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Valuing the Absence of Feral Swine for US Corn, Soybean, Wheat, Rice, and Peanut Producers and Consumers. A Partial Equilibrium Approach

Jason Holderieath

No 235867, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: Conflicts between humans and wildlife are manifestations of inevitable divergences between human interests and wildlife presence and survival. Those conflicts can range from property damage to threatening and predatory behavior (USDA APHIS 2015). In the US, considerable financial resources are dedicated to managing human-wildlife conflicts. In 2014, the USDA allocated $106 million to the Wildlife Services division of the Animal and Plant Health Inspection Service for a portion of the federally funded human-wildlife conflict mitigation efforts (USDA 2015). Among policy makers and researchers interested in human-wildlife conflicts, one species of particular recent interest is feral swine. The USDA has dedicated $20 million to support the ambitious goals to "eliminate feral swine from two States [sic] every three to five years and stabilize feral swine damage within 10 [sic] years" and to these and supporting efforts (Bannerman and Cole 2014). Feral swine are known to cause damage to crops among other types of property damage. Pimentel, Zuniga, and Morrison (2005) is the only publication with a nationwide estimate of feral swine damage in the US, estimating $800 million in crop and environmental damages per year. Damage estimates such as Pimentel, Zuniga, and Morrison (2005) are part of the foundation of knowledge required to arrive at an economic value of removal. However, they do not reflect a more complex reality. When crops are damaged, the quantity available to be brought to market decreases. Markets adjust to the lower quantities with higher prices. Farms suffering damage have less to sell at higher market prices and farms that do not suffer damage have the same quantity at higher market prices. Welfare measures such as changes in producer and consumer surplus describe if individuals are better or worse off from a given policy action or market change. To-date, there are no studies that assess the welfare implications of feral swine crop damage. To address this need in the literature we ask, what are the welfare effects to US crop producers and consumers from an immediate removal of feral swine in nine of the hardest hit states in the southeastern US? Additionally, what would be the distribution of those effects among consumers and farmers in different states? A partial equilibrium model is built based on historical production data in all US counties with a crop insurance program for Corn, Soybeans, Wheat, Rice, and Peanuts from USDA NASS, feral swine presence data from USDA APHIS, and feral swine damage estimates from a recent USDA survey conducted in Alabama, Arkansas, California, Florida, Georgia, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, and Texas. This model is used to create a counterfactual to the current reality of feral swine damage to value the absence of feral swine in the previously mentioned states. One framework for measuring the effects of feral swine crop damage is an Equilibrium Displacement Model (EDM). The EDM is a linear abstraction of supply and demand functions that describe the transition from one equilibrium to another without defining an exact functional form (Wohlgenant 2011; Wohlgenant 1993). The versatility of the EDM has allowed them to be used to examine export demand effects on grain, feed products, and livestock using genetically modified organisms (Preckel, Harrington and Dubman 2002), returns to public research (Alston, Norton and Pardey 1995), welfare effects of the Washington State University wheat breeding program (Nogueira et al. 2015), country of origin labeling (Brester, Marsh and Atwood 2004), and animal disease outbreaks (Pendell et al. 2007), among other uses. These varied applications are made possible by the flexibility inherent to the EDM. The literature has examples of EDMs with more than one product and location to serve as examples. Perrin and Scobie (1981) use an EDM with both multiple markets and price wedges to study the options for increasing nutrient consumption among Colombia's poor. More recently, Wohlgenant (2011) detailed several different variants of EDMs with multiple products and markets including vertical integration and joint products. Alston, Norton, and Pardey (1995) described several variants of EDMs with multiple markets including products related in consumption and products related in production as well as other models with multiple geographical markets. Nogueira et al. (2015) created a model that had both multiple products and multiple markets. Each of these models took a slightly different approach to measuring welfare changes. Our model closely follows the lead of Nogueira et al. (2015) in covering the products listed above in more than one place. Due to the price decrease resulting from the quantity increase, preliminary results indicate welfare losses for producers in states without feral swine, welfare gains or even losses for producers in states with feral swine, and unambiguous gains for consumers from a removal of feral swine damage. Final results will establish upper limits for what should be paid to control feral swine based on crop damage justification.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 42
Date: 2016
New Economics Papers: this item is included in nep-agr
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DOI: 10.22004/ag.econ.235867

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