Using Farmers’ Actions to Measure Crop Loss Due to Air Pollution

The effects of ozone on the profitability of Illinois cash grain farms is investigated by utilizing a profit function framework. This approach uses individual farms as the observational unit so the data are generated under field conditions. Hence, experimental plot data are not used although results from past biological experiments are utilized to frame initial hypotheses and for evaluation of the estimated model. This study demonstrates the benefits of combining economic data and biological science results to estimate the economic reactions of producers in terms of input and output (production) response to an ambient environmental characteristic.

A time series of cross sectional data on cash grain farms in Illinois is used to estimate two profit functions. Ozone data are measured on a growing season basis by county. The estimated model shows ozone has a negative effect on profits. Increases in ozone levels tend to depress output levels and lessen the demand for variable inputs. Additionally, a production function is derived from one of the profit functions. The impact of ozone is found to be in general agreement with dose-response data obtained in Illinois by plant scientists.     

Development of a bias ratio to examine factors influencing hypothetical bias

Using data from three contingent valuation studies, this study investigates if socio-economic factors and the type of good being valued can help explain changes in respondents' answers. A bias ratio, defined as the ratio of respondents who change their choice under hypothetical and "real" settings, is developed to help explain changes in respondents' answers. Marginal changes in the bias ratio resulting from a change in a particular independent variable consist of changes in responses in both the hypothetical and real situation. Results provide limited evidence that socio-economic variables and type of good being study can help in explaining bias. Respondents who are older, have a higher level of education, and are environmentally conscious tend to show less bias. Familiarity with the good also tend to decrease bias. A large amount of the variation in bias, however, remains unexplained.     

AN INTERDISCIPLINARY APPROACH TO VALUING WATER FROM BRUSH CONTROL1

ABSTRACT: An analytic methodology utilizing models from three disciplines is developed to assess the viability of brush control for water yield in the Frio River basin, Texas. Ecological, hydrologic, and economic models are used to portray changes in forage production and water supply resulting from brush control, and to value supplemental water produced through brush control. Site‐specific biophysical characteristics are used to simulate water yields from brush control across the watershed. Economic benefits from increased animal production for ranchers undertaking brush control are assessed. Benefits to Corpus Christi residential water consumers from ranchers' brush control activities are evaluated using the change in consumer surplus resulting from supplemental water produced through brush control. Results indicate an increase in water yield with brush control on 35 percent of the land area in the basin. However, the cost of brush control is more than the increase in returns it fosters on most range sites. Consumer surplus change for Corpus Christi residents over 25 years is zero under baseline conditions, implying subsidies for brush control in the Frio basin are not worthwhile at this time.