Abstract:
Changes in the structure of the U.S. agricultural
industry since World War II have transformed it into a
highly productive component of the domestic economy. But
these changes have not occurred without indirect costs. For
example, the reliance on agricultural chemicals has produced
environmental effects causing growing concern. In addition,
renewed awareness of and demand for environmental amenities
by the general public are changing attitudes towards the
agricultural industry and its implicit property rights.
This public concern is prompting a growing use of regulatory
controls for pollution problems, at a time of greater
demands on water resources and declining farm sector
population.
In this dissertation an examination was made of
economic incentives and other mechanisms available to
farmers to offset pollution, with particular application to
the Willamette Valley of Oregon. A two-part simulation was
used, involving a biophysical model designed to simulate
crop growth and nutrient flow, and separate economic
optimization linear programming models of five
representative farms. The output of each of the farm models
is an optimal crop rotation mix and an associated set of
nutrient outflows. Environmental restrictions and
regulations were imposed when conducting policy tests, and
changes in profit, crop mix, and physical outputs were
recorded to provide a measure of policy effectiveness and
cost. Policies tested included effluent charges, an input
tax, per-acre standards, a required use of no-tillage, and a
fall fertilizer ban.
The results indicate that the availability of
production options on each farm influences policy
effectiveness and the cost of achieving pollution abatement.
Nevertheless, some abatement is possible on all farms for
relatively little cost. Of the policy measures, effluent
charges provide abatement at least cost, although specific
levels of abatement may not be attainable. When a farm is
subject to multiple pollution problems, control of one type
of pollutant may exacerbate other problems. Finally,
farmers in the Willamette Valley can reduce both nitrogen
use and effluent with a greater use of crop rotations.
