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

  • Andres Picazo-Tadeo
  • Ernest Reig-Martinez

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 & Francis Journals in its journal Applied Economics.

Volume (Year): 38 (2006)
Issue (Month): 11 ()
Pages: 1327-1334

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Handle: RePEc:taf:applec:v:38:y:2006:i:11:p:1327-1334
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  1. Hanley, Nick, 1990. "The Economics of Nitrate Pollution," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 17(2), pages 129-51.
  2. Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February.
  3. Bromley, Daniel W & Hodge, Ian, 1990. "Private Property Rights and Presumptive Policy Entitlements: Reconsidering the Premises of Rural Policy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 17(2), pages 197-214.
  4. Ian Hodge, 2000. "Agri-environmental Pelationships and the Choice of Policy Mechanism," The World Economy, Wiley Blackwell, vol. 23(2), pages 257-273, 02.
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