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Multi-Sector Sustainability in Agroecosystem Environments: Using Value Function Iteration for Numerical Solutions

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  • Bond, Craig A.

Abstract

Using the numerical technique of value iteration, this paper imposes several sustainability constraints on a simple multi-sector agroecosystem model, and provides analysis of the costs tradeoffs within and between generations. Results show that internalization of a stock externality is insufficient for intergenerationally equitable welfare paths, while sustaining a physical resource over time in the interests of equitability can result in a less equitable distribution of welfare across generations. Furthermore, a value sustainability constraint imposed on the social welfare maximization problem acts as a welfare transfer mechanism from the productive sector to the sector affected by the externality, but implies growth in profits for the productive sector and declining utility for the non-productive sector.

Suggested Citation

  • Bond, Craig A., 2006. "Multi-Sector Sustainability in Agroecosystem Environments: Using Value Function Iteration for Numerical Solutions," 2006 Annual meeting, July 23-26, Long Beach, CA 21039, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21039
    DOI: 10.22004/ag.econ.21039
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