Agricultural externalities and environmental regulation: evaluating good practice in citrus production

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Agricultural externalities and environmental regulation: evaluating good practice in citrus production

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Andrés J. Picazo-Tadeo
Ernest Reig-Martínez

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Abstract

Economic activity takes place in a scenario characterized by an increasing number of environmental regulations aimed at bringing under control the emission of contaminating wastes. In this paper, we evaluate the impact of transforming a code of good practice in nitrogen fertilization on Spanish citrus fruit farms into an environmental regulation of compulsory fulfilment. Using data envelopment techniques, we calculate unrestricted and environmentally regulated short-run maximum profits. Both profit values are then used to compute an index of the cost of regulation. Our results suggest that the cost of shifting from a merely recommended practice to a binding rule is low. On average, the loss of profit computed is only about 4%. Furthermore, we find that farms’ overall efficiency is low and that the current gap between observed and regulated fertilization practices could be overcome by improving overall management efficiency.

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Article provided by Taylor and Francis Journals in its journal Applied Economics.

Volume (Year): 38 (2006)
Issue (Month): 11 (June)
Pages: 1327-1334
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Handle: RePEc:taf:applec:v:38:y:2006:i:11:p:1327-1334

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Hanley, Nick, 1990. "The Economics of Nitrate Pollution," European Review of Agricultural Economics, Oxford University Press for the Foundation for the European Review of Agricultural Economics, vol. 17(2), pages 129-51.
Ian Hodge, 2000. "Agri-environmental Pelationships and the Choice of Policy Mechanism," The World Economy, Blackwell Publishing, vol. 23(2), pages 257-273, 02. [Downloadable!] (restricted)
Bromley, Daniel W & Hodge, Ian, 1990. "Private Property Rights and Presumptive Policy Entitlements: Reconsidering the Premises of Rural Policy," European Review of Agricultural Economics, Oxford University Press for the Foundation for the European Review of Agricultural Economics, vol. 17(2), pages 197-214.

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