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Environmental Targets and Shadow Prices of Bad Outputs in Organic and Conventional Farming

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  • Huhtala, Anni
  • Marklund, Per-Olov

Abstract

We present a framework for deriving shadow prices for negative environmental impacts regulated in agriculture. The shadow prices can be used as indicators of the costs of environmental regulation imposed as reflected in alternative farming technologies adopted. We illustrate our analytical findings with implications of the Finnish water protection policy measures on conventional and organic livestock farms over the period 1994-2002. Generally, the representative organic farm is found to be more technically efficient relative to its own technology than is the conventional representative farm. However, there is no statistical indication of a difference between these two particular representative farms in valuing the costs of undesirable output (manure) at the margin.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24575.

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Date of creation: 2005
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Handle: RePEc:ags:eaae05:24575

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Related research

Keywords: environmental performance; technology choices; nutrient surplus; Environmental Economics and Policy; H23; C21; Q12; Q21;

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  1. Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, vol. 126(2), pages 469-492, June.
  2. Rolf F�re & Shawna Grosskopf, 1998. "Shadow Pricing of Good and Bad Commodities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 584-590.
  3. V. Kerry Smith, 1998. "Should Pollution Reductions Count as Productivity Gains for Agriculture?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 591-594.
  4. Marklund, Per-Olov, 2003. "Analyzing Interplant Marginal Abatement Cost Differences: A Directional Output Distance Function Approach," UmeÃ¥ Economic Studies 618, Umeå University, Department of Economics.
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Cited by:
  1. Lota D. Tamini & Bruno Larue & Gale West, 2012. "Technical and environmental efficiencies and best management practices in agriculture," Applied Economics, Taylor & Francis Journals, vol. 44(13), pages 1659-1672, May.
  2. Arandia, Amaia & Aldanondo-Ochoa, A., 2008. "Social Versus Private Efficiency: A Comparison of Conventional and Organic Farming Systems in Vineyard Production," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44416, European Association of Agricultural Economists.

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