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Best Management Practices and the Production of Good and Bad Outputs

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  • Pascal L. Ghazalian
  • Bruno Larue
  • Gale E. West

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. L’agriculture produit de bons et de mauvais extrants. Une fonction de coût translog est utilisée pour évaluer les coûts associés à l’amélioration de la qualité de l’eau en réduisant les problèmes de ruissellement et de transfert de nutriments. Nous évaluons comment ces coûts changent avec les niveaux des productions animales et de cultures. Nos résultats indiquent que la réduction des transferts de nutriments est coûteux mais que l’élasticité‐coût décroit avec la valeur des cultures produites tout en étant indépendant de l’envergure de la production animale. Les élasticités‐coût associés aux pratiques environnementales (PE) sont positives et ont de grandes erreur‐types, ce qui veut dire que les vraies élasticités peuvent être beaucoup plus grandes ou plus petites. Les élasticités‐coût pour la plupart des PE diminuent avec la production de cultures produit tandis que la taille de la production animale a un effet contraire sur les élasticités pour la rotation de cultures et le contrôle des herbicides. Nos résultats confirment qu’il existe d’importantes économies de taille à exploiter en agriculture.

Suggested Citation

  • Pascal L. Ghazalian & Bruno Larue & Gale E. West, 2010. "Best Management Practices and the Production of Good and Bad Outputs," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(3), pages 283-302, September.
  • Handle: RePEc:bla:canjag:v:58:y:2010:i:3:p:283-302
    DOI: 10.1111/j.1744-7976.2010.01187.x
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    References listed on IDEAS

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    1. M.K. Ndegue Fongue & Lota D. Tamini & B. Larue & G.E. West, 2014. "Efficiences technique et environnementale en agriculture: le cas du bassin de la rivière Chaudière au Québec," Cahiers de recherche CREATE 2014-10, CREATE.
    2. Bruno Larue, 2022. "On the economics of meat processing, livestock queuing, and worker safety," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(1), pages 63-72, March.
    3. Ndegue Fongue, M.K., 2014. "Efficiences technique et environnementale en agriculture: le cas du bassin de la rivière Chaudière au Québec," Working Papers 187234, University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE).
    4. repec:bla:canjag:v:58:y:2010:i:s1:p:403-409 is not listed on IDEAS
    5. Lota D. Tamini & Bruno Larue & Gale E. West & Moise K.Ndegue Fongue, 2016. "Agricultural production and pollutant runoffs in QuŽbecÕs Chaudi re river watershed: what are the potential environmental gains?," Cahiers de recherche CREATE 2016-2, CREATE.

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