Projects Funded for Julian Alston

2017-2018

Home-Grown Capital and Productivity in California Agriculture

2016-2017

Economics of Precision Agriculture in High-Value California Crops

2012-2013

California's Air Quality Regulations on Dairies: Multiple Environmental Externalities and Interactions of Regulations

Abstract

Specific Objectives of the Project

We will study the economic effects of California's air quality regulations on dairies and provide insights into the future design of environmental policy related to the livestock sector. This research will make four contributions. First, we will identify consequences of local air quality regulations on dairies for ambient air concentrations of ozone and particulate matter. Second, we will estimate the economic cost of local air quality regulations borne by dairies in the South Coast Air Basin and San Joaquin Valley. Third, we will investigate the interactions between air quality and water quality regulations and empirically test whether these different regulations are complementary or incompatible. Fourth, our research will shed light on cost-effective approaches to regulate environmental extern alities from livestock.

Summary of Results

California dairy farms have experienced hard times in recent years. In addition to changes in market conditions in both input and output markets, the burden of environmental and other regulations has been mentioned as a culprit. This research examines the effects of a local air quality regulation on the costs of milk production for dairy farms in the San Joaquin Valley in California. Unlike previous analysis of the effects of environmental regulations on ag ricultural production, in this work it was possible to identify the realized operational changes associated with abiding by the regulation. Estimated adoption rates of different pollution-mitigation practices reveal that dairy farms have adopted labor-intensive production practices to comply with the air quality regulation. Using farm-level cost data on a panel of dairy farms, the effects of the regulation on the costs of milk production were estimated. Different from ex-ante analyses, my econometric results indicate that the air quality regulation has not affected the total costs of milk production. Estimates from different specifications indicate that the regulation may have reduced feed costs during some periods, perhaps because some pollution-mitigation practices can reduce feed fermentation. The regulation has increased the costs of hired labor by about $0.15 per hundredweight of milk, which is equivalent to an 11% increase in hired labor costs for dairy farms facing the regulation.

2011-2012

Economic Impacts of California's Greenhouse Gas Cap-and-Trade Program on Dairy Industry

Abstract

The objective of the research is to simulate how the greenhouse gas (GHG) cap-and-trade program will affect the dairy industry in California, including both dairy farms and dairy product manufacturers. The simulation analysis of the effects of the GHG cap-and-trade program indicates that carbon pricing leads to (a) higher prices of dairy products and lower energy use, and (b) lower prices of milk when the output-market equilibrium effect dominates the factor substitution effect, and vice versa. The magnitudes of the changes in the equilibrium prices and quantities depend primarily on the elasticity of milk supply, the own-price elasticity of demand for manufactured dairy products, and the elasticity of substitution between milk and energy in the production of manufactured dairy products. Results imply a generally small influence of dairy policies. The existence of dairy policies lowers the potential welfare gains for consumers of fluid dairy products from carbon pricing.

2010-2011

Some Economic Impacts of California's Greenhouse Gas Cap and Trade Policies

Abstract

Specific Objectives of the Project

The objective of the research is to simulate how the greenhouse gas (GHG) cap-and-trade program will affect the dairy industry in California, including both dairy farms and dairy product manufacturers. The simulation results will demonstrate the changes in carbon emissions, production and product portfolio, profits, and competitiveness. We will develop theoretical models to capture both the horizontal competition between California's dairy products and the products manufactured by other states that will not adopt climate policy any time soon and the vertical relationship between California's dairy product manufacturers and dairy farms. To calibrate the economic impacts, we will estimate the carbon intensities of the dairy producers in California and the rest of the country, and the demand elasticities of dairy products.

Summary of Results

The simulation analysis of the effects of the GHG cap-and-trade program indicates that carbon pricing leads to (a) higher prices of dairy products and lower energy use, and (b) lower prices of milk when the output-market equilibrium effect dominates the factor substitution effect, and vice versa. The magnitudes of the changes in the equilibrium prices and quantities depend primarily on the elasticity of milk supply, the own-price elasticity of demand for manufactured dairy products, and the elasticity of substitution between milk and energy in the production of manufactured dairy products. Results imply a generally small influence of dairy policies. The existence of dairy policies lowers the potential welfare gains for consumers of fluid dairy products from carbon pricing.

2008-2009

The Economics of Alternative Strategies for the Management of Pierce's Disease in the California Wine Grape Industry

Abstract

Specific Objectives of the Project

The overall objective of the proposed research is to develop a detailed, practical, quantitative understanding of the economic consequences of Pierce's disease and alternative management strategies.More specific objectives are to quantify the economic impact of the disease, to evaluate alternative management strategies including alternative research investments, and to guide policy decisions, including research priorities. To pursue these objectives we propose to develop an economic model of the California wine and wine-grape sector that can be used to simulate market outcomes under scenarios with varying prevalence of Pierce's disease and alternative technologies and policies. We can thus assess the economic consequences of these alternative technologies and policies for various stakeholder Groups. Our model will be designed with a view to using it to assess the benefits from alternative types of new technologies that might be developed from new research investments, as well as alternative management strategies based on currently available knowledge and technology.

Summary of Results

We address economic questions related to Pierce's Disease (PD) by developing a model of the supply and demand for California wine grapes. Drawing on advice from scientists who study the disease, combined with information gleaned from interviews with vineyard managers, we have modeled the problem of the Blue-Green Sharpshooter (BGSS) in Northern California, and the Glassy-Winged Sharpshooter (GWSS) in Southern California, the main vectors of PD in wine grapes. The results from this work have been incorporated into a multi-year, multimarket supply and demand simulation model of regional wine grape production in California. This model will be used to evaluate the impact of alternative PD/GWSS management strategies and the likely benefits from investments in alternative R&D projects related to the management of PD/GWSS. Research products from this project include graduate student orals, prospectus, and dissertation essays, and several conference papers and posters. Work for formal publication is underway.

2007-2008

Public Research for California Specialty Crops

2006-2007

Does the USDA Make Us Fat?

2005-2006

Inputs, Outputs, and Productivity in California Agriculture: Data Development and Initial Analysis

2004-2005

Costs of Technological Regulation of Biotech Crop Varieties

2003-2004

Pro-Cyclical Productivity Patterns in California Agriculture

2002-2003

Antibiotics and Agriculture: Theory, Measures, and Implications of Antibiotic Resistance for the Social Benefits and Costs of Intensive Livestock Production Technologies

2001-2002

The Payoff to UC Pest Management Research and Extension

The Full Economic Consequences of Generic Advertising: Theory and Application to California's Mandated Marketing Programs

2000-2001

Beggar-thy-Neighbor Generic Advertising--Theory and Application to California's Mandated Commodity Program

1999-2000

Incorporating Quality Effects in Policy Analysis: Excise Taxes on California Wine

1998-1999

Technology Spillovers and California Agriculture