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Using Field-level Characteristics as Proxy Measures to Test for the Presence of Economies of Scale in Nonpoint Pollution Control

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  • Caplan, Arthur J.
  • Gilbert, John
  • Chatterjee, Devalina

Abstract

We use parametric and nonparametric methods to estimate correlations between average control cost and three field-level characteristics—field size and delivered phosphorous per field and per acre—as proxies for economies of scale in controlling nonpoint pollution. We combine load and delivery-ratio estimates for more than 12,000 fields in the Bear River Basin, Utah, with estimates of control costs and effectiveness of management practices from the literature. Results suggest a negative relationship between control cost and delivered phosphorous per field and per acre. Ranking fields by phosphorous load therefore prioritizes management-practice subsidies by economies of scale.

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Bibliographic Info

Article provided by Northeastern Agricultural and Resource Economics Association in its journal Agricultural and Resource Economics Review.

Volume (Year): 42 (2013)
Issue (Month): 2 (August)
Pages:

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Handle: RePEc:ags:arerjl:155317

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Related research

Keywords: economies of scale; nonpoint-source pollution; delivered load; control costs; Environmental Economics and Policy; Land Economics/Use;

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  1. A. Myrick Freeman III, 2002. "Environmental Policy Since Earth Day I: What Have We Gained?," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 125-146, Winter.
  2. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  3. Gyimah-Brempong, Kwabena, 1987. "Economies of Scale in Municipal Police Departments: The Case of Florida," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 352-56, May.
  4. Babcock, Bruce A. & Lakshminarayan, P. G. & Wu, J. & Zilberman, David, 1997. "Targeting Tools for the Purchase of Environmental Amenities," Staff General Research Papers 5220, Iowa State University, Department of Economics.
  5. Breusch, T.S. & Pagan, A.R., . "The Lagrange multiplier test and its applications to model specification in econometrics," CORE Discussion Papers RP -412, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Cornwell, Christopher & Schmidt, Peter & Wyhowski, Donald, 1992. "Simultaneous equations and panel data," Journal of Econometrics, Elsevier, vol. 51(1-2), pages 151-181.
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