Master's Thesis Award of Merit
Multifunctionality refers to the ability of agricultural systems to produce an array of non-market goods and services in addition to market commodities. This thesis focuses explicitly on the provision of environmental benefits, through reduced soil erosion and fertilizer applications, by agricultural producers. Soil erosion and nutrient contamination from agricultural production are the foremost contributors to ground and surface water degradation in the United States. Reducing their production implies gains in social welfare, but may generate significant private losses to producers. The objective of this analysis is to quantify the trade-off between environmental improvements and producer welfare and to examine the extent to which public policy can influence that trade-off.
To address this objective, a land use allocation model is constructed using slope to reflect terrain heterogeneity. The model is formulated as a mathematical programming problem by building upon the Takayama and Judge framework, with the objective of maximizing producer welfare subject to an exogenous land endowment and a series of production constraints. The model developed in this thesis differs from previous empirical modes in several substantive ways. First, crop and livestock production activities are explicitly modeled as either separable or nonseparable activities. Doing so gives the model the flexibility to choose the optimal degree of integration between the two. The model also diverges from previous studies by incorporating a common set of variables that affect the economic and environmental aspects of commodity production. …