Essays on Industrial Organization and Environmental Economics

This dissertation studies environmental regulation issues in the hog production industry as well as forces behind the reorganization of the industry during the past two decades. Federal and State-level environmental regulations imposed on U.S. hog production during the year 2003 are examined in Chapter 1. Based on the number of regulations passed by the Federal government and states, the 2003 regulatory index is constructed. The regulatory stringency index suggests that state-level regulations vary across states and have increased over the years. In addition, state-level regulations are more stringent than federal regulations. Chapter 2 develops an empirically implementable theoretical model which allows us to investigate the long-run effects of environmental regulations on the U.S. hog industry. Hog feeding operations (HFOs) are divided into large feeding operations (LHFOs) and small feeding operations (SHFOs). The impact of the presence of a large number of LHFOs on the entry and exit of CHFOs is also examined. Results of this study suggest that: Increased state-level regulation stringency significantly lowers the output of SHFOs; increased state-level regulation stringency significantly lowers the output of LHFOs; increased state-level regulation stringency significantly lowers the number of SHFOs; SHFO output rises significantly in states that have a greater number of LHFOs; LHFO output rises significantly in states that have a greater number of LHFOs; the number of SHFOs significantly increases in states that have a greater numbers of LHFOs; regulation increases the average SHFO size; and regulation decreases the average LHFO size. Chapter 3 examines the importance of input availability, market attractiveness, agglomeration economies and environmental regulations on the reorganization of U.S. hog production for a panel of 22 U.S. hog producing states which include, Northern states, Southern states and Midwest states for the period 1994-2006. Results from this study suggest that: Hog production in a state is positively affected by hog production in a nearby state, confirming the presence of agglomeration economies; Environmental regulations and high corn price have negative effects on state-level U.S. hog production; High hog prices, and favorable labor cost, and land values attract hog production; and transportation cost has no effect on hog production. Advisors: Azzeddine Azzam and Karina Schoengold

Agricultural Economics: The Year In Review

Undergraduate programs continue to be a mainstay for the Department of Agricultural Economics. In an ongoing effort to match our offerings with the market demands for our graduates, we have implemented four new options in the Natural Resources and Environmental Economics major. This, combined with the options in the Agribusiness and Agricultural Economics majors allows students to customize their program to meet particular career goals. As a result of diligent efforts by faculty and staff, student enrollment for fall semester 2008 increased by 13.2 percent over the 2007 fall semester. This increase was greater than the College average.

The Economics of Threatened Species Conservation: A Review and Analysis

Stabilizing human population size and reducing human-caused impacts on the environment are keys to conserving threatened species (TS). Earth's human population is ~ 7 billion and increasing by ~ 76 million per year. This equates to a human birth-death ratio of 2.35 annually. The 2007 Red List prepared by the International Union for Conservation of Nature and Natural Resources (IUCN) categorized 16,306 species of vertebrates, invertebrates, plants, and other organisms (e.g., lichens, algae) as TS. This is ~ 1 percent of the 1,589,161 species described by IUCN or ~ 0.0033 percent of the believed 5,000,000 total species. Of the IUCN’s described species, vertebrates comprised relatively the most TS listings within respective taxonomic categories (5,742 of 59,811), while invertebrates (2,108 of 1,203,175), plants (8,447 of 297,326), and other species (9 of 28,849) accounted for minor class percentages. Conservation economics comprises microeconomic and macroeconomic principles involving interactions among ecological, environmental, and natural resource economics. A sustainable-growth (steady-state) economy has been posited as instrumental to preserving biological diversity and slowing extinctions in the wild, but few nations endorse this approach. Expanding growth principles characterize most nations' economic policies. To date, statutory fine, captive breeding cost, contingent valuation analysis, hedonic pricing, and travel cost methods are used to value TS in economic research and models. Improved valuation methods of TS are needed for benefit-cost analysis (BCA) of conservation plans. This Chapter provides a review and analysis of: (1) the IUCN status of species, (2) economic principles inherent to sustainable versus growth economies, and (3) methodological issues which hinder effective BCAs of TS conservation.

Variation of Environmental Regulation Stringency Among the Top Ten U.S. Hog Producing States

The U.S. hog industry, once primarily made up of small owner-operated crop-hog farms, has become dominated by large specialized operations characterized by low costs and improved technologies in livestock management. Such changes have triggered concerns over the dangers large Hog Feeding Operations (HFOs) are likely to pose to the environment. In 2007, the top ten states accounted for more than 85 percent of total U.S. hog production (Iowa (IA), North Carolina (NC), Minnesota (MN), Illinois (IL), Nebraska (NE), Indiana (IN), Missouri (MO), Oklahoma (OK), Ohio (OH), and Kansas (KS)). With such domination on production, these states are often the subject of environmental debate relating to hog production. When farmers are required to incorporate environmental measures in hog production, their costs of production increase. Metcalfe (2001) found that small HFOs have found it difficult to cope with such costs and many have exited the industry, while large operations have not been affected at the same level. Due to the variation of environmental regulations among states, other operations moved to states with lax regulations (e.g. NC prior to the late 1990s). Such regulations appear to have played a major role in shaping the structure of the hog industry.