinks are an important factor for countries to consider in designing a portfolio of climate mitigation strategies. (JEL Q23)

Assessing alternative futures for agriculture in Iowa, U.S.A

The contributions of current agricultural practices to environmental degradation and the social problems facing agricultural regions are well known. However, landscape-scale alternatives to current trends have not been fully explored nor their potential impacts quantified. To address this research need, our interdisciplinary team designed three alternative future scenarios for two watersheds in Iowa, USA, and used spatially-explicit models to evaluate the potential consequences of changes in farmland management. This paper summarizes and integrates the results of this interdisciplinary research project into an assessment of the designed alternatives intended to improve our understanding of landscape ecology in agricultural ecosystems and to inform agricultural policy. Scenario futures were digitized into a Geographic Information System (GIS), visualized with maps and simulated images, and evaluated for multiple endpoints to assess impacts of land use change on water quality, social and economic goals, and native flora and fauna. The Biodiversity scenario, targeting restoration of indigenous biodiversity, ranked higher than the current landscape for all endpoints (biodiversity, water quality, farmer preference, and profitability). The Biodiversity scenario ranked higher than the Production scenario (which focused on profitable agricultural production) in all endpoints but profitability, for which the two scenarios scored similarly, and also ranked higher than the Water Quality scenario in all endpoints except water quality. The Water Quality scenario, which targeted improvement in water quality, ranked highest of all landscapes in potential water quality and higher than the current landscape and the Production scenario in all but profitability. Our results indicate that innovative agricultural practices targeting environmental improvements may be acceptable to farmers and could substantially reduce the environmental impacts of agriculture in this region.

What Causes Spatial Variations in Economic Development in the United States

This article examines the causes of spatial disparities in economic development in the United States. A theoretical model is developed to analyze the location decisions of firms and households. An empirical model is estimated to quantify the contribution of alternative factors to spatial variations in wage, employment density, housing price, and land development density. Results suggest that remoteness is a primary cause of spatial disparities in economic development, while natural amenities are a major determinant of housing prices. Despite the dominant role of geography, public investments in infrastructure and human capital development could contribute to economic development in remote areas. Copyright 2008, Oxford University Press.