"Maximizing the Environmental Benefits per Dollar Expended" An Economic Interpretation and Review of Agricultural Environmental Benefits and Costs
The broad objectives of this paper are to pr vide an overview of the economic policy foundations underlying the 1996 Farm Bill language and to survey research to date that has attempted to quantify agricultural environmental benefits. The paper is organized around these two themes. Section II provides a background for non-economists on fundamental concepts in environmental benefit estimation and non-market valuation. In addition to establishing an historical policy and theoretical perspective on such estimates, techniques used to measure these value are briefly introduced and classified. Section III discusses these techniques in greater detail by using examples taken from prior valuation research on agricultural environmental benefits. Reflecting historical emphases in valuation research, this section concentrates on separate expo ition of positive (amenity values) and negative (ground and surface waters). The final section assimilates the findings from the previous research and identifies areas for future policy and research. While the text tries to provide an introductory overview of basic principles and central citations, selected suggestions for advanced readings on valuation theory and methods are provided throughout. Importantly this paper both follows and challenges the mainstream of non-market valuation research and policy in this area. Most of the presentation remains within the dominant agricultural environmental policy and research paradigm by maintaining a separation between the positive and negative externalities of agriculture. Yet, it is argued in the final section that such a unilateral approach is artificial and inappropriate if the goals of such policy are truly to maximize the environmental benefits of agricultural land use. Both policy and research need to be redesigned to address this issue.
Charles H. Dyson School of Applied Economics and Management, Cornell University