Dynamic Models, Externalities and Sustainability in Agriculture

The goal of sustainability in the management of natural resources and agricultural systems has received increasing attention during the 1990's. The many dimensions of the problem have been extensively discussed in the literature and a recognition of the interaction between economic, biological and social objectives have led to an acceptance of its multidisciplinary nature. When studying sustainability in agriculture, two aspects which cannot be ignored are (i) any measure must include economic as well as biological criteria and (ii) the dynamic nature of the production system and the environment (both physical and economic) must be accounted for. The goal of sustainable agricultural practices at the microeconomic level is explored in this paper, in an attempt to link the individual producer behaviour to the regulatory environment. Particular attention is paid to the dynamic aspect in the context of a grazing system, where plant and animal populations interact with each other and are influenced by the environment. An optimal control formulation is used to discuss the alternative ways in which externalities (such as salinity, soil loss and fertiliser and chemical run-off) can be incorporated into a model. The problem of valuing externalities and the role of the discount rate on optimal management strategies are briefly discussed.(This abstract was borrowed from another version of this item.)