Volume 27, Issue 2, December 2002

December, 2002

By: Baerenklau, Kenneth A.
Mechanism design theory is used to examine the case of a cost-minimizing regulator who uses input-reduction subsidies to meet an exogenously imposed ambient standard for nonpoint source pollution. A general result claimed for a welfare-maximizing equilibrium. Numerical results suggest the ability to directly target contracts reduces costs significantly for the regulator. But in the absence of this ability, indirect targeting reduces costs only slightly.

December, 2002

By: von Haefen, Roger H.
This study extends LaFrance's (1985, 1986, 1990) previous research by deriving the necessary parameter restrictions for two additional classes of incomplete demand system models to be integrable. In contrast to LaFrance's earlier work, this analysis considers models that treat expenditures and expenditure shares as the dependent variables in the specified incomplete demand systems. With environmental economists increasingly turning to demand system approaches to value changes in environmental quality, these new results significantly expand the menu of empirical specifications which can be used to fit a given data set. Moreover, the alternative specifications considered in this study, in combination with LaFrance's original work, represent a complete characterization of the linear, log-linear, and semi-log incomplete demand system models.

December, 2002

By: Hite, Diane; Hudson, Darren; Intarapapong, Walaiporn
A contingent valuation survey conducted in Mississippi is used to assess public willingness to pay for reductions in agricultural nonpoint pollution. The analysis focuses on implementation of a policy to provide farmers with precision application equipment to reduce nutrient runoff. Findings suggest public support exists for such policies. This study also finds that inclusion of debriefing questions can be used to refine willingness-to-pay estimates in contingent valuation studies. A nonparametric scope test suggests respondents are sensitive to level of runoff reduction and associated water-quality benefits.

December, 2002

By: Shaik, Saleem; Helmers, Glenn A.; Langemeier, Michael R.
The implications of treating environmental pollution as an undesirable output (weak disposability) as well as a normal input (strong disposability) on the direct and indirect shadow price and cost estimates of nitrogen pollution abatement is analyzed using Nebraska agriculture sector data. The shadow price of nitrogen pollution abatement treated as an undesirable output represents the reduced revenue from reducing nitrogen pollution. In contrast, the shadow price of nitrogen pollution abatement treated as an input reflects the increased cost of reducing nitrogen pollution. For the 1936-97 period, the estimated shadow price and cost of nitrogen pollution abatement for Nebraska ranges from $0.91 to $2.21 per pound and from $300 to $729 million respectively.

December, 2002

By: Nivens, Heather D.; Kastens, Terry L.; Dhuyvetter, Kevin C.; Featherstone, Allen M.
Can remotely sensed imagery improve hedonic land price models? A remotely sensed variable was added to a hedonic farmland value model as a proxy for land productivity. Land cover data were used to obtain urban and recreational effects as well. The urban and recreational effects were statistically significant but economically small. The remotely sensed productivity variable was statistically significant and economically large, indicating that knowing the "greenness" of the land increased the explanatory power of the hedonic price model. Thus, depending upon the cost of this information, including remotely sensed imagery in traditional hedonic land price models is economically beneficial.

December, 2002

By: Kim, Hong Jin; Cho, Yongsung
The contingent valuation method is applied to determine how much consumers would be willing to pay to reduce copper in their drinking water and what factors influence their willingness to pay (WTP). The annual mean WTP per household was estimated using survey data from nine counties in southwestern Minnesota where copper contamination is high. The annual mean WTP per household varied from a low range of $30.41 to $43.61 for Chippewa County to a high range of $39.79 to $57.06 for Nobles County. The aggregate WTP for all nine counties was estimated to range from $1.66 to $2.38 million. However, the estimated WTP may not be sufficient to pay the cost of providing improved water through public water systems for small communities in southwestern Minnesota.

December, 2002

By: Yen, Steven T.; Huang, Chung L.
Demands for beef products are investigated using the U.S. Department of Agriculture's 1987-88 Nationwide Food Consumption Survey data. The censored translog demand system is estimated with full-information and simulated maximum-likelihood procedures. These procedures represent different approaches to evaluation of multiple probability integrals in the likelihood function, but produce very similar parameter and elasticity estimates. Findings suggest sociodemographic variables play important roles in the demand for beef, and that demand for different cuts of beef should be treated differently.

December, 2002

By: Mills, Bradford F.
In nonmetropolitan areas of the United States, single-mother families contain a majority of children living below the poverty line. Changes between 1992 and 2000 in the economic well-being of nonmetropolitan single-mother families are examined using kernel density estimation and density reweighting methods. The results show that increased education levels of single mothers and the strengthening of area economic conditions explain much of the observed gains in the economic well-being of this family group. But temporal changes in propensities to work and to be on welfare from 1992 to 2000 have also contributed to observed gains.