VALUING AGROFORESTRY IN THE PRESENCE OF LAND DEGRADATION

Agroforestry can help prevent land degradation while allowing continuing use of land to produce crops and livestock. A problem with the evaluation of agroforestry using long-run static models and traditional discounting techniques is that the present value of the forestry enterprise is generally much lower than that of other production activities. This problem is common with Australian native species which tend to have a high environmental value but a low market value. This paper presents an economic analysis of an agroforestry operation in land prone to degradation and in the presence of positive externalities provided by trees. The value of the land is estimated based on the present value of expected returns in perpetuity under optimal management. Simulation analysis is used to evaluate the loss in land value caused by dryland salinity. A nonlinear programming model is developed and used to study the effects of timber prices and forest planting costs on optimal forest area and the level of salinity. Elasticities of relevant variables with respect to prices and costs are derived and policy implications of results are discussed.agroforestry, land degradation, externalities, dryland salinity, Land Economics/Use,

Carbon markets, transaction costs and bioenergy

Payment for carbon sequestration by agriculture and forestry can provide incentives for adoption of sustainable agricultural practices. However, a project involving contracts with farmers may face high transaction costs in showing that net emission reductions are real and attributable to the project. This paper presents a model of project participation that includes transaction and abatement costs. A project feasibility frontier (PFF) is derived, which shows the minimum project size that is feasible for any given market price of carbon. The PFF is used to analyse how the design of a climate mitigation program may affect the feasibility of actual projects.Climate Policy, Greenhouse Effect, Carbon Sequestration, Agroforestry, Transaction Costs, Environmental Economics and Policy,

A comparison of data mining methods for mass real estate appraisal

We compare the performance of both hedonic and non-hedonic pricing models applied to the problem of housing valuation in the city of Madrid. Urban areas pose several challenges in data mining because of the potential presence of different market segments originated from geospatial relations. Among the algorithms presented, ensembles of M5 model trees consistently showed superior correlation rates in out of sample data. Additionally, they improved the mean relative error rate by 23% when compared with the popular method of assessing the average price per square meter in each neighborhood, outperforming commonplace multiple linear regression models and artificial neural networks as well within our dataset, comprised of 25415 residential properties.mass appraisal, real estate, data mining

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.sustainability, dynamic modelling, bioeconomics, Environmental Economics and Policy, Livestock Production/Industries, Resource /Energy Economics and Policy,

Abatement and Transaction Costs of Carbon-Sink Projects Involving Smallholders

Agroforestry projects have the potential to help mitigate global warming by acting as sinks for greenhouse gasses. However, participation in carbon-sink projects may be constrained by high costs. This problem may be particularly severe for projects involving smallholders in developing countries. Of particular concern are the transaction costs incurred in developing projects, measuring, certifying and selling the carbon-sequestration services generated by such projects. This paper addresses these issues by analysing the implications of transaction and abatement costs in carbon-sequestration projects. A model of project participation is developed, which accounts for the conditions under which both buyers and sellers would be willing to engage in a carbon transaction that involves a long-term commitment. The model is used to identify critical project-design variables (minimum project size, farm price of carbon, minimum area of participating farms). A project feasibility frontier (PFF) is derived, which shows the minimum project size that is feasible for any given market price of carbon. The PFF is used to analyse how the transaction costs imposed by the Clean Development Mechanism of the Kyoto Protocol affect project feasibility.Agroforestry, Climate Policy, Carbon Sequestration Costs

A Positivist Approach to Pigouvian Taxes based on an Evolutionary Algorithm

Pigouvian tax, pollution tax, genetic algorithm, political preferences, Environmental Economics and Policy, Political Economy,

Management Options for the Inland Fisheries Resource in South Sumatra, Indonesia: I Bioeconomic Model

The inland fishery in South Sumatra, Indonesia, is an important source of income, employment and protein to small-scale fishers. Some overall indicators, such as virtual disappearance of certain important species and continuous reduction in the size of harvested fish, indicate that the fishery is not being exploited on a sustainable basis. In this study, an evaluation of the status of the existing fish stock is undertaken, and an analytical model for identifying efficient levels of exploitation of the fishery is developed. Primary data are used to describe the current costs of fishing effort. Secondary data, combined with results of analysis of primary data, are then used to derive a supply function for the fishery. Different types of fishing gear are standardised into a single type of fishing unit, and mixed species of harvested fish are treated as an aggregated fish stock. Empirical results reveal that both riverine and swamp fisheries in South Sumatra were biologically and economically over-fished during the period of study. This implies that regulation is required to reduce the level of fishing effort.smallholder fisheries, bioeconomic analysis, Inland fisheries, Indonesia, Sumatra, Resource /Energy Economics and Policy,

Alternative Price Expectation Formulation and Information Access

Demand and Price Analysis,

A Dynamic Optimisation Model of Weed Control

It is argued in this paper that static approaches to weed management, where the benefits and costs are only considered within a single season, are inappropriate for assessing the economic benefits of weed control technologies. There are carryover effects from weed management as weeds that escape control in one season may reproduce and replenish weed populations in following seasons. Consequently, it is appropriate to view weed control in the context of a resource management problem where the goal is to determine the optimal inter-temporal level of weed control that maximises economic benefits over some pre-determined period of time. A dynamic optimisation model for weed control is presented. Using the tools of comparative static analysis and Pontryagin's maximum principle, the conditions for optimal input use (ie weed control) are compared for static and dynamic situations. It is shown that a higher level of input use for a given weed population is optimal using a dynamic framework than would be derived under a static framework. The analysis is further extended by the incorporation of uncertainty and shows that the optimal level of weed control is also affected by uncertainty in herbicide efficacy and the survival of weed seeds produced. A case study of the optimal long-term management under deterministic and stochastic conditions of an annual cropping weed, Avena fatua, is presented.weed control, resource economics, optimal control, dynamic programming, wild oats, Farm Management,