Best Management Practices and the Production of Good and Bad Outputs

Abstract

"Agricultural activities simultaneously produce good and bad outputs. A translog cost function is used to evaluate the cost associated with reduction of chemical runoff and how it is influenced by the scale of crop and animal production. The results show that reducing runoff entails increasing costs and that these costs decrease with the level of crop production, but are unaffected by the level of animal production. The estimates of the cost elasticities of Best Management Practices (BMPs) were all positive, but many have large standard errors that imply that the true elasticities can be much lower or much higher. Also, the cost elasticities decrease with the scale of crop production for most BMPs whereas the scale of animal production has the opposite effect for crop rotation and herbicide control practices. Our results reaffirm that there are economies of size in production." Copyright (c) 2010 Canadian Agricultural Economics Society.

Agri-Environmental Regulations, Policies, and Programs

“…Lamba et al (2009) use correlation analysis to comment on the associations between attributes of Canadian farmers and BMP adoption. In a departure from the standard methodology, Ghazalian et al (2010) uses a translog cost function to estimate the farm‐level cost of BMP adoption for Canadian farmers. Sparling and Brethour (2007) combine the results from a farm‐level survey and a farm economic model to calculate the net cost to a farmer who adopts conservation tillage.…”

Current and Emerging Water Issues in Agriculture: An Overview

“…In an attempt to lessen effects of agriculture on water quality, a number of BMPs are recommended for producers. However, reducing runoff has rising costs, and cost elasticities of BMPs decrease with the scale of crop production but increase with the scale of animal production (Ghazalian et al 2010). To encourage producers to adopt BMPs, some governments have instituted cost-sharing programs to reduce the cost of implementing BMP or to provide an ongoing incentive.…”