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Dynamic Models, Externalities and Sustainability in Agriculture

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  • Cacho, Oscar J.

Abstract

The goal of sustainability in the management of natural resources and agricultural systems has received increasing attention during the 1990's. The many dimensions of the problem have been extensively discussed in the literature and a recognition of the interaction between economic, biological and social objectives have led to an acceptance of its multidisciplinary nature. When studying sustainability in agriculture, two aspects which cannot be ignored are (i) any measure must include economic as well as biological criteria and (ii) the dynamic nature of the production system and the environment (both physical and economic) must be accounted for. The goal of sustainable agricultural practices at the microeconomic level is explored in this paper, in an attempt to link the individual producer behaviour to the regulatory environment. Particular attention is paid to the dynamic aspect in the context of a grazing system, where plant and animal populations interact with each other and are influenced by the environment. An optimal control formulation is used to discuss the alternative ways in which externalities (such as salinity, soil loss and fertiliser and chemical run-off) can be incorporated into a model. The problem of valuing externalities and the role of the discount rate on optimal management strategies are briefly discussed.
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Suggested Citation

  • Cacho, Oscar J., 1997. "Dynamic Models, Externalities and Sustainability in Agriculture," 1997 Conference (41st), January 22-24, 1997, Gold Coast, Australia 135738, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare97:135738
    DOI: 10.22004/ag.econ.135738
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    1. Ruttan, Vernon W., 1994. "Constraints on the design of sustainable systems of agricultural production," Ecological Economics, Elsevier, vol. 10(3), pages 209-219, August.
    2. Jean-Paul Chavas, 1993. "On Sustainability and the Economics of Survival," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 72-83.
    3. Kenneth E. McConnell, 1983. "An Economic Model of Soil Conservation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(1), pages 83-89.
    4. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, January.
    5. Pandey, Sushil & Hardaker, J. Brian, 1995. "The role of modelling in the quest for sustainable farming systems," Agricultural Systems, Elsevier, vol. 47(4), pages 439-450.
    6. Barbier, Edward B & Markandya, Anil & Pearce, David W, 1990. "Sustainable Agricultural Development and Project Appraisal," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 17(2), pages 181-196.
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    Cited by:

    1. Farquharson, Robert J. & Cacho, Oscar J. & Mullen, John D., 2005. "An economic approach to soil fertility management for wheat production in New South Wales and Queensland," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137866, Australian Agricultural and Resource Economics Society.

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