These articles provide a discussion of studies presented in a session on spatial econometrics, focusing on the ability of spatial regression models to quantify the magnitude of spatial spillover impacts. Both articles presented argue that a proper modeling of spatial spillovers is required to truly understand the phenomena under study, in one case the impact of climate change on land values (or crop yields) and in the second the role of regional industry composition on regional business establishment growth.

The unique nature of the Ogallala Aquifer presents interesting and confounding problems for water policymakers who are coping with changing groundwater rules in Texas. The purpose of this article is to link previous efforts in water policy research for the Ogallala Aquifer in Texas with current collaborations that are ongoing with regional water planners. A chronological progression of economic water modeling efforts for the region is reviewed. The results of two recent collaborative studies are presented that provide estimates of impacts of alternative policies on groundwater saturated thickness, water use, net farm income, and regional economic activities.

Several states in the southeast have acknowledged the need for statewide water planning but have yet to act. In contrast, Georgia is on the cusp of completing the Georgia Comprehensive Statewide Water Management Plan (SWMP). The SWMP provides for resource assessments, forecasts, and regional water planning. Over the past three years, an extensive effort has been made to implement the SWMP. This article describes the planning process undertaken in Georgia. Several of the recommended practices are also highlighted and critiqued with respect to their potential to affect aggregate water use in the state.

The Rio Grande has headwaters in Colorado, flows through New Mexico, and serves as the United States-Mexico border in Texas, emptying into the Gulf of Mexico. Snow melt in Colorado and northern New Mexico constitutes the water river supply for New Mexico and the El Paso region, whereas summer monsoonal flow from the Rio Conchos in Mexico and tributaries, including the Pecos River, provides the Rio Grande flow for southern Texas. The region is mostly semiarid with frequent long-term drought periods but is also characterized by a substantial irrigated agriculture sector and a rapidly growing population. International treaties and interstate compacts provide the rules for allocation of Rio Grande waters between the United States and Mexico and among Colorado, New Mexico, and Texas. Water rights in Texas have been adjudicated, but the adjudication process was based on a wet period; hence, contemporary Rio Grande water rights are overallocated. Issues related to the waters of the Rio Grande include frequent drought, increased municipal demand caused by a rapidly increasing population, supply variability, underdeliveries from Mexico, increasing salinity, inefficient delivery systems, health issues of the population, no economic/financial incentives for farmers to conserve, and water is not typically priced for efficiency. Stakeholders are interested in identifying solutions to limited water supplies while there is increasing demand. There are several activities in place addressing Rio Grande-related water needs, including enhancing delivery distribution efficiency of raw water, conversion of rights from agriculture to urban, improving both agricultural irrigation field distribution and urban use efficiency, developments in desalination, and litigation. None of the solutions are easy or inexpensive, but there are encouraging cooperative attitudes between stakeholders.

The three articles presented at this invited session examine the evolution of water policy planning and the implementation of regulatory tools to achieve water conservation objectives. Two articles focus on Texas water issues and the third focuses on the Georgia planning experience. Each article clearly illustrates the value of sharing advances in hydrologic and economic modeling with local community stakeholder groups to facilitate the credible development of regional water management plans. Moreover, each article hints that stronger regulatory tools may be needed to achieve long-run policy objectives.

First-generation grain ethanol biofuel has affected the historical excess capacity problem in U.S. agriculture. Second-generation cellulosic ethanol biofuel has had difficulty achieving cost-competitiveness. Third-generation drop-in biofuels are under development. If lignocellulosic biomass from perennial grasses becomes the feedstock of choice for second- and third-generation biorefineries, an integrated system could evolve in which a biorefinery directly manages feedstock production, harvest, storage, and delivery. Modeling was conducted to determine the potential economic benefits from an integrated system. Relatively low-cost public policies that could be implemented to facilitate economic efficiency are proposed.

Arkansas cropping pattern changes at the county level were estimated under various scenarios involving a likely decline in water availability, the development of a biomass market for renewable energy production, and the potential of a widely used carbon offset market. These scenarios are analyzed separately and jointly to determine which of the three scenarios is expected to have the largest impact on net (emissions - sequestration) greenhouse gas (GHG) emissions, renewable fuels feedstock supply, and producer net returns. Land use choices included conventional crops of rice, cotton, soybean, corn, grain sorghum, pasture, and hay. Specialty crops of loblolly pine and switchgrass were modeled for their respective potential to sequester carbon and provide feedstock for renewable fuels. GHG emissions were measured across an array of production methods for each crop. Soil and lumber carbon sequestration was based on yield, soil texture, and tillage. Using the concept of additionality in which net GHG emissions reductions compared with a baseline level were rewarded at a carbon price of $15 per ton along with $40 per dry ton of switchgrass, baled at field side, revealed that irrigation restrictions had the largest negative impact on producer net returns while also lowering net GHG emissions. Introducing the higher carbon price led to minor positive income ramifications and greatly reduced net GHG emissions. Biomass production returns were higher than the returns from the carbon offset market, however, at the cost of greater net GHG emissions. The combination of all factors led to a significant increase in switchgrass and pine production. In this scenario, approximately 16% of the total income losses with lower nonirrigated yields were offset with returns from biomass and carbon markets. Lowest statewide net GHG emissions were achieved given least irrigation fuel use and a greater than 15% increase in carbon sequestration with pine and switchgrass.

As a result of the increase in the real cost of fossil fuel-based energy in recent years, federal and state governments have taken a more active role in energy policy by creating incentives to develop alternative sources of energy, including biofuels. However, policymakers often become focused on the specific type of energy and not the energy services consumers ultimately value. The lack of recognition of energy as a commodity results in policies that ignore the characteristics of the associated markets: easy entry and exit, no barriers to entry, and sensitivity to changes in supply and demand. Consequently, energy industries may fail to arise because entrepreneurs must be able to account for all costs and earn—at a minimum—a competitive return on the investment. This article evaluates the options available to policymakers related to biofuels, which are of particular concern to the South, and includes an assessment of the knowledge base on which policy decisions are made.

The goal of this study, based on data collected through community surveys and visitors' surveys, is to determine and analyze factors impacting returns from rural tourism. Our first model shows that age of event, median family income, and hired labor have a significant impact on the revenues collected from tourism events. Furthermore, it shows brochures and flyers to be the most effective form of advertisement. The second multivariate regression model proves that traveling greater distances, staying overnight at a hotel, and plans for visiting surrounding areas contribute positively and significantly to higher individual expenditures by tourists.

The Texas Department of Agriculture launched the GO TEXAN marketing promotion program in 1999 to support Texas agricultural and food production. The underlying assumption is that if successful, the program would support directly or indirectly the demand for Texas agricultural production and the well-being of the state's rural population. This research analyzes responses to an official 2008 survey sent to the GO TEXAN program beneficiaries. Overall, this study suggests that not all activities in the program have a clearly positive impact. Participation in trade shows, retail promotion and media events, and reverse trade missions seem to have a significant effect on sales increase as well as the use of the program logo on promotional items and web sites. The study also suggests that the relative impacts of event participation and uses of the program logo differ according to the group of member's belonging, particularly when comparing the “mostly rural” vs. “mostly urban” categories. Consequently, if a state's agricultural marketing program specifically attempts to reach producers from its “mainly rural” areas, an analysis may be needed to identify what specific types of promotion seem to generate the best results in those areas.

We investigate the determinants of organic farming in the United States. State-level data show that the organic farming sector has grown over the last decade, but growth has been very heterogeneous with few states accounting for most of the growth. Further analyses of county data reveal that favorable natural amenities, water for irrigation, and government payments have a positive effect on most measures of organic farming used here. Results further point out that organic farming operations are more popular among young farmers. Adjacency to metro areas is also an important determinant for the number of organic operations. Organic farming is more important for the agricultural sector of the areas that are somewhat remote but that does not appear to be the case for very remote rural areas.

The three articles in this invited paper session examine value-added strategies related to agriculture and food at the state and federal level designed to enhance rural development. Two of the papers dealt with the GO TEXAN program and the other with organic agriculture. All three papers were well written and interesting, but all three also shed light on the problem of using classical economic theory to interpret differentiated agriculture and food products as opposed to undifferentiated commodities.