Pierre Mérel

A Regional Bio-economic Model of Nitrogen Use in Cropping

We develop a programming model of crop production to predict the effects of environmental policies on agriculture and the environment. The model is calibrated against acreages, yields, and exogenous supply elasticities following positive mathematical programming. In addition, crop production functions are calibrated to yield elasticities with respect to nitrogen and irrigation obtained from a biogeochemical model. We study the effects of a nitrogen tax in Yolo County, California, intended to mitigate nitrogen pollution from field crops. The behavioral and environmental responses to the tax are largely due to intensive margin adjustments. Sizable reductions in nitrate leaching are achieved at a low social cost.

On the Deadweight Cost of Production Requirements for Geographically Differentiated Agricultural Products

This article investigates the welfare effects of alternate producer collusion schemes in a context where collusion is authorized in order to cover fixed costs. Using a linear equilibrium displacement model, we find evidence that, when the producer group is allowed to control quota levels, an input quota policy entails a smaller absolute deadweight loss than an output quota policy. This finding suggests that if producer groups are allowed to resort to production-distorting instruments to limit output, they will make production choices that are less costly for society than if they had been allowed to directly control output levels. Copyright 2008, Oxford University Press.

Switchgrass in California: where, and at what price?

This article assesses the potential of California agriculture to supply biofuel feedstock in the form of switchgrass. We construct a fully calibrated, multiregion, multi‐input and multioutput model of agricultural supply for Californias Central Valley based on the principles of positive mathematical programming. We exploit agronomic information obtained from a biophysical model to estimate regional production functions for switchgrass. The model predicts the extent and location of potential feedstock production in the Central Valley. Our results suggest that switchgrass adoption rates differ widely among agricultural regions, and that switchgrass is not likely to displace specialty crops by much statewide.

Hidden costs of supply management in a small market

Canada regulates its dairy and poultry industries through supply management. The supply-management programs use target prices, production quotas and import tariff-rate quotas to raise domestic prices. Canadian supply-managed producers cannot export their output to world markets as exports would be considered subsidized under World Trade Organization rules. In this paper, we show that once foregone export opportunities are accounted for, supply management may no longer be beneficial to domestic producers of the supply-managed commodities. The extent to which foregone profits from exports dominate domestic rents depends on Canadas comparative advantage, domestic market elasticities and the extent of supply management distortion in the domestic market.

The Social Costs of Environmental Goods Provision: A Cautionary Guide to the Revealed-Preference Approach

Empirically estimated behavioral models have emerged as the preferred approach to revealing the social opportunity costs of pollution abatement in many areas of environmental economics. This paper identifies conceptual issues in the implementation of the revealed-preference approach to nonpoint-source pollution and provides methods to overcome them. We focus on the common second-best setting where emissions are not measurable at the source and pollution reduction is incentivized indirectly through payments tied to practice adoption. First, we show through simulation that in discrete choice models estimated on microdata, the use of predicted opportunity costs provides an erroneous estimate of underlying abatement costs. We then focus on two metrics commonly used to represent the marginal social costs of abatement actions, namely, average and marginal program expenditures incurred by the regulating agency. We show theoretically and empirically that these metrics generally fail to reveal underlying social costs.