Terrence S. Veeman

Non-parametric Productivity Analysis with Undesirable Outputs: An Application to the Canadian Pulp and Paper Industry

This article extends the Chavas-Cox approach to non-parametric analysis by incorporating undesirable outputs to provide a more complete representation of the production technology. Inner and outer non-parametric technology bounds are constructed. The methods are illustrated with application to time series data for the Canadian pulp and paper industry. Conventional measures that ignore changes in pollutant outputs underestimate true productivity growth. Further, there is a large gap between estimates generated with reference to inner and outer bounds to the technology, suggesting that researchers need to be aware of the limitations of results derived from analyses relying only on DEA methods. Copyright 2001, Oxford University Press.

The Changing Organization, Structure, and Control of Canadian Agriculture

Public interest in the agricultural sector in Canada has greatly increased since 1973. Canadian consumers continue to be worried by increases in food prices and their causes. The farm production sector faces continued income instability in the short run, relatively low incomes for many (though not all) producers, and apparent increases in the degree of inequality in the distribution of agricultural income and wealth. Canadian taxpayers are in no mood, it would seem, to increase the relatively modest (except for the dairy sector) levels of direct government support to agriculture. During recent months, the dialogue on a potential food strategy for Canada has continued. To our mind, this debate, while fruitful to some degree, has not always identified the major issues facing Canadian agriculture nor clearly outlined the possible solutions and hard choices that Canadian society might undertake. In this paper, we present our perception of how the structure and organization of Canadian agriculture is evolving and outline some major areas for policy attention and societal regulation. In the course of our discussion, we examine the primary production sector and the marketing economy.

Conserving Water in Irrigated Agriculture: The Economics and Valuation of Water Rights

The effective management of water resources in Alberta is crucial to sustainable agriculture, industrial development, and environmental management. The historical water allocation mechanism, administrative apportionment, has been viewed in recent years as ineffective and cumbersome. Accordingly, the revision of the Water Act in 1996, included an attempt to improve the efficiency of water allocation. By making the transfer of water rights possible, the revised Act provides many new options for water use and flexibility. The implications of transferable water rights in Alberta water policy must be carefully considered in order to determine the viability and suitability of such a system in the provincial context. This project examines some of the economic aspects of transferable water rights and the potential for effective water allocation by way of transfers in an Alberta setting. As a major part of this project, a hedonic price model, focusing on land values in southern Alberta, was constructed based on similar models, which have been used elsewhere to value water rights or agricultural products. The hedonic approach to market analysis uses the relationship between the price of land and the attributes of the land, such as water availability, soil quality and location, to explain differences in land prices. In this process, the hedonic model is used to estimate the implicit marginal price or value of each land attribute -- in our case, the marginal value of irrigation water. This value will provide us with an indirect estimate of the value of water rights in the region studied. An advantage of the technique is that it estimates the value that farmers express for irrigation water in the market place for land. Such values, then, give us an indication of the anticipated prices, which might prevail for water rights in southern Alberta. The focus of the study was an area of southern Alberta encompassing the counties of Wheatland, Newell, Cypress, Forty Mile, Taber, Warner, Lethbridge and Vulcan and the irrigation districts of Western, Eastern, St.Marys, Taber, Lethbridge Northern, and portions of Raymond. Information was collected on the physical and economic characteristics of 230 land parcels, which were sold in this region in 1993 and early 1994. A crude comparison of the value of irrigated agricultural land and non-irrigated agricultural land in the sample reveals that irrigated land was worth, on average,

China's grain imports: an empirical study

325 more per acre than non-irrigated land. In the ensuing analysis, it was estimated that the value of a parcel of land was determined largely by the buildings on it, the number of acres in the parcel, the proximity of the parcel to a major city (in this case Calgary or Lethbridge), and by the availability of irrigation water. In the hedonic model, the coefficient values of the variables included represent the marginal impact of each of these characteristics on land prices holding all other things constant. For example, the value of water rights represents the average difference between land values of farms that have access to irrigation and farms that do not. This study estimated that every dollar of improvements to farm buildings translates to a one cent increase in the per acre price of the land parcel, where the addition of one extra acre of land to a land parcel lowers the price per acre by

Implications of the Multilateral Trade Agreement for Canadian Agriculture: A Computable General Equilibrium Evaluation

5.17 per acre. Land prices were seen to increase with the proximity of the parcel to large cities. Similarly, the results of the preferred model indicate that the implicit value of having access to irrigation water in southern Alberta is approximately

Indian foodgrain performance

190 per acre, or, using the conventional estimate that irrigating one acre of land requires 1.5 acre feet of water, this translates to

Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach

126 per acre foot of irrigation water. Accordingly, it is revealed that the existence of water rights adds approximately 35% to the value of non-irrigated land. Since this value represents the implicit amount farmers are willing to pay for access to water, it could also be construed as an indirect measure of the value of water rights. From these results, it is reasonable to conclude that water rights do have a measurable impact on land values. Accordingly, proper incentives may be needed to ensure that water is used efficiently and not incorrectly treated as a relatively free or cheap good. One possible method of policy reform to achieve such a system would be the institution of a system of transferable water rights, permitting water to be traded, or effectively sold, at its market price or scarcity value. Further work was done to determine the potential effects of transferable water rights on the Eastern Irrigation District in southern Alberta. Farm budget information was used to gather information and create twelve representative farm types whose financial performance was analysed using linear programming with increasing water quantity constraints. The resulting productive water values were then used to imply potential reallocations of water among farm types and cropping systems. Analysis of the data gathered revealed that all representative farms faced downward sloping demand functions for water. The overall value of water for a 1% reduction ranged from

Alternative methods for environmentally adjusted productivity analysis

8 to

Comparative analysis of efficiency and productivity growth in Canadian regional boreal logging industries

250 per acre foot, with the lowest value belonging to largely pasture operations and the highest value attributed to specialty crop producers. This large range in water values for the region indicates that there is sufficient heterogeneity within the EID to accommodate a transferable rights system. Further analysis of the data reveals that the implementation of a transfer system would result in water being transferred to specialty crop producers and the acreage devoted to specialty crops would increase. Small irrigated pasture operations and cereal crop producers would be the first to give up their water allocations under a transfer system. The analysis indicates that there is considerable potential for economic gains from water trade within this district, the main constraint being the market limitations to expanded specialty crop production. Using these two major studies and other sources, this report concludes with a brief evaluation of the economic advantages, disadvantages and other issues involved in instituting a system of transferable water rights in Alberta. Experience elsewhere, primarily in Australia and the western United States, strongly suggests that transferable water rights, despite some drawbacks and problems of implementation, can be a very worthwhile water policy tool. Now that such tradable water rights are permissible under the revised Water Resources Act of 1996, it is recommended that a pilot project involving transferable water rights be instituted in a water short basin or sub-basin in southern Alberta once a water management plan for that basin is completed.

Crops and Livestock Productivity Growth in the Prairies: The Impacts of Technical Change and Scale

Abstract China is a major importer of grains, primarily wheat. However, the relative importance of economic and policy factors underlying the increase in imports into this centrally planned, but reforming, economy is not that well understood. An econometric model is developed to analyze Chinese grain import behaviour over the past three decades and assess the relative importance of respective import determinants. It is concluded that major factors influencing imports have been changes in state grain procurement policy (and associated aspects of Chinas grain distribution system), income-related improvements in diet (manifest primarily as a shift from inferior cereals and potatoes to wheat and rice rather than as feed-grain based increases in meat consumption), and shortfalls in domestic grain production.