IDEAS home Printed from
   My bibliography  Save this paper

Corner solutions in the allocation of environmental water: an application of inframarginal economics


  • Hone, Simon


Inframarginal economics is a combination of marginal and total cost-benefit analysis (across corner solutions). It has been applied extensively in analysing trade issues, however, there have been few environmental applications. While there is debate over the contribution of inframarginal economics to the analysis of aggregate economic phenomena, inframarginal economics is central to understanding agent-level decisions. This paper applies inframarginal methods to investigate the efficient allocation of water among ecosystems. The Australian Government is acquiring billions of dollars of water for environmental uses through a number of programs. Allocating this water efficiently will require information on preferences and environmental production functions, as well as the development of analytical frameworks capable of examining corner solutions. Within a general inframarginal framework, this paper investigates the conditions under which corner solutions are likely to be efficient. In particular, corner solutions may arise when environmental production functions are convex but are also possible under ‘well behaved’ functions.

Suggested Citation

  • Hone, Simon, 2011. "Corner solutions in the allocation of environmental water: an application of inframarginal economics," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100560, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare11:100560

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Thomas W. Hertel & Kyle Stiegert & Harry Vroomen, 1996. "Nitrogen-Land Substitution in Corn Production: A Reconciliation of Aggregate and Firm-Level Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 30-40.
    2. Kanlaya J. Barr & Bruce A. Babcock & Miguel A. Carriquiry & Andre M. Nassar & Leila Harfuch, 2011. "Agricultural Land Elasticities in the United States and Brazil," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(3), pages 449-462.
    3. Jette Jacobsen & Nick Hanley, 2009. "Are There Income Effects on Global Willingness to Pay for Biodiversity Conservation?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 137-160, June.
    4. Neumann, Kathleen & Verburg, Peter H. & Stehfest, Elke & Müller, Christoph, 2010. "The yield gap of global grain production: A spatial analysis," Agricultural Systems, Elsevier, vol. 103(5), pages 316-326, June.
    5. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
    6. Ahmed, Syud Amer & Diffenbaugh, Noah S. & Hertel, Thomas W. & Ramankutty, Navin & Rios, Ana R. & Rowhani, Pedram, 2009. "Climate Volatility and Poverty Vulnerability in Tanzania," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49358, Agricultural and Applied Economics Association.
    7. Sohngen, Brent & Brown, Sandra, 2006. "The influence of conversion of forest types on carbon sequestration and other ecosystem services in the South Central United States," Ecological Economics, Elsevier, vol. 57(4), pages 698-708, June.
    8. Seale, James & Regmi, Anita & Bernstein, Jason, 2003. "International Evidence on Food Consumption Patterns," Technical Bulletins 184321, United States Department of Agriculture, Economic Research Service.
    9. Hertel, Thomas W. & Tyner, Wallace E. & Birur, Dileep K., 2008. "Biofuels for all? Understanding the Global Impacts of Multinational Mandates," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6526, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Golub, Alla & W. Hertel, Thomas, 2008. "Global Economic Integration and Land Use Change," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 463-488.
    11. Barbier, Edward B., 1997. "Introduction to the environmental Kuznets curve special issue," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 357-367, November.
    12. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers Archive 12881, Iowa State University, Department of Economics.
    13. Jan Fidrmuc & Peter Huber, 2007. "Introduction," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(4), pages 281-286, September.
    14. Lubowski, Ruben N. & Plantinga, Andrew J. & Stavins, Robert N., 2006. "Land-use change and carbon sinks: Econometric estimation of the carbon sequestration supply function," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 135-152, March.
    15. Golub, Alla & Hertel, Thomas & Lee, Huey-Lin & Rose, Steven & Sohngen, Brent, 2009. "The opportunity cost of land use and the global potential for greenhouse gas mitigation in agriculture and forestry," Resource and Energy Economics, Elsevier, vol. 31(4), pages 299-319, November.
    16. Keeney, Roman & Hertel, Thomas, 2008. "The Indirect Land Use Impacts of U.S. Biofuel Policies: The Importance of Acreage, Yield, and Bilateral Trade Responses," GTAP Working Papers 2810, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    17. Beckman, Jayson F. & Livingston, Michael J. & McBride, William D. & Ribaudo, Marc & MacDonald, James M., 2009. "The Extent and Characteristics of Manure Use on U.S. Cropland under Rate Restrictions," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49172, Agricultural and Applied Economics Association.
    18. Ahmed, Syud Amer & Thomas Hertel & Ruben Lubowski, 2009. "Calibration of a Land Cover Supply Function Using Transition Probabilities," GTAP Research Memoranda 2947, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    19. Hertel, Thomas & Rose, Steven & Tol, Richard, 2008. "Land Use in Computable General Equilibrium Models: An Overview," GTAP Working Papers 2595, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Environmental Economics and Policy;

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aare11:100560. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.