By broadening the definition of an ecosystem to include economic activities, can we better characterize the interactions and relationships among agricultural activities and important indicators of ecological system health? This paper addresses research approaches for assessing the role of agriculture in an ecosystems context. Environmental regulation and resource management policies have heightened the interest in understanding interactions among agricultural activities and the natural resource base, including the impacts of agriculture on environmental quality and the impacts on agriculture of ecosystem restoration efforts. What are the most meaningful indicators of environmental quality? Which agricultural practices and policies should be considered, along with which nonagricultural resource uses? Finally, does the evolving thinking about ecosystems permit us to link agricultural practices and policies more directly and meaningfully to conceptions of sustainability, of both natural and socioeconomic systems? This paper presents a brief synopsis of ecosystem management, drawing from several recent governmental initiatives. It then provides an overview of the economics of ecosystem management from the perspective of the role of agriculture; discusses two specific cases, the Pacific Northwest and South Florida; and concludes with a discussion of promising economic approaches, data needs, and caveats to those engaged in policy analysis involving ecosystem restoration.

A commonly visualized benefit from natural resources is outdoor recreation including activities such as fishing, hunting, hiking, and nature study. Due to the extra-market nature of these activities, monetary measures of the benefits emanating from them require use of some kind of simulated prices. The procedure most widely used for this purpose has been that of estimating a demand function, using differential travel costs associated with the locational dispersion of the recreationists, as a proxy price variable. These methodologies may be labeled as “willingness to pay” approaches and have been used by a number of economists.

In recent years, the topic of land prices has received considerable attention in the literature. Part of the interest stems from the importance of land as a factor of production in agriculture. Land prices have a direct influence on the ability of young farmers to operate and expand their operations. Thus, the interest in land prices by farmers, bankers and input suppliers is easily understood.

Differential grain transportation rates between the Northeast and South have been identified as a possible source of comparative disadvantage for Northeastern broiler producers. Low cost barge transportation into the South provides competition for railroads resulting in generally low transportation rates in the South. Barge transportation is low cost in part because the Federal improvements of waterways have resulted in a toll-free waterway system. Solutions for a transportation model were found with and without the subsidy. The results indicate that subsidy removal is unlikely to affect interregional broiler production and consumption.

This article examines the relationships between livestock vaccinations, herd introduction decisions, and livestock disease–related outcomes. We develop a theoretical model and derive testable hypotheses about the relationships between these outcomes and practices and test them using two-stage least squares regression analysis. We find that vaccinations reduce disease-related livestock deaths, implying that vaccine availability and use may improve herd and household welfare. We do not find robust evidence of increase in disease-related illness due to herd introductions. Our results highlight the role of livestock vaccinations in safeguarding herd value, which is connected to broader household welfare for livestock keepers of Eastern Africa.

Economic experiments have been widely used to elicit individuals' evaluation for various commodities. Common elicitation methods include auction and posted price mechanisms. A field experiment is designed to compare willingness-to-pay (WTP) estimates between these two mechanisms. Despite both of these formats being theoretically incentive compatible and demand revealing, results from 115 adult consumers indicate that WTP estimates obtained from an auction are 32–39 percent smaller than those from a posted price mechanism. A comparison in statistical significance shows that auctions require a smaller sample size than posted price mechanisms in order to detect the same preference change. Nevertheless, the signs of marginal effects for different product characteristics are consistent in both mechanisms.

Hidden consumption is a potential problem when consumers’ expenditure data from household surveys are used in demand analyses. A solution is to collect and use actual consumption data. This study compares demand estimation using consumption and expenditure data and evaluates meat demand in Nigeria. Data are from a nationally representative panel from Nigeria. The results show the elasticities estimated across both datasets were very similar; thus, if the only objective of data collection is to estimate elasticity using a demand system framework, collection of both types of data (consumption and expenditures) may be unnecessary. The elasticity estimates classify poultry, beef, and processed seafood as luxuries, while other meat and unprocessed seafood are classified as necessities. Own-price elasticities from both datasets indicated that poultry, beef, and processed seafood were price-elastic, and poultry was the most price-elastic.

The major portion of this paper is about railroads and the old saying, “That's a hell-of-a-way to run a railroad,” still obtains.

An interregional model which minimizes production and transportation costs for broilers was developed and tested. Ten production and 22 consumption regions were defined. The results indicate that current flow patterns are relatively efficient given the existing production capacities. As demand increases the increased production will tend to be in the Southwest (Texas) and to a lesser extent in the Southeast (North Carolina). Shadow prices indicate that in the longer run production in the Northeast will continue to decline in relative terms and perhaps in absolute terms.

This paper examines the effects of the use of increasingly-popular phytosanitary regulations on production costs, and output and factor trade flows. The case addressed is that of the European regulation of maximum chemical residues in cigarettes manufactured with tobacco containing maleic hydrazide. The paper presents simulations of the effects of tightening the EU regulation on the tobacco growing and manufacturing industries. The analysis focusses on input/output market linkages and on the substitution away from the residue-contaminated U.S. input to residue-free non-U.S. inputs. This induced substitution results in higher costs, lower quantity supplied of the final product, and higher prices for U.S. cigarettes in Europe. Cross-price effects lead to higher quantities of EU cigarettes sold and a corresponding increase in the use of all inputs, including U.S. tobacco. When the U.S. tobacco price is allowed to fall, direct price effects stimulate the EU derived demand for U.S. tobacco. Although the regulation is protectionist in the output market, it leads to increased EU imports of the residue-contaminated input. When the price of U.S. tobacco adjusts, the regulation is actually antiprotective for EU growers. The regulation also indirectly influences production practices of U.S. tobacco growers and leads to lower levels of MH residues on U.S. leaf.

Because of high commodity prices, beginning in 2006, subsidies to farmers in the United States, the European Union, and Canada have been reduced significantly. However, significant losses have been experienced by the red meat sector, along with escalating food prices. Because of rising input costs, the “farm boom” may not be as great as first thought. Ethanol made from corn and country-of-origin labeling cloud the U.S. policy scene. Higher commodity prices have caused some countries to lower tariff and non-tariff barriers, resulting in freer commodity trade worldwide. Policymakers should attempt to make these trade-barrier cuts permanent and should rethink current policy legislation to deal with the possibility of a collapse of world commodity markets. Agricultural commodity prices have dropped significantly since early 2008.

A frontier production function may be thought of as a “best practice” production function (Førsund and Jansen) or a function that expresses the maximum product obtainable from various combinations of factors given the existing state of technical knowledge. It is the theoretical counterpart to farm enterprise budgets or processing plant budgets derived by economic engineering methods to describe the best possible production processes.

The practice of econometrics entails choosing which equations to include in a system, and which equations to inclue in a system, and what restrictions to impose on the parameters. There is a widespread, but not universally held, preference for making these choices on the basis of theory. Until recently, this theory has rested on the hypothesis that agents solve static optimization problems. For agents’ behavior to be consistent with this story, certain restrictions must hold. These restrictions are used in econometric models as maintained or testable hypotheses.

Growth in aggregate agricultural output, and productivity is generally recognized as a necessary condition for economic development. The persistent differences productivity among countries and regions (Figure 1) have severely dampened the optimism among national policy makers and planners and among officials in the international aid agencies as to the possibility of substantially narrowing the gaps in productivity (total, land, and worker) in the feasible future.

The U.S. brewing industry was at a low point in the 1980s. Since that time, more than 4,000 new breweries of varying scales and scopes have entered the market. Given the rapid expansion in this industry, which involves large capital costs, it is useful to consider the competitive nature of individual firms. Using a sample of New England breweries, this study identifies several firm and geographic attributes that are linked to firms’ product offerings. We find that the breadth of product lines and nature of competition varies by brewery type and by the economic environment of the market.

We estimate the impacts of various types of government payments to U.S. agriculture on different components of farm household consumption. Using 2003 to 2005 data from the Agricultural Resource Management Survey (ARMS), we show that marginal rates of consumption differ by consumption category and income source, including different types of farm program payments. The results suggest that farm households treat income from different sources as imperfect substitutes and may reserve income from specific sources for specific types of consumption. Implications for the effects of different types of government payments on the farm household are considered.

Had only a farm program like the new ACRE state revenue program existed instead of the authorized 1996–2008 programs for com, soybeans, and wheat, farm support expenditures would have occurred earlier but totaled less. In contrast, at the higher prices forecast for the three crops over the 2009–2012 crop years, spending per acre is expected to be higher for acres enrolled in the ACRE program than for acres enrolled in the traditional programs. These results reflect the different design features of the two programs: revenue versus price assistance and assistance levels that adjust with lagged market revenue versus fixed nominal support triggers. The design issues and policy questions raised for both domestic policy considerations and WTO compliance are discussed.

This study assesses the economic and environmental effects to hog finishing farms from residual taxes/standards and restrictions on manure application and stocking density. Economic effects are measured in terms of net farm income and land prices, while levels of ammonia and excess nitrogen and phosphorus proxy the environmental effects. Any environmental policy requiring the need for additional land comes at a small cost to farmers who have access to adequate neighboring land. If this is not the case, then manure application and stocking density restrictions are expensive since the producer is basically forced to either purchase land or reduce hog production levels.

The forest owner's decision regarding when to harvest, based on forest's current worth, is analyzed using the real options approach for a representative Pacific Northwest Douglas-fir stand when the carbon price is stochastic and there is a fire risk. The problem is framed as a linear complementarity problem and solved using the fully implicit finite difference method combined with a penalty method. The fire risk results in lower option values and earlier critical harvesting times, whereas a wider carbon price range ($0–$100 versus $0–$10) produces contrary results and more responsiveness to the parameter changes.