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Ozone pollution and farm profits in England and Wales

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  • Harris Neeliah
  • Bhavani Shankar

Abstract

Tropospheric ozone is an air pollutant known to adversely affect crop yields across Europe. Experimental work is underway to quantify yield effects at ambient ozone levels for a number of crops. In this article, we undertake direct, farm-level evaluation of the impact of ozone by estimating a multi-output profit function using a panel dataset of cereal farms in England and Wales. A system of equations, comprising the profit function, input and output share equations is estimated using a fixed-effects seemingly unrelated regression technique, with ozone as a quasi-fixed input. Estimated parameters are used to calculate tropospheric ozone-related profit and output supply elasticities. The main findings from the profit function show that a 10% increase in average ozone levels would decrease variable profits by 1.3% and wheat output supply by 1%. These results are of a significantly lower magnitude, but qualitatively consistent with findings from similar studies carried out in North America.

Suggested Citation

  • Harris Neeliah & Bhavani Shankar, 2010. "Ozone pollution and farm profits in England and Wales," Applied Economics, Taylor & Francis Journals, vol. 42(19), pages 2449-2458.
    • Handle: RePEc:taf:applec:v:42:y:2010:i:19:p:2449-2458
    DOI: 10.1080/00036840701858158
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    References listed on IDEAS

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    1. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
    2. Fuss, Melvyn & McFadden, Daniel (ed.), 1978. "Production Economics: A Dual Approach to Theory and Applications," Elsevier Monographs, Elsevier, edition 1, number 9780444850133.
    3. Fuss, Melvyn & McFadden, Daniel, 1978. "Production Economics: A Dual Approach to Theory and Applications (I): The Theory of Production," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 1, number fuss1978.
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