Michael E. Wetzstein

Biodiesel as a Substitute for Petroleum Diesel in a Stochastic Environment

The objective of the research presented in this paper is the development of a stochastic adoption threshold. The option pricing approach for modeling investment under uncertainty is extended for the case of comparing two stochastic input prices associated with inputs that are perfect substitutes in a production process. Based on this methodology, a threshold decision rule influenced by the drift and volatility of these two input prices is developed. Theoretical results established an empirical link for measuring the tradeoff of a relatively more expensive input (biodiesel) with lower price drift and volatility compared with a lower but more volatile priced input (petroleum diesel).

Market Effects of Cotton Integrated Pest Management

Widely reported research results indicate that cotton integrated pest management (IPM) generally reduces chemical use and increases net returns. Despite these favorable research results, many farmers have not adopted IPM and others have adopted only some of the available technologies. Given rising marginal costs and diminishing marginal benefits from IPM technology transfer, an optimal control framework is developed to identify optimal rates of technology transfer through educational programs. Results from an analysis of this dynamic adoption process for cotton IPM are presented. Considering the complex and evolving nature of cotton IPM, continuing educational efforts to transfer IPM technologies are warranted.

Reducing Yield Variation in Peach Orchards by Geographic Scattering

Assuming a declining correlation in yields as distance between pairs of orchards increases, yield variability in peach production may be reduced by increasing distances among orchards. As a measure of yield variability that avoids possible bias resulting from orchard-specific effects, a stochastic production function is estimated. Results support the assumption that a declining correlation between yields exists as distance increases. For every mile further apart, the correlation in yield declines 2.28%. Copyright 1997, Oxford University Press.

A Stein-rule method for pooling data.

Abstract In this paper a Stein-rule estimator is discussed as an alternative to the traditional statistical approaches to pooling time-series and cross-section data. Ex post forecasts of the Stein-rule applied to a wilderness recreation demand model are compared to that of conventional estimators.

Regulating agricultural contamination of groundwater through strict liability and negligence legislation

Abstract New state and national legislation attempts to limit the liability of agricultural chemical users by emasculating existing strict liability standards and replacing them with negligence standards. The allocation of contamination costs and precaution level between producers and victims of contamination associated with these alternative legislative standards is investigated. The analysis employed is a dynamic game theoretic framework considering moral hazard. Based on this analysis, a new institutional response is recommended to assign property rights based upon propensity and severity of injury and to require victim precaution.

Economic Returns to the Boll Weevil Eradication Program

The economic viability of the Boll Weevil Eradication program in Alabama, Florida, and Georgia is assessed based on a five-year survey of producers. Results indicate the program increases yield 100 pounds per acre. This implies a 19 percent internal rate of return for producers over a ten year period.

Environmental Impacts from Pesticide Use: A Case Study of Soil Fumigation in Florida Tomato Production

The search for alternative fumigants has been ongoing since the 1992 Parties of the Montreal Protocol classified methyl bromide as a Class I controlled substance with an ozone depletion potential (ODP) of 0.7 and destined it for phase-out. This paper focuses on the hazards from fumigants proposed as alternatives for pre-plant soil fumigation in tomato production. We use the Environmental Impact Quotient (EIQ) developed by Kovach et al. to estimate the hazards from methyl bromide and the proposed alternative fumigants to workers, consumers, beneficial arthropods, birds, fish, and bees. Our findings indicate that iodomethane 98/2 has the lowest EIQ index value and field use rating, and is the alternative with the lowest relative risk. Among environmental categories, workers and beneficial arthropods experience the highest relative risks from the proposed tomato fumigants, and fish and consumers the least risks.

Using a Climate Index to Measure Crop Yield Response

Using principal component analysis, a climate index is developed to estimate the linkage between climate and crop yields. The indices based on three climate projections are then applied to forecast future crop yield responses. We identify spatial heterogeneity of crop yield responses to future climate change across a number of U.S. northern and southern states. The results indicate that future hotter/drier weather conditions will likely have significant negative impacts on southern states, whereas only mild impacts are expected in most northern states.

Measuring the Impact of Externalities on College of Agriculture Teaching Evaluations

Student evaluation of teaching (SET) is employed as an aid in improving instruction and determining faculty teaching effectiveness. However, economic theory indicates the existence of externalities in SET scores that directly influence their interpretation. As a test of this existence, a multinomial-choice, ordered data estimation procedure is employed to identify course externalities influencing SET. These externalities include student class standing, required courses, class size, days a class meets, class meeting time, classroom location, and classroom design. Results indicate that externalities have a significant impact on teaching evaluations. Thus, failure to internalize these externalities will lead to biases in SET and questionable use of SET as an aid in instruction improvement and determining faculty effectiveness.

Georgia Cotton Acreage Response to the Boll Weevil Eradication Program

An adaptive regression model is employed for estimating pre- and post-boll weevil eradication cotton-acreage response. Results indicate cotton acreage becoming more inelastic to own- and cross-price changes. As a result of this shift in acreage response and yield increases from eradication, net producer benefits on average are