Volume 23, Issue 1, July 1998

July, 1998

By: Arnade, Carlos Anthony; Gopinath, Munisamy
Significant differences exist in the rates of capital adjustment in the four major sectors of the U.S. economy: agriculture, food, manufacturing, and services. A multioutput adjustment cost model is specified to compute the rates of capital adjustment. This specification allows us to derive dynamic output supply and investment demand functions for the four sectors, which are then fitted to time-series data. Our estimates show that capital in agriculture and manufacturing is almost fixed and adjusts toward respective long-run equilibrium at a rate of about 2% per year. The food processing and services sectors are more flexible in that their capital stocks fully adjust in less than five years. Thus, the rate of adjustment of agricultural capital is lower than that of other sectors in the U.S. economy.

July, 1998

By: Variyam, Jayachandran N.; Blaylock, James R.; Smallwood, David M.
Nutrient information and dietary data for a sample of U.S. household meal planners are used to estimate the direct and indirect effects of various dietary determinants on cholesterol intake. Holding sociodemographic and household characteristics constant, greater nutrition information translates to significantly lower intake of dietary cholesterol. Evidence supports the hypothesis that schooling promotes better health behavior through greater acquisition and use of health information. Blacks and Hispanics stand to benefit from nutrition education programs to increase their awareness of diet-health relationship. A low-calorie diet decreases the intake of cholesterol more than a low-fat diet.

July, 1998

By: Kim, Hong Jin; Helfand, Gloria E.; Howitt, Richard E.
This study estimates the benefits to agricultural and human health of reducing ozone in the San Joaquin Valley of California, and the costs of ozone control. The San Joaquin Valley's highly valued crops suffer from high ozone levels. Federal and state primary ozone standards are based on health effects, not effects on other sectors, and do not consider costs of attaining the standards. The methods here allow comparison of both total and marginal benefits and costs. The results suggest that net gains can be achieved for the entire valley by reducing ozone below 1990 levels, although results vary by region.

July, 1998

By: Anderson, John D.; Ward, Clement E.; Koontz, Stephen R.; Peel, Derrell S.; Trapp, James N.
Federal budgetary pressures raise questions regarding the importance of public market information. This study assesses the impact of price discovery and production efficiency of reducing public price and quantity information. The amount and type of information provided to Fed Cattle Market Simulator (FCMS) participants was varied by periodically withholding current and weekly summary information according to a predetermined experimental design. Results show that reducing information increased price variance and decreased marketing efficiency; that is, more cattle were delivered at weights deviating from 1,150 pounds- the least-cost marketing weight in the simulator. These factors, which increase costs, make the industry less competitive.

July, 1998

By: Fleming, Ronald A.; Adams, Richard M.; Ervin, David E.
Testing soils for nutrients is expected to improve groundwater quality. However, it is unknown whether soil testing will improve groundwater quality sufficiently to decrease the demand for direct regulation of agricultural practices. Focusing on an irrigated agricultural region in eastern Oregon, the economic and environmental aspects of soil testing are assessed using a spatially distributed, dynamic simulation model which links economic behavior with the physical processes that determine groundwater quality. Results indicate that soil testing of all fields increases farm profits and reduced groundwater nitrate concentration. However, the benefits are small in terms of potential improvements in groundwater quality

July, 1998

By: Keplinger, Keith O.; McCarl, Bruce A.; Chowdhury, Manzoor E.; Lacewell, Ronald D.
A dry year irrigation suspension has been proposed as a way of reallocating water when aquifer levels are low for the Texas Edwards Aquifer. Under this program, farmers would be paid to suspend irrigation to allow more spring flow or nonagricultural pumping. When irrigation is suspended in the east, springflow response is markedly larger than when suspended in the western portions of the aquifer. Most acreage participates when a $90 per acre payment is offered before the cropping season. Considerably higher payments are needed and less water saved for a suspension program instituted during the cropping season.

July, 1998

By: Willis, David B.; Whittlesey, Norman K.
This study presents a procedure for simultaneously addressing stochastic input demands and resource supplies for irrigated agriculture within a linear modeling framework. Specifically, the effect of stochastic crop net irrigation requirements and streamflow supplies on irrigation water management is examined. Irrigators pay a self-protection cost, in terms of water management decisions, to increase the probability that stochastic crop water demand is satisfied and anticipated water supply is available. Self-protection cost is lower when increasing the probability that anticipated water supplies are delivered, ceteris paribus, than when increasing the probability that the crop receives full net irrigation requirement in the study region.

July, 1998

By: Huffaker, Ray G.; Whittlesey, Norman K.; Michelsen, Ari M.; Taylor, R. Garth; McGuckin, J. Thomas
Charging farmers increasing block prices for irrigation deliveries is advocated as a means of encouraging agricultural water conservation in the West. We formulated a model of a hypothetical irrigated river basin to investigate the hyrdro-economic circumstances in which such pricing leads to water conservation. Our results indicate that increasing delivery prices may encourage irrigators to make adjustments with countervailing impacts on consumptive water use and conservation. Whether these countervailing impacts combine to conserve water or increase its consumptive use must be resolved empirically. An alternative resolution of this ambiguity is to assess water prices in terms of consumptive use.

July, 1998

By: Weber, Bruce A.
This article explores and develops three ideas: (a) that the aridity of western North America and its attendant characteristics have fundamentally shaped the work of western agricultural economists and encouraged some distinctive western contributions to the study of economics; (b) that in order to understand economic relationships that are critical to rural western economic development, economists need to move beyond the standard equilibrium economic models and explore some emerging models of spatial development and institutional change in which the concept of "increasing returns" plays a key role; and (c) that the West provides a fine laboratory for testing these frameworks.

July, 1998

By: Bystrom, Olof; Bromley, Daniel W.
This study presents an incentive scheme to control agricultural nonpoint-source pollution. The analysis is based on a principal-agent framework with two parties: farmers and a regulating authority. Our incentive scheme proposes collective penalties as a way to control pollution. Unlike previous analyses of incentive schemes to control agricultural pollution, we suggest nonindividual contracts between farmers and a regulating authority, where farmers can trade pollution abatement efforts. Findings show that the information requirement of a regulatory agency can be substantially reduced if contracts can be made nonindividual.