Peter Berck

Reconciling the von Liebig and Differentiable Crop Production Functions

Two commonly used forms for crop response to inputs are a smooth, differentiable production function and a linear response and plateau (LRP) model. This paper reconciles these two views by showing that smooth functions can be derived by aggregating the effects of heterogenous inputs on LRP functions. Data on corn growth are used to test two specific aggregations.

Grand Challenges for Life-Cycle Assessment of Biofuels

Biofuels are widely touted as viable, albeit not straightforward, alternatives to petroleum-derived fuels. To best determine their utilization, many practitioners turn to life-cycle assessment (LCA) to ascertain the “environmental footprint”. Although parameters such as resource and land use, along with infrastructure, can be incorporated into LCA algorithms, many have noted that the methodological approach still needs careful attention. In this Feature, McKone et al. outline seven grand challenges that need to be engaged and surmounted to provide the best way forward for biofuel use.

Habitat and Open Space at Risk of Land-Use Conversion: Targeting Strategies for Land Conservation

Funds available to purchase land and easements for conservation purposes are limited. This article provides a targeting strategy for protecting multiple environmental benefits that includes heterogeneity in land costs and probability of land-use conversion, by incorporating spatially explicit land-use change and hedonic price models. This strategy is compared to two alternative strategies that omit either land cost or conversion threat. Based on dynamic programming and Monte Carlo simulations with alternating periods of conservation and development, we demonstrate that the positive correlation between land costs and probability of land-use conversion affects targeting efficiency using parcel data from Sonoma County, California.

The use of computable general equilibrium models to assess water policies

This paper discusses basic issues in project analysis and shows how these issues can be resolved in a computable general equilibrium (CGE) framework. The role of border prices and intersectoral linkages is explored. The CGE framework is compared to less comprehensive frameworks, including benefit-cost analysis, input-output models, multi-market models, and models based on social accounting matrices (SAMs). An illustrative CGE model of the southern portion of the San Joaquin Valley is constructed and is used to find the effects of reducing water inputs on aggregate Valley gross domestic product (GDP) and on sectoral output, employment, and land use. The model is also used to determine demand curves for water by the southern portion of the Valley, given alternative specifications of production technology.

The Economics of Timber: A Renewable Resource in the Long Run

Critics of current and historical trends in timber production contend that private owners cut their woods more quickly than optimal while public managers cut their forests more slowly than optimal. Using the Douglas fir industry, this paper shows that private entrepreneurs holding rational expectations with respect to future prices have historically been discounting the future at a real rate of 5 percent -- a much lower rate than that available for other private investments -- and, therefore, that these owners have not cut their forests prematurely. In the case of public management, calculated shadow losses incurred by holding old timber are so great that an appeal to nontimber use values is not sufficient to reconcile management practices. Finally, predictions for the long-term price trends for timber indicate a slowdown in the rate of price increase.

Assessing the Employment Impacts of Environmental and Natural Resource Policy

This paper provides an introductory guide for environmental andresource economists to methods of assessing the impact of environmentaland natural resource policy on employment. It examines five basicapproaches to evaluating the effect of a policy action on employment:1) supply and demand analysis of the affected sector; 2) partialequilibrium analysis of multiple markets; 3) fixed-price, generalequilibrium simulations (input-output (I-O) and social accounting matrix (SAM) multiplier models); 4) non-linear, general equilibriumsimulations (Computable General Equilibrium (CGE) models); and 5) econometric estimation of the adjustment process, particularly timeseries analysis. The basic modeling structure and data requirementsfor each of these approaches are described. Simple examples of theirapplication to evaluation of environmental and natural resourcepolicy are developed and the relative merits and applicability of each are discussed.

Portfolio Theory and the Demand for Futures: The Case of California Cotton

This paper examines the simultaneous choice of cropping patterns and futures positions. It derives the demand for hedging as a function of the price of a hedge and the crop choice set; it estimates these functions for California cotton farmers. It finds that both the costs of hedging and the opportunity to diversify risk by growing other crops substantially change the optimal hedge for California cotton farmers.

Open access and extinction

kinds of circumstances. (i) The resource is easy to find and profitable to extract right down to the very last member of the species (Vernon Smith gives the woolly mammoth as an example). Smith [5] and Gould [3] show how this comes about in a dynamic model and a static model, respectively. (ii) Although the cost structure of the exploiting industry usually protects the endangered species, a random shocksuch as the warm wind, El Nii-no, on the Peruvian anchovy-displaces the system from equilibrium, and then the immobile fixed capital in the industry relentlessly hunts down and captures the very last member of the species. The second scenario gives rise to a number of more or less restrictive models in which the necessary conditions for extinction have been adduced. In a more general model containing many of the previous models as a proper subset, it is shown that, except in unlikely circumstances, necessary conditions for the case (ii) type extinction are not described, as the previous authors have said, in terms of growth rates of the resource or returns-to-scale parameters; rather, the necessary conditions for

A strong test of the von Liebig hypothesis

An implication of the von Liebig hypothesis is that crop-production functions have right-angle isoquants. This article presents a nonparametric estimation of right-angle isoquant production functions. It then describes a new test for right-angle isoquants. The procedures are used to test experimental data on corn and wheat. Copyright 2000, Oxford University Press.

The Theory of Pollution Policy

Physically, pollution occurs because it is virtually impossible to have a productive process that involves no waste; economically, pollution occurs because polluting is less expensive than operating cleanly. This chapter explores the sources and consequences of, and remedies for, pollution and associated environmental damages. If all goods had well-defined property rights and could be traded in markets, environmental goods would be no different than other goods; however, markets fail for these goods because property rights cannot or do not exist and because of the nonexclusive, nonrival nature of these goods. Thus, environmental goods provide the classic case where government intervention can increase efficiency. Achieving efficient levels of pollution involves charging per unit of pollution based on damages caused by that unit. In practice, this policy can be difficult to achieve, due to difficulties in measuring and differentiating damages by source, difficulties in monitoring and enforcing pollution policies, and the financial and political costs of pollution taxes. Additionally, pre-existing market distortions influence the nature of efficient pollution abatement strategies. Thus, many regulatory approaches that do not achieve first-best outcomes may be used because their technological or political feasibility is superior. Market-based instruments provide flexibility to polluters, while command-and-control (standards-based) approaches limit choice, often through an emissions limit or a technology requirement. Market-based approaches typically achieve a specified level of emissions with lower abatement costs than standards, but their greater efficiency may not hold in the presence of the problems mentioned above. Non-regulatory approaches to pollution control include the use of liability law to define and enforce property rights and some voluntary pollution control initiatives by polluters. While these approaches can play an important role, they are unlikely to achieve adequate provision of environmental goods.