Agricultural externalities and environmental regulation: evaluating good practice in citrus production

Andres Picazo-Tadeo and Ernest Reig-Martínez ()

Applied Economics, 2006, vol. 38, issue 11, 1327-1334

Abstract: Economic activity takes place in a scenario characterized by an increasing number of environmental regulations aimed at bringing under control the emission of contaminating wastes. In this paper, we evaluate the impact of transforming a code of good practice in nitrogen fertilization on Spanish citrus fruit farms into an environmental regulation of compulsory fulfilment. Using data envelopment techniques, we calculate unrestricted and environmentally regulated short-run maximum profits. Both profit values are then used to compute an index of the cost of regulation. Our results suggest that the cost of shifting from a merely recommended practice to a binding rule is low. On average, the loss of profit computed is only about 4%. Furthermore, we find that farms' overall efficiency is low and that the current gap between observed and regulated fertilization practices could be overcome by improving overall management efficiency.

Date: 2006
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DOI: 10.1080/00036840500399966

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