IDEAS home Printed from https://ideas.repec.org/a/bla/canjag/v58y2010i3p283-302.html
   My bibliography  Save this article

Best Management Practices and the Production of Good and Bad Outputs

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1744-7976.2010.01187.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1744-7976.2010.01187.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. John C. Panzar & Robert D. Willig, 1977. "Economies of Scale in Multi-Output Production," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(3), pages 481-493.
    2. Ryan, David L & Wales, Terence J, 1998. "A Simple Method for Imposing Local Curvature in Some Flexible Consumer-Demand Systems," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(3), pages 331-338, July.
    3. Shunsuke Managi, 2004. "Competitiveness and environmental policies for agriculture: testing the Porter hypothesis," International Journal of Agricultural Resources, Governance and Ecology, Inderscience Enterprises Ltd, vol. 3(3/4), pages 310-324.
    4. Oberhofer, W & Kmenta, J, 1974. "A General Procedure for Obtaining Maximum Likelihood Estimates in Generalized Regression Models," Econometrica, Econometric Society, vol. 42(3), pages 579-590, May.
    5. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    6. Catherine J. Morrison Paul & V. Eldon Ball & Ronald G. Felthoven & Arthur Grube & Richard F. Nehring, 2002. "Effective Costs and Chemical Use in United States Agricultural Production: Using the Environment as a “Free” Input," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 902-915.
    7. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    8. J.B. Smith & W A. Sims, 1985. "The Impact of Pollution Charges on Productivity Growth in Canadian Brewing," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 410-423, Autumn.
    9. BARTEN, Anton P., 1969. "Maximum likelihood estimation of a complete system of demand equations," LIDAM Reprints CORE 34, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Barten, A. P., 1969. "Maximum likelihood estimation of a complete system of demand equations," European Economic Review, Elsevier, vol. 1(1), pages 7-73.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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.
    3. Elwin G. Smith & Mark E. Eiswerth & Terrence S. Veeman, 2010. "Current and Emerging Water Issues in Agriculture: An Overview," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(s1), pages 403-409, December.
    4. 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.
    5. 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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lila J. Truett & Dale B. Truett, 2011. "Whither Germany and the EMU In a Challenging Environment?," Working Papers 0019, College of Business, University of Texas at San Antonio.
    2. Ting-Wong Cheng & Kuo-Liang Wang & Chih-Chiang Weng, 2000. "Economies of scale and scope in Taiwan's CPA service industry," Applied Economics Letters, Taylor & Francis Journals, vol. 7(6), pages 409-414.
    3. Dongfeng Chang & Apostolos Serletis, 2014. "The Demand For Gasoline: Evidence From Household Survey Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 291-313, March.
    4. Truett, Lila J. & Truett, Dale B., 2002. "The demand for imports in Italy: A production analysis," International Review of Economics & Finance, Elsevier, vol. 11(4), pages 393-409.
    5. Angel Prieto & José L. Zofio & Inmaculada Alvarez, 2009. "Economías de escala, densidad y alcance en la provisión pública de infraestructura básica municipal," Hacienda Pública Española / Review of Public Economics, IEF, vol. 190(3), pages 59-94, September.
    6. Santeramo, Fabio Gaetano, 2014. "On the Estimation of Supply and Demand Elasticities of Agricultural Commodites," MPRA Paper 56126, University Library of Munich, Germany.
    7. Lila J. Truett & Dale B. Truett, 2009. "Challenges For France In The Emerging International Environment: A Dynamic Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 27(4), pages 566-573, October.
    8. Truett, Lila J. & Truett, Dale B., 2003. "A cost function analysis of import demand and growth in South Africa," Journal of Development Economics, Elsevier, vol. 70(2), pages 425-442, April.
    9. Lila J. Truett & Dale B. Truett, 2005. "European Integration and Production in the French Economy," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 304-316, April.
    10. Truett, Lila J. & Truett, Dale B., 1998. "The demand for imports in Korea: a production analysis approach," Journal of Development Economics, Elsevier, vol. 56(1), pages 97-114, June.
    11. Truett, Dale B. & Truett, Lila J., 1998. "Production, cost, and input substitution in the Mexican petroleum industry," The North American Journal of Economics and Finance, Elsevier, vol. 9(1), pages 67-87.
    12. Daniel Atsbeha & Dadi Kristofersson & Kyrre Rickertsen, 2015. "Broad breeding goals and production costs in dairy farming," Journal of Productivity Analysis, Springer, vol. 43(3), pages 403-415, June.
    13. Barnett, William A. & Serletis, Apostolos, 2008. "Consumer preferences and demand systems," Journal of Econometrics, Elsevier, vol. 147(2), pages 210-224, December.
    14. Giancarlo Moschini, 1988. "The Cost Structure of Ontario Dairy Farms: A Microeconometric Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(2), pages 187-206, July.
    15. Truett, Lila J. & Truett, Dale B., 1997. "The Korean metals industry and economic development," Journal of Asian Economics, Elsevier, vol. 8(2), pages 333-347.
    16. Sharimakin, Akinsehinwa, 2019. "Measuring the energy input substitution and output effects of energy price changes and the implications for the environment," Energy Policy, Elsevier, vol. 133(C).
    17. Huang, Tai-Hsin & Lin, Chung-I & Chen, Kuan-Chen, 2017. "Evaluating efficiencies of Chinese commercial banks in the context of stochastic multistage technologies," Pacific-Basin Finance Journal, Elsevier, vol. 41(C), pages 93-110.
    18. Lila Truett & Dale Truett, 2006. "Production and costs in the South African motor vehicle industry," Applied Economics, Taylor & Francis Journals, vol. 38(20), pages 2381-2392.
    19. Mateo Velásquez‐Giraldo & Gustavo Canavire‐Bacarreza & Kim P. Huynh & David T. Jacho‐Chavez, 2018. "Flexible Estimation of Demand Systems: A Copula Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 33(7), pages 1109-1116, November.
    20. Lila J. Truett & Dale B. Truett, 2003. "The Italian Automotive Industry and Economies of Scale," Contemporary Economic Policy, Western Economic Association International, vol. 21(3), pages 329-337, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:canjag:v:58:y:2010:i:3:p:283-302. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/caefmea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.