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Edge-Effect Externalities: Theoretical And Empirical Implications Of Spatial Heterogeneity

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  • Parker, Dawn Cassandra

Abstract

This dissertation examines the impacts of distance-dependent spatial externalities on patterns of economic activity in a free-market setting. This class of externalities, which include such examples as smog dispersal, pesticide drift, and habitat degradation from roads, are referred to as ``edge-effect externalities''. Under edge-effect externalities, economic optimality will require not only the correct allocation of land to different uses, but also the correct arrangement of land uses. However, an unregulated free market will potentially fail to achieve an efficient arrangement of land uses. Chapter 2 develops a spatially continuous one-dimensional model of edge-effect externalities. The model demonstrates that, while the externality creates an incentive for a recipient to distance himself from the generator, this distance is too small from a social standpoint. The model also demonstrates the potential for positive externalities between those impacted by the edge-effect externality. Chapter 3 formally demonstrates the potential for edge-effect externalities to create non-convexities in the production possibilities frontier. Further, it demonstrates that conflicting border per unit area is a summary measure of landscape efficiency under edge-effect externalities, but this ratio will vary with the number, shape, and geographic concentration of parcels in the externality-receiving use. Chapter 4 develops a two dimensional agent-based cellular automaton model of free-market land use in an economy impacted by edge-effect externalities. It demonstrates that in an unregulated free-market without bargaining, both Pareto-efficient and inefficient equilibrium landscape patterns are possible. Initial configurations of firms, permanent geographic features, and transportation costs will impact final outcomes. Chapter 5 tests the hypothesis that production patterns for California Certified Organic Farms reflect possible avoidance of negative spatial spillovers from surrounding conventional farms. Differences in parcel size, shape, and surroundings between C.C.O.F. and non-C.C.O.F. parcels are demonstrated. While inherently more vulnerable to losses from mandatory buffer zones, C.C.O.F. parcels are shown to potentially lose a much lower proportion of their land to buffers than non-C.C.O.F. parcels. However, very few C.C.O.F. farms border C.C.O.F. farms under separate management, indicating that growers have not managed to coordinate to capture potential positive externalities.

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Bibliographic Info

Paper provided by University of California, Davis, Department of Agricultural and Resource Economics in its series Dissertations with number 11940.

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Date of creation: 2000
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Handle: RePEc:ags:ucdavd:11940

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Web page: http://www.agecon.ucdavis.edu/
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Related research

Keywords: Resource /Energy Economics and Policy;

References

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  1. Geoghegan, Jacqueline & Wainger, Lisa A. & Bockstael, Nancy E., 1997. "Spatial landscape indices in a hedonic framework: an ecological economics analysis using GIS," Ecological Economics, Elsevier, vol. 23(3), pages 251-264, December.
  2. McGartland, Albert M. & Oates, Wallace E., 1985. "Marketable permits for the prevention of environmental deterioration," Journal of Environmental Economics and Management, Elsevier, vol. 12(3), pages 207-228, September.
  3. Albers, Heidi J., 1996. "Modeling Ecological Constraints on Tropical Forest Management: Spatial Interdependence, Irreversibility, and Uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 73-94, January.
  4. Krupnick, Alan J. & Oates, Wallace E. & Van De Verg, Eric, 1983. "On marketable air-pollution permits: The case for a system of pollution offsets," Journal of Environmental Economics and Management, Elsevier, vol. 10(3), pages 233-247, September.
  5. Lohr, Luanne & Salomonsson, Lennart, 1998. "Conversion Subsidies For Organic Production: Results From Sweden And Lessons For The United States," Faculty Series 16640, University of Georgia, Department of Agricultural and Applied Economics.
  6. Raymond B. Palmquist & Fritz M. Roka & Tomislav Vukina, 1997. "Hog Operations, Environmental Effects, and Residential Property Values," Land Economics, University of Wisconsin Press, vol. 73(1), pages 114-124.
  7. Dawn C. Parker, 1999. "Landscape Outcomes in a Model of Edge Effect Externalities: A Computational Economics Approach," Working Papers 99-07-051, Santa Fe Institute.
  8. Tietenberg, T. H., 1974. "Derived decision rules for pollution control in a general equilibrium space economy," Journal of Environmental Economics and Management, Elsevier, vol. 1(1), pages 3-16, May.
  9. Leggett, Christopher G. & Bockstael, Nancy E., 2000. "Evidence of the Effects of Water Quality on Residential Land Prices," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 121-144, March.
  10. Nancy E. Bockstael, 1996. "Modeling Economics and Ecology: The Importance of a Spatial Perspective," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1168-1180.
  11. Helfand Gloria E. & Rubin Jonathan, 1994. "Spreading versus Concentrating Damages: Environmental Policy in the Presence of Nonconvexities," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 84-91, July.
  12. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
  13. Burrows, Paul, 1986. "Nonconvexity induced by external costs on production: Theoretical curio or policy dilemma?," Journal of Environmental Economics and Management, Elsevier, vol. 13(2), pages 101-128, June.
  14. Freeman, A. III, 1984. "Depletable externalities and pigouvian taxation," Journal of Environmental Economics and Management, Elsevier, vol. 11(2), pages 173-179, June.
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Citations

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Cited by:
  1. Lewis, David J. & Wu, JunJie, 2005. "Optimal Economic Landscapes with Habitat Fragmentation Effects," 2005 Annual meeting, July 24-27, Providence, RI 19425, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Daniel Müller & Darla K. Munroe, 2005. "Tradeoffs between Rural Development Policies and Forest Protection: Spatially Explicit Modeling in the Central Highlands of Vietnam," Land Economics, University of Wisconsin Press, vol. 81(3).
  3. Munroe, Darla K. & Southworth, Jane & Tucker, Catherine M., 2001. "The Dynamics Of Land-Cover Change In Western Honduras: Spatial Autocorrelation And Temporal Variation," 2001 Annual meeting, August 5-8, Chicago, IL 20759, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Parker, Dawn Cassandra & Munroe, Darla K., 2004. "Spatial Tests For Edge-Effect Externalities And External Scale Economies In California Agriculture," 2004 Annual meeting, August 1-4, Denver, CO 20000, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Lewis, David J. & Barham, Bradford L. & Zimmerer, Karl S., 2008. "Spatial Externalities in Agriculture: Empirical Analysis, Statistical Identification, and Policy Implications," World Development, Elsevier, vol. 36(10), pages 1813-1829, October.
  6. Munroe, Darla K. & Southworth, Jane & Tucker, Catherine M., 2002. "The dynamics of land-cover change in western Honduras: exploring spatial and temporal complexity," Agricultural Economics, Blackwell, vol. 27(3), pages 355-369, November.
  7. Lewis, David J. & Barham, Bradford L. & Zimmerer, Karl S., 2007. "Spatial Externalities in Agriculture: Empirical Analysis, Statistical Identification, and Policy Implications," Staff Paper Series 519, University of Wisconsin, Agricultural and Applied Economics.
  8. Parker, Dawn C. & Munroe, Darla K., 2007. "The geography of market failure: Edge-effect externalities and the location and production patterns of organic farming," Ecological Economics, Elsevier, vol. 60(4), pages 821-833, February.

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