Laura McCann

ESTIMATES OF PUBLIC SECTOR TRANSACTION COSTS IN NRCS PROGRAMS

When evaluating the economic efficiency of policies to reduce nonpoint source pollution, administrative or transaction costs are usually not taken into account. While the importance of transaction costs has been recognized in the theoretical literature, the fact that they are not incorporated in empirical analyses means that, in effect, these costs are given a zero value. This issue is examined quantitatively using data collected by the National Resource Conservation Service (NRCS). Transaction costs are found to be a significant portion (38 percent) of overall conservation costs. This provides strong support for including these costs in economic evaluations of alternative policy instruments.

Transaction Costs of Pesticide Policies in Vietnam

ABSTRACT Vietnam faces a number of important environmental and resource issues, including deforestation, loss of biodiversity, and water and air pollution. In developing countries the conflict between growth and protecting the environment is particularly acute. This article provides an overview of existing agri-environmental policies and institutions in Vietnam. It then analyzes policy instruments that have been employed to reduce pesticide pollution and discusses the factors affecting the magnitude of transaction costs associated with those policies. A major factor is the large number of enterprises involved, both farms and input suppliers.

People, place, behavior, and context: A research agenda for expanding our understanding of what motivates farmers' conservation behaviors

Social scientists have explored why farmers engage in conservation activities for a number of decades, yet there is still a large degree of unexplained variation and a lack of understanding about the factors that contribute to, or inhibit, farmer conservation. Our goal with this article is to outline an agenda for future social science research exploring conservation behaviors in agricultural systems. We believe that greater reflection on what avenues need further exploration will lead to improved scientific understanding and ultimately greater uptake in conservation by farmers. Environmentally relevant farmer behaviors, often conceptualized as best management practices (BMPs) or conservation practices, are complex and context specific, making the adoption or use of these practices difficult to measure or predict. Additionally, farmers are a highly diverse group with differing resource endowments and exposures to risk; production needs, tenure arrangements, and ownership goals; environmental motives; personalities; proclivities for engaging in government conservation programs; and social networks. Subsequently, as indicated by earlier reviews of this literature, there are few variables that consistently explain adoption decisions. In addition to high variability in determinants of behavior, physical and temporal variation in the characteristics of the practices themselves complicate research efforts. Farm and farmer-level factors are not…

Adoption of nitrogen-efficient technologies by u.s. Corn farmers.

Anthropogenically introduced nitrogen (N) has compromised environmental quality, but it is an essential element for crop production, particularly corn production. Increasing N use efficiency by adopting eco-innovations such as N soil testing, plant tissue testing, and N transformation inhibitors can ameliorate this problem. Data from the 2010 USDA Agricultural Resource Management Survey of corn producers was used to examine the factors affecting adoption of these practices. Twenty-one percent of the 1840 corn farmers had adopted N soil testing, 3% had adopted plant tissue testing, and 10% had adopted N inhibitors. A multivariate probit regression found significant results for each category of explanatory variable that was examined. Among the findings was the importance of information source for N recommendations. Farmers who did not obtain external recommendations were less likely to adopt all three practices than farmers who received recommendations from a crop consultant. Those who received recommendations from fertilizer dealers were less likely to adopt N soil testing and plant tissue testing. All regions were more likely to adopt N soil testing than the Midwest, and warmer regions were less likely to adopt B transformation inhibitors. Those who adopted conservation tillage were more likely to adopt plant tissue testing and N inhibitors, and those who received conservation payments were more likely to adopt N soil testing and plant tissue testing. Adoption of conservation tillage was also associated with the adoption of several other technologies. Implications for research and educational programs are discussed.

Off-Farm Employment Effects on Adoption of Nutrient Management Practices

Off-farm income as a share of total farm household income has been increasing. Previous studies found inconsistent results regarding the impact of off-farm income on adoption of conservation practices. We test the hypothesis that off-farm employment has a positive impact on adoption of capital incentive practices and a negative impact on adoption of labor-intensive practices. The results confirm that adoption of injecting manure into the soil, a capitalintensive practice, is positively and significantly impacted by off-farm employment of the operator. However, off-farm employment variables had no effect on adoption of record keeping.

Effects of observability and complexity on farmers’ adoption of environmental practices

The ability of both regulators and farmers themselves to monitor the impact of environmental practices may be an issue with nonpoint source pollution. Effects that can be perceived via direct sensory evidence provide information at low cost. Results from a survey of livestock farmers suggest that a practice that has more obvious effects on water quality, manure application setbacks, is more likely to be adopted than a more complicated one with less visible effects, manure testing. Farmers’ perceptions of the profitability of the two practices were similar. The importance of observability and complexity has implications for educational programs.

Perceived environmental quality and subjective well-being: are African countries different from developed countries?

An important literature examines the effect of environmental quality on self-reported measures of well-being. Some studies have focused on objective indicators of environmental quality, while other studies have explored how perceptions about environmental quality are correlated with happiness. However, there is little research examining the relationship between perceptions of environmental quality and subjective well-being in African countries. In this paper, we examine how peoples perceptions about local environmental quality (poor water, poor air, and poor sanitation/sewer) and global environmental quality (global warming, loss of animal and plant species, and pollution of water bodies) are correlated with their well-being in a cross-country sample using data from the World Values Survey. We find a negative correlation between perceptions about the poorness of local environmental quality and subjective well-being for both developed and African countries. However, only in developed countries is there a negative correlation between perceptions about the poorness of global environmental quality and subjective well-being.

Transaction Costs and Policy Design for Water Markets

This chapter synthesizes the growing empirical literature on transaction costs to identify pragmatic design recommendations for water markets and related institutions. The New Institutional Economics literature recognizes that appropriate policy choice and design will be a function of the specific characteristics of the problem. The physical and institutional determinants of both transaction costs and transformation costs should be considered in the design of water markets due to potential interactions between them. Analysts also need to incorporate the extent to which the technologies, institutional environment, governance structures, or policy designs can be changed; some factors can only be adjusted to or “designed around” while others can be designed differently. This framework highlights the importance of property rights, historic water use patterns, and path dependency since transaction costs will be incurred to obtain or retain property rights to water. The physical complexity associated with water resources increases transformation costs as well as transaction costs. Uncertainty and changing societal preferences highlight the importance of flexibility and conflict resolution mechanisms in institutional design. Sequencing of policy changes is also revealed as a key design consideration.

BARRIERS TO ADOPTION OF ANIMAL WASTE MANAGEMENT STRATEGIES

Reducing air and water pollution from livestock operations that are not regulated as concentratedanimal feeding operations (CAFOs) will require voluntary adoption of new practices and technologies.However, adoption of the manure management strategies and innovations suggested by scientistshas been disappointing. Increasing voluntary adoption of animal waste management strategieswill require improved understanding of the economic and social barriers and constraints that currentlylimit adoption. Before an innovation can be adopted, it must be invented and modified. Induced innovation theorysays that innovations are developed that economize on relatively scarce factors of production.The fact that pollution is not costly to the farmer means that technologies that reduce pollution areless likely to be developed in the free market. Therefore, well-designed regulations and policies canfacilitate the development of abatement technologies. For innovations that have been developed, a number of barriers to adoption exist. A review of theadoption and diffusion literatures in economics and sociology shows that perceived characteristicsof the innovation, characteristics related to the individual farm and farmer, as well as the social systemare important. Uncertainty regarding potential costs and benefits of manure management systemswill limit adoption and is accentuated by the complexity involved with animal and crop productionsystems. Increased information availability and trialing of innovations reduces uncertainty. Profitability, or lack thereof, is an important barrier to adoption of improved manure managementpractices. If storage structures and application equipment are required, credit constraints maybe an issue. In addition, the opportunity cost of time is an important factor with respect to both laborand management requirements. Transportation costs are a very important issue and will becomemore critical with phosphorous-based regulations. Compatibility with the goals of the farmer aswell as the current farming system is an important barrier to adoption of improved manure managementstrategies. Institutional constraints may also exist. Systems solutions, involving interdisciplinaryresearch, are required. Given the variability in farms, farmers, and location-related factors,different barriers will be most limiting and one-size-fits-all technologies and policies will not beappropriate. Methodological approaches and institutional incentives for systems research need to be designed.Technologies and policies that address the current barriers to adoption of manure managementstrategies need to be developed in a systems context. For example, production systems that result ina valuable product, which may involve multiple farm units, are needed.

Rice versus Shrimp Production in Thailand: Is There Really a Conflict?

Shrimp farming in Thailand has had disastrous effects on the environment in the past, which has prompted a government ban on shrimp production in inland areas. However, a new low-salinity shrimp farming system has developed that seems to have fewer disease and environmental problems than previous systems but competes with rice production for land and water resources. The present study found that shrimp farming exhibits increasing returns to scale and is much more profitable than rice farming, which offers opportunities for rice farmers to improve their incomes through diversification. No evidence was found for external environmental effects of shrimp production on rice production or vice versa. A total ban on shrimp production in rice farming areas does not seem justified, although further analysis on the environmental effects of this farming system is warranted.