ENVIRONMENTAL AND NATURAL RESOURCE POLICY AND THE OPTIMAL DISPERSION OF PROPERTY RIGHTS

Environmental policies generally address problems associated with ill-defined property rights. Our framework describes property rights "regimes" as functions of the degree of consolidation of rights to an asset and of the parties holding those rights. Efficient resource use occurs if welfare gains from regime switches offset endogenous transaction costs.Environmental Economics and Policy, Resource /Energy Economics and Policy,

WETLANDS, WILDLIFE, AND WATER QUALITY: TARGETING AND TRADE OFFS

Cost-effective targeting of conservation activities has only recently been addressed by economists. Most work to date has focused on finding the best locations to set aside land for the protection of biodiversity. An economic approach to the problem, where biodiversity reserve networks are delineated to maximize the number of species protected subject to a budget constraint, has been shown to be much more cost-effective than the standard approach, where reserve networks are delineated subject to an area constraint, ignoring differences in costs across sites. This paper is among the first to use spatially explicit models of production functions for ecosystem services in an optimization framework for prioritizing sites for wetlands restoration. Tradeoffs between two classes of environmental benefits from wetlands restoration, habitat, and water quality were assessed in the Central Valley of California. Habitat benefits were estimated by a count regression model that relates breeding mallard abundances to the configuration of land use types in the study area, and water quality benefits were estimated by a spatially distributed model of nonpoint source pollution and nutrient attenuation in wetlands. Two decision scenarios were analyzed. In the first scenario the optimal configuration of restoration activity was determined for a small watershed, and in the second scenario sites were selected from those offered for enrollment in an easement program throughout the valley. The results reveal the potential for gains in effectiveness from spatial targeting, and they suggest that there will be substantial tradeoffs between environmental benefits. Maximizing habitat quality in the small watershed yielded a 34% increase in mallard abundance and a 3% decrease in nitrogen loads to the river. In contrast, maximizing water quality resulted in a 25% decrease in nitrogen loads and a 2% increase in mallard abundance. Qualitatively similar results were obtained when sites were selected from a set of offered sites throughout the valley, but the tradeoffs were not as severe. The results also suggest that at traditional funding levels the Wetlands Reserve Program in California could reduce nitrogen loads to rivers by approximately 29,000 kg and increase total mallard abundance in the breeding season by approximately 150 individuals throughout the Central Valley in a given year.Resource /Energy Economics and Policy,

Flexible Conservation Measures on Working Land: What Challenges Lie Ahead?

From 1985 to 2002, most Federal conservation dollars going to farm operators have been to retire land from crop production. Yet most U.S. farmland (850 million acres) remains in active production. The Farm Security and Rural Investment (FSRI) Act of 2002 sharply increased conservation funding and earmarked most of the increase for working-land payment programs (WLPPs). The design and implementation of WLPPs will largely determine the extent to which environmental goals are achieved and whether they are cost effective. We simulate potential environmental gains as well as adjustments in agricultural production, price, and income associated with various WLPP features to illustrate tradeoffs arising from WLPP design and implementation. Competitive bidding with the use of environmental indices to rank producers for enrollment is most cost effective. Payments based on past conservation will help support farm incomes, but limit the amount of additional environmental benefit that can be generated under a fixed budget.Land Economics/Use,

SALMON RECOVERY IN THE COLUMBIA RIVER BASIN: ANALYSIS OF MEASURES AFFECTING AGRICULTURE

The effects of salmon recovery measures on the Northwest agricultural sector are evaluated. Relevant recovery measures, such as: modified timing for dam releases, reservoir drawdown, and flow augmentation in the Columbia River basin, on the regional agricultural sector are evaluated. Combined, these measures would increase power rates, grain transportation costs, and irrigation water costs and reduce the supply of water to irrigators. We quantify these input cost and quantity changes and combine them into seven recovery scenarios for analysis. Results suggest that drawdown and/or minor reductions in irrigation water diversions would reduce producers' profits by less than 1% of baseline levels. However, the most extreme scenario-a long drawdown period combined with a large reduction in irrigation diversions-would reduce producers' profits by $35 million (2.5$35 million decline in annual profits, more than $27 million occur in southern Idaho and eastern Oregon. The federal government would bear these costs if it acquires water via voluntary transactions.Agricultural and Food Policy, Resource /Energy Economics and Policy,

Agri-Environmental Policy at the Crossroads: Guideposts on a Changing Landscape

Agri-environmental policy is at a crossroads. Over the past 20 years, a wide range of policies addressing the environmental implications of agricultural production have been implemented at the Federal level. Those policies have played an important role in reducing soil erosion, protecting and restoring wetlands, and creating wildlife habitat. However, emerging agri-environmental issues, evolution of farm income support policies, and limits imposed by trade agreements may point toward a rethinking of agri-environmental policy. This report identifies the types of policy tools available and the design features that have improved the effectiveness of current programs. It provides an indepth analysis of one policy tool that may be an important component of a future policy package-agri-environmental payments. The analysis focuses on issues and tradeoffs that policymakers would face in designing a program of agri-environmental payments.conservation programs, environmental policy, agricultural policy, policy instruments, agricultural program design, soil erosion, nitrogen runoff, Environmental Economics and Policy,

Assessing a Policy Grab Bag: Federal Water Policy Reform

This article examines the economic impacts of policy alternatives for addressing allocative inefficiencies among agricultural, urban, and environmental uses of federal water. The Central Valley Project Improvement Act, composed of multiple incentive-based and command-and-control policies, forms the context for this analysis. Estimated multi-output agricultural revenue functions and urban water demand functions are incorporated into a nonlinear programming model designed to predict changes in water use, returns to agriculture, and urban consumer surplus. Results suggest that analysis that does not explicitly model policy instruments implemented at sub-optimal levels and, as part of a package of reforms, could over- or underestimate the costs, benefits, and effectiveness of each policy instrument. Copyright 2002, Oxford University Press.

Rewarding Farm Practices versus Environmental Performance

A multitude of design decisions influence the performance of voluntary conservation programs. This Economic Brief is one of a set of five exploring the implications of decisions policymakers and program managers must make about who is eligible to receive payments, how much can be received, for what action, and the means by which applicants are selected. The particular issue examined here is whether to pay for conservation practices or to link payments to environmental performance