Agricultural systems are complex and dynamic, being made up of inter-acting bio-physical and human sub-systems. Moreover, agricultural systems are re-markably diverse, both within geographic regions and across regions. Accordingly, this paper focuses on dynamics and heterogeneity in coupled, multi-disciplinary simulation models of agricultural systems. We begin with a discussion of the principal features of agricultural production systems. We then present an example of a ‘loosely coupled’ model, the type of model most researchers have used to represent agricultural systems. We discuss the loosely coupled model's features and limitations, and show how it can be modified to incorporate feedbacks among sub-models. Finally, we use a case study of a hillside production system in Ecuador to illustrate the importance of model coupling, dynamics and heterogeneity in the analysis of production systems. This example shows that feedbacks and threshold effects are most important at sites most vulnerable to tillage erosion.

This paper compares protest rates and willingness to pay (WTP) using a payment card versus single and double bounded voter referendum contingent valuation question formats. Using a chi-square test, the payment card had a significantly higher protest rate (6.7 per cent) than the voter referendum question format (2.2 per cent). The median WTP of the single bounded and double bounded referendum format exceeds the payment card by a factor of nine and seven, respectively. The median WTP from the referendum formats represent about 8 per cent of income, while the payment card results represents about 1 per cent of income. These large differences in WTP between question formats are double what have been found in past studies. We believe this result may be due to excessive yea saying at high bid amounts in the dichotomous choice question formats. This behavior may arise in our case study in rural China because citizens have not had a long history of open elections or voting on tax referenda.

The paper treats the economy of controlling an African pest rodent, the multimammate rat, causing major damage in maize production. An ecological population model is presented and used as a basis for the economic analyses carried out at the village level using data from Tanzania. This model incorporates both density-dependent and density-independent (stochastic) factors. Rodents are controlled by applying poison, and the costs are made up of the cost of poison plus the damage to maize production. We analyse how the present-value costs of maize production are affected by various rodent control strategies, by varying the duration and timing of rodenticide application. Our numerical results suggest that it is economically beneficial to control the rodent population. In general, the most cost-effective duration of controlling the rodent population is 3–4 months every year, and especially at the end of the dry season/beginning of rainy season. The paper demonstrates that changing from today's practice of symptomatic treatment when heavy rodent damage is noticed to a practice where the calendar is emphasized, may substantially improve the economic conditions for the maize producing farmers. This main conclusion is highly robust and not much affected by changing prices of maize production.

This study uses an endogenous switching-regression model to examine the impact of slash-and-burn cultivation practice on the application of commercial fertilizer and pesticides, as well as yields and net returns. The empirical evidence of the study indicates that cross-section analysis of the impact of technology adoption on input demand and output supply should take into consideration sample selection, and also examine the impact separately for adopters and non-adopters. The results show that education, access to credit, land rights, and visits by extension agents reduce the probability of farmers adopting slash-and-burn farm practices. Environmental variables, such as soil quality and plot slope, do not impact on the adoption decision, but affect output supply of both adopters and non-adopters of slash-and-burn technology.

Preparing regional development strategies for the Amazon Basin is a vexing task for policymakers. Forests continue to fall and agriculture to move in to a region with patchy (in terms of agronomic potential) yet broadly nutrient-poor soils. The spatial distribution of soil types is not well mapped at finer scales relevant for agriculture. There is, moreover, little evidence about how farm land use or farm household welfare varies by soil quality in this frontier setting. Despite these information gaps, regional planners continue to use soils as a basis for policy action, some of which may influence future options for the Amazon. This paper uses a farm-level bioeconomic model that captures soil-quality-specific degrading effects of agricultural activities to assess the impacts of soil quality differences on deforestation, use of cleared land, and smallholder income in the western Brazilian Amazon. Focusing on an archetypical area farm with reasonable market access but limited access to labor and credit, simulations show soil quality mattered more for income than for deforestation or land use, although extremely cash-strapped farmers on poor-quality soils could face displacement. Pasture dominated farm land use across all soil types as farm forest disappeared within a generation on successfully established farms. Good- and (viable) poor-soil farms had slightly slower deforestation rates than their medium-soil counterparts – rich-soil farms shifting small amounts of area (and labor) to the more nutrient- and labor-intensive annuals, and (even viable) poor-soil farms lacking sufficient resources to clear and farm additional land. Farms with good soils could generate about 44 per cent more income than their viable poor-soil counterparts, but the lower-income level still surpassed thresholds for meeting food security and other needs. At no combination of income level and soil quality explored did the (simulated) farmer find it worthwhile to purchase and apply chemical fertilizer; nutrients came instead from secondary forest fallow, whose area rose or fell in step with annual cropping area. The implications of these results for land-use zoning, forest conservation, poverty alleviation, and other policies are discussed.

This paper examines environmental and labour market linkages between two agricultural systems-one upstream and another downstream. Using data from the Philippine province of Palawan as a point of departure, the paper develops a dynamic, two-sector model of an agricultural watershed to study the evolution and impact of an erosion externality. Attention focuses on the interplay between erosion generated by the extensive upstream sector and labour productivity in a labour-intensive downstream sector. A key feature of the model is that labour productivity and labour demand downstream are influenced by the externality generated upstream. Production of the externality, in turn, is influenced by wage employment opportunities downstream. Time paths of equilibrium wages are derived. A simulation is used to study the impact of environmental payments to upland households in exchange for allocating labour away from the externality-producing activity. The analysis shows how natural processes and economic interactions between two groups influence the benefits of agricultural intensification.

This paper provides a new explanation for the persistent land degradation in some parts of the world, despite the availability of seemingly effective soil conservation technologies. We demonstrate that soil conservation technologies may induce agricultural systems to exhibit equilibria characterized by both low and high levels of soil degradation. These two equilibria are separated by a threshold level of soil degradation beyond which a conservation investment will not yield a positive return. Once a parcel of land crosses this productivity threshold, soil degradation becomes economically irreversible (it is not profitable to invest in soil conservation) even though the degradation may be technically reversible. A case study of terracing investments in Peru is used to demonstrate the existence of multiple equilibria under conditions typical of many marginal agricultural areas. These findings help explain why attempts to encourage permanent adoption of soil conservation practices often fail, and how more successful policies could be designed.

This paper estimates WTP for drinking water quality in Brazil by combining averting behavior with contingent valuation data. Using bivariate probit models, alternative structures allowing for heteroscedasticity between and within data sources are incorporated by taking advantage of the different information content that characterizes each data source. We look at two covariates not yet examined in the literature when combining stated and revealed preferred data to explain the variance in the models: income and the bid in the contingent valuation questionnaire. Tests for parameter equality across data sets are performed. The results suggest that the specification of heteroscedasticity has a significant impact in WTP estimates and is crucial to legitimate the combination of data sets from different origins. The significant differences found in WTP between the two sources are discussed.

Many terrorist organizations around the world seek shelter in forests and this paper tries to address the impact of this phenomenon on forest conservation. We construct a framework to measure the social loss when a terrorist lives in the forest and has full control over the forest resources. We also consider a game between the terrorists and the government when the government tries to combat them to recover the social loss. We characterize the equilibrium of the game in which the terrorist chooses the optimum rotation length of the forest and the government chooses the optimum combat-effort. We derive the impact of two popular policy measures such as strengthening the combat operations and restricting the sale of timber by the terrorist groups in the market, on forest conservation and find both to be negative.

In developing countries, the rapid proliferation of informal firms – low-technology unlicensed micro-enterprises – is having significant environmental impacts. Yet environmental management authorities typically ignore such firms. This paper estimates the annual net benefits (benefits minus costs) of controlling particulate emissions from a collection of informal brick kilns in Ciudad Juárez, Mexico and from two of the city's leading formal industrial polluters. We find that the annual net benefits of controlling brick kiln emissions are substantial – in the tens of millions of dollars – and exceed those for the two formal industrial facilities by a significant margin. These results suggest that, in some cases, the conventional allocation of pollution control resources across formal and informal polluters may be suboptimal.

International climate negotiations have specified that projects under the Clean Development Mechanism (CDM) should not lead to a ‘diversion’ of official development assistance (ODA). It is however unchallenged that ODA can be used in capacity building for the CDM. Diversion can be interpreted in purpose, sectoral, and regional terms. There are possibilities to use ODA benchmarks to define diversion such as the UN 0.7 per cent target but they are unlikely to be politically acceptable. On the project level, three main options exist but none of them is perfect. The Development Assistance Committee of OECD endorses deduction of the value of emissions credits (CERs) from ODA. This however leads to a long-term pressure on the ODA level. Differentiating an ODA-financed baseline project and a ‘piggyback’ CDM option is likely to be arbitrary in many circumstances. Even if CERs do not accrue for the ODA share of the investment, still private CDM projects are crowded out due to the subsidizing of CDM projects.

This study investigates the optimal use of ‘dirty’ technologies for economic development and when to stop polluting (either temporarily or forever). This question is addressed within a real option framework where three different kinds of options arise: for stopping pollution temporarily or forever and for re-starting. The possibility to shelve a polluting technology temporarily allows for a more conservationist policy. Costs associated with the option of a re-start lead to hystereses effects that complicate empirical cross-country comparisons of environmental policies.

A revenue-sharing arrangement is under consideration between the USA and Western and Central Pacific Island Parties. When the ex-vessel price for cannery-grade skipjack tuna is above a minimum price, Pacific Island Parties would share in the increased revenue. This arrangement would provide economic incentives to these island nations to control fishing capacity and thereby increase revenues and economic rents. This potential arrangement raises the issue of which market and species prices to use as a benchmark, Bangkok or Pago-Pago; American Samoa and skipjack or yellowfin tuna. This paper, through a time series analysis of spatial price linkages, finds price leadership for skipjack in Bangkok. Macroeconomic and regional economic implications of enhanced price stability and higher revenues in the region are also discussed.

In developing countries, informal waste-pickers (known as scavengers) play an important role in solid waste management systems, acting in a parallel way to formal waste collection and disposal agents. Scavengers collect, from the streets, dumpsites, or landfills, re-usable and recyclable material that can be reincorporated into the economy's production process. Despite the benefits that they generate to society, waste-pickers are ignored when waste management policies are formulated. The purpose of this paper is to integrate the role of scavengers in a dynamic model of production, consumption, and recovery, and to show that, in an economy producing solid waste, efficiency can be reached using a set of specific and complementary policies: a tax on virgin materials use, a tax on consumption and disposal, and a subsidy to the recovery of material. A numerical simulation is performed to evaluate the impact of these policies on landfill lifetime and natural resource stocks. A discussion on the implementation of these instruments is also included.

This paper uses provincial macro-data from the mid 1980s onwards to investigate the determinants of land-use choice in rural China, by paying particular attention to the decision to plant trees as competing with agriculture. The evidence supports the importance of economic motivations in the afforestation decision. A profit-seeking behavior is found to be at stake in the decision to plant trees, which is made according to both the relative profitability of forestry against agriculture, and their relative risks. Afforestation is also found to strongly depend on the pressure upon land as well as on household wealth.

This paper adapts the safe minimum standard (SMS) approach so as to explore its use as a potential policy decision support tool that can be applied to issues related to the conservation and sustainable use of farm animal genetic resource (AnGR) diversity. Empirical SMS cost estimates are obtained using data from three AnGR economics case studies in Mexico and Italy. The findings support our hypothesis that the costs of implementing an SMS are low, both when compared with the size of subsidies currently being provided to the livestock sector (<1 percent of the total subsidy) and with regard to the benefits of conservation (benefit-cost ratio of >2.9).

Nevertheless, despite providing a potentially useful AnGR conservation decision support tool, a critical assessment of the application reveals that a much more extensive quantification of the components required to determine SMS costs needs to be undertaken before this tool can be applied in practice.

Economic instruments offer the potential to reach pre-determined environmental goals at a lower aggregate cost than less incentive-based measures, but administrative underpinnings crucial to the effective functioning of economic instruments may be lacking in developing countries. For this reason, pragmatic analysts and policymakers often advocate the use of so-called ‘mixed’ instruments that combine incentive mechanisms with improved administrative arrangements. This paper explores such possibilities with reference to intensive shrimp aquaculture, which dominates shrimp farming and is an important economic sector in Thailand. This activity has been cited as a major contributor to environmental degradation in Thailand and several other countries through destruction of mangrove forests, salinization of land, sludge disposal, and, in particular, water pollution. An analytical model is presented that highlights some of the key opportunities and limitations of mixed instruments applied to shrimp aquaculture. Mixed instruments are then proposed and evaluated.

This paper explores economic development in the floodplain of large rivers, where both economic and ecological factors need to be considered for effective management. Floodplain management policies in Bangladesh emphasize structural changes to enhance agricultural production. However, these structural changes reduce fisheries production, an important natural resource sector and a source of subsistence for the rural poor. We develop a model where net returns to agriculture and fisheries are jointly maximized, taking into account the effect of flooding depth and timing on production, and value of catch in markets and for subsistence nutrition. Results for a region in Bangladesh show that optimal production in a natural floodplain yields higher net returns compared with a floodplain modified by flood control structures. This finding implies that neglecting the bio-economic relationship between fisheries and land use may significantly affect the long-run economic role of a river floodplain, particularly where subsistence consumption is important to social welfare.

This paper develops a bio-economic model to explore the effect on illegal hunting, wildlife conservation, and human welfare of the most common instruments of two different designs of Integrated Conservation and Development Projects (ICDPs) currently in existence. First, it is demonstrated that the distribution of game meat and money transfers to the local people fails if not explicitly linked to the conservation objective. Second, the analysis shows that ICDPs relying on such a link, implemented as a risk of being excluded from the project if caught in illegal hunting, may reach their goal of improved wildlife conservation and human welfare. The theoretical model is illustrated by numerical calculations using data from the Serengeti in Tanzania.

China has been implementing one of the world's largest ecological rehabilitation projects, the Natural Forest Protection Program (NFPP), to improve its fragile and precarious environmental conditions. This paper measures the socioeconomic impacts of the NFPP using input–output (I–O) models. We find that the NFPP will expand the annual output of the forest sectors by 5.8 billion Yuan and the whole economy by 8.9 billion Yuan by 2010. Employment will increase by 0.84 million in the forest sectors and by 0.93 million in the whole economy. Associated with the enormous expansion of forest protection and management are huge contributions to mitigating water runoff, soil erosion, flooding, and biodiversity loss. The investments and adjustments are thus worthwhile, if the program is properly implemented. The challenges are to transform loggers into tree planters and forest managers and to ensure that the financial and institutional commitments by the local and national governments will be materialized.