Measuring the Marginal Cost of Nonuniform Environmental Regulations

David Sunding

American Journal of Agricultural Economics, 1996, vol. 78, issue 4, 1098-1107

Abstract: A method is presented for measuring the marginal welfare cost of environmental regulations affecting agriculture. The method incorporates output market effects and recognizes diversity in production conditions among crops, regions, and seasons. An important advantage of the method is that only regional outputs and changes in regional production costs are needed to calculate deadweight loss, thus simplifying the measurement of welfare changes. This feature of the model is significant since the complexity and substantial data requirements of most existing impact models cause many environmental regulations to be enacted with inadequate analysis of their economic impacts. The method also disaggregates welfare impacts by crop, place, and time, thus encouraging the implementation of nonuniform interventions that achieve a given level of environmental quality more efficiently than uniform policies. Copyright 1996, Oxford University Press.

Date: 1996
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