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A Differential Game Approach to Adoption of Conservation Practices

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  • Parcell, Joe L.
  • Gedikoglu, Haluk
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    Abstract

    Agricultural production can degrade water sources through leaching of nitrogen and phosphorus from agricultural land to surface and ground water sources. To minimize the pollution from agricultural production, the U.S. Department of Agriculture promotes adoption of conservation practices. Previous studies that analyzed adoption of new technologies did not incorporate the two important features of technologies that are primarily used to conserve the environment; common resource and interaction between farmers. The current study develops a conceptual framework using a differential game to analyze adoption of new technologies that impact the water quality. The results of the current study show that the single agent optimization models of the previous studies would not lead to the optimal solution of the differential game. Current study also shows that if farmers act cooperatively, they devote more capital to conserve the environment.

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    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 149619.

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    Date of creation: 26 May 2013
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    Handle: RePEc:ags:aaea13:149619

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    Keywords: Technology Adoption; Water Quality; Optimal Control; Differential Game; Environmental Economics and Policy; Resource /Energy Economics and Policy;

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    1. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, April.
    2. Huffman, Wallace, 1980. "Farm and Off-Farm Work Decisions: The Role of Human Capital," Staff General Research Papers 10973, Iowa State University, Department of Economics.
    3. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-98, January.
    4. Cooper, Joseph C. & Keim, Russ, 1996. "Incentive payments to encourage farmer adoption of water quality protection practices," MPRA Paper 24779, University Library of Munich, Germany.
    5. Khalatbari, Firauzeh, 1977. "Market Imperfections and the Optimum Rate of Depletion of Natural Resources," Economica, London School of Economics and Political Science, vol. 44(176), pages 409-14, November.
    6. Goetz, Renan U. & Zilberman, David, 2000. "The dynamics of spatial pollution: The case of phosphorus runoff from agricultural land," Journal of Economic Dynamics and Control, Elsevier, vol. 24(1), pages 143-163, January.
    7. Ulph, Alistair, 1989. "A Review of Books on Resource and Environmental Economics," Bulletin of Economic Research, Wiley Blackwell, vol. 41(3), pages 219-28, July.
    8. Sunding, David & Zilberman, David, 2001. "The agricultural innovation process: Research and technology adoption in a changing agricultural sector," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 4, pages 207-261 Elsevier.
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