Pascal Favard

Does productive capital affect the order of resource exploitation

The purpose of this paper is to show that in a general equilibrium framework it is never optimal to use high cost substitute after lower cost exhaustible resource even if it is possible to accumulate productive capital. Indeed if the high cost substitute is scarce it is always optimal to consume it simultaneously with a lower cost stock. Moreover it may be optimal to consume the high cost substitute before using a lower cost resource.

Is the Irrigation Water Demand Really Convex

The seasonal irrigation water demand under uncertainty, which lies at the core of this paper, is still very roughly known. We know, however, that irrigated agriculture accounts for a large proportion of water use, especially in many water-scarce areas. In this paper, we estimate the irrigation water demand, for various climatic conditions characterizing the distribution of the necessarily stochastic, demand functions under uncertainty. We use a dynamic programming model to represent the farmers decision program under uncertainty. A crop-growth simulation model (EPIC-PHASE), provides the response function to the decisions taken and climatic events and is linked to a CRRA utility function representing the farmers objective function. This model is used to generate the data allowing the estimation of irrigation water demand by a nonparametric procedure. An application to irrigation water demand is proposed in the South-West of France. We show that the estimated demand functions present four main areas: For very small quantities, where the farmer considers water as an essential input to crop growth, the demand is inelastic. The second area corresponds to mean quantities where the plant has reached a satisfactory level of growth; water is no more an essential input and is not yet a risk reducing input. The farmer is more responsive to change in water price. But, we find a third, non-intuitive, area for larger quantities where the water is a risk reducing input and the demand becomes inelastic again. The last area is classic, the water demand is obviously elastic for important total water quantities. This result is of great importance to analyze a regulation policy.

How many cake-eaters? Chouette, on a du monde a diner !

We use a cake-eating model with a non-renewable resource and a backstop technology to describe the effect of migration of poor workers into a rich country with surplus labor. Migrants receive a large transfer from natives. If future migration is anticipated, natives flow of utility increases discontinuously at the time of migration. Migration at time 0 may cause the~ initial flow of natives~ utility to be higher. However, the present discounted value of the stream of per capita utility falls. Thus, when migration occurs, it may benefit the current generation of natives, although it harms other generations.

Input Use and Capacity Constraint under Uncertainty: The Case of Irrigation

In this paper we consider a two periods model of cropping using irrigation. The farmer takes two kind of decisions, one related to the level of investment in irrigation capacity and the other one to the irrigation level in each period. In the first period, decisions are taken under uncertainty on the rainfall level which is resolved at the beginning of the second period. Assuming a CARA utility function, the total water use is non monotonic with respect to the price of investment. Indeed, taxing capital may induce the farmer to increase the total level of irrigation despite that the irrigation capacity decreases. Surprisingly, the impact of an increase of water price is generally ambiguous even assuming risk neutrality. ...French Abstract : Les auteurs etudient, dans cet article, un modele de culture irriguee a 2 periodes. Lagriculteur prend deux types de decisions, lune reliee au niveau dinvestissement en capacite dirrigation et lautre reliee au niveau dapport deau dans chaque periode. Au debut de la 1ere periode, les decisions sont prises en presence dincertitude quant au niveau effectif des pluies, qui est connu au debut de la 2nd periode. Sous lhypothese de preferences vis-a-vis du risque de type CARA, les auteurs montrent que taxer linvestissement en capital peut induire un accroissement du niveau dirrigation preventive bien que le niveau dinvestissement decroisse. Par ailleurs, dans le cas dune fonction de production agricole de type logistique, le montant total deau consommee est non monotone par rapport au prix unitaire de linvestissement. Ainsi, taxer le capital peut induire lagriculteur a augmenter lapport deau total par irrigation alors que la capacite dirrigation decroit. Enfin, de maniere surprenante, une augmentation du prix de leau conduit en general a des resultats ambigus meme en supposant la neutralite vis-a -vis du risque.