An abstract is not available for this content so a preview has been provided. As you have access to this content, a full PDF is available via the ‘Save PDF’ action button.
Major plant construction projects represent a large part of a typical utility's rate base and construction cost overruns are a perennial problem associated with these projects. The conventional approach to prevent overruns is direct regulatory oversight by a regulatory commission. Yet this approach fails to provide on-going incentives for the most cost effective decisions by the utility. This article contrasts an incentive method of regulation, which inversely relates the rate of return granted by the regulatory agency with the level of overruns incurred, with conventional rate regulation. A discounted cash flow simulation model is employed based on data from an electric generation project currently under construction in Central New York.
Costs involved in double-bottoms (tandem trailers) and TOFC (trailer-on-flatcar; piggyback) were modeled and compared with conventional over-the-road transport of bulk milk from northern Vermont in single trailers. Both modes were found to be both cost-effective and fuel-sparing alternatives to conventional transport.Since the study's completion, although not as a direct result of it, two shippers have adopted these innovations. One of them (using double-bottoms) has budgeted savings even larger than those claimed in our study.
The Northeast region with nearly 25 percent of the U.S. population and purchasing power in 1983 is a deficit region in both processing and fresh market vegetable crops. This study explores the underlying factors in the long post-World War II decline in Northeastern vegetable production. It evaluates the economic viability of small-scale, family operated vegetable farms with emphasis on Maryland and the Baltimore-Washington Wholesale Market outlet near Jessup, Maryland.Preliminary results of our study indicate that, under certain conditions, small-scale family farms can grow and commercially market fresh-market vegetables at competitive prices, and generate healthy cash flows. The optimum mix of crops would include up to three, non-competing crop sequences, with four different vegetable crops including spinach, snap beans, tomatoes and broccoli. Family (owner-operator) labor was found to be a major resource constraint on volume of vegetables marketed, especially tomatoes. Potentials for future expansion in selected crops seem to exist with improved technology and better management.
Logit analysis is used to evaluate the performance of the zoning body in Frederick County, Maryland, in terms of its statutory policy objectives. Models are formulated to test the hypothesis that the rezoning process is consistent with the guidelines specified in the County Zoning Ordinance. An analysis of 59 requests for rezoning from agricultural to other uses indicates that, in general, both the Planning Commission staff and the County Commissioners conform to the Ordinance. At the Commissioners’ level, a development bias in favor of industrial use was found. The methodology may also be used to forecast the probability a particular rezoning request would be approved.
Given the relative importance of the Chesapeake Bay hard blue crab fishery to the U.S. blue crab fishery, this paper analyzes ex-vessel prices for hard blue crabs landed in this region. The purpose is to evaluate alternative methods of forecasting ex-vessel prices for hard blue crabs in the Bay; both individual methods (trend extrapolation, econometric, and time-series) and composite methods. Examining the mean squared errors for the individual methods, the time-series model performs the best, with the econometric model slightly better than the trend extrapolation model. None of the composite methods outperforms the time-series model, although in some cases the differences are slight. Nevertheless, the time-series trend extrapolation composite outperforms all other models in identifying turning points. Generally speaking, it would appear that ex-vessel prices for hard blue crabs possess strong time dependencies, and consequently, better forecasts occur with time-series models than with econometric models.
This study empirically compares the retirement values of dairy farm investments to tax-deferred retirement investments that are funded with bank certificates of deposit or common stock. For a successful dairy farm, the results indicate that tax-deferred retirement plans that generate rates of return similar to certificates of deposit or common stock mutual funds are probably not as good an investment as reinvesting farm earnings back into the farm business.
Estimates of regional adult equivalence scales for convenience foods were obtained using the model developed by Buse and Salathe and using data from the 1977–78 Nationwide Food Consumption Survey. Wide disparities exist in scale values among regions, controlling for other factors, suggesting that age-sex composition of households have differential impacts on convenience food expenditures.
The implicit price (hedonic) equation for the housing market in a coastal town in southern Rhode Island was estimated using a conditional Box-Cox maximum likelihood procedure. Linear, log-linear, and semi-log functional forms were rejected with 95% confidence. Estimates of marginal implicit prices for water related attributes (view of, frontage on, and proximity to a coastal salt water pond) derived from these rejected models were quite different from those determined from the optimal functional form. This result has important ramifications for public policy, as is shown in an example, since these attributes were found to be highly valued in the housing market.
Rural residents, particularly recent in-migrants, are often characterized by preferences for a tranquil rural lifestyle based on the attributes of an open countryside. A survey of residents of an isolated rural county in West Virginia was conducted to explore the proposition that recent rural in-migrants are more opposed to the growth of natural resource based activities which are detrimental to the rural countryside than are long-term residents of the County. The hypothesis was not supported, as both recent in-migrants and long-time residents strongly favored economic development of the County's natural resources over preservation of the natural countryside.
This study develops a simple model to forecast the basis for corn in a specific region. Improved forecasts can improve hedging decisions. Basis behavior, however, depends on explanatory variables that are themselves difficult to forecast with precision. This limits the usefulness of the basis model, but it does offer some benefit over naive forecasts.
In agricultural commodity modeling, the time period since 1973 has presented estimation problems due to sudden large increases in product and input prices. Among factors contributing to these price increases are the 1973 oil embargo, grain trade with the Soviet Union and decreased yields for some crops due to severe weather conditions. The presence of such extreme values (i.e., large price increases) can obviously affect modeling results when deriving such relationships as supply equations or demand equations.
A five-year linear programming farm planning model, permitting the inclusion of nitrogen decay rates, was constructed to include the use of sewage sludge as a primary crop nutrient source. Twenty-two scenarios depicting various operating conditions were examined and maximized net farm incomes compared.Although only a small percentage difference resulted between the highest and the lowest net revenues over the five-year period, given a variety of operating circumstances, those scenarios including the use of sludge yielded the highest net incomes. Nitrogen application restrictions were at their upper limits when sludge use was included in the optimal solution. The calculation of net present values, for the two sludge contents considered, provided value estimates compatible with the linear programming solutions.
Models are developed to examine the determinants of weekly truck rates for produce shipped to the Northeast from California and Florida. In the empirical work, a large proportion of the variation in rates is explained and the estimated parameters are generally consistent with a priori expectations. The total quantity of produce shipped from each state, the proportion of this total which is compatible with the commodity in question, and the F.O.B. price if the commodity were found to be the most important determinants of truck rate levels. Fuel costs have a surprisingly weak influence, at least in the short run, and for Florida origin commodities the truck rate-fuel cost relationship appears to have weakened over the 1979–1983 sample period.
Expenditure patterns for whole milk and lowfat milk in the Northeast region were examined by applying the Tobit maximum likelihood procedure to the 1977–78 USDA NFCS data.Results suggest that differing expenditure patterns exist between whole milk and lowfat milk. Household income estimates indicate significant positive effects on expenditure for lowfat milk but negative on expenditure for whole milk. Whole milk expenditure was estimated to be strongly related to the family life cycle stages through the child-raising years.
Cow-calf enterprises in the Northeastern United States are generally small and often the only agricultural enterprise of families with large off-farm incomes. In this paper, the economic viability of cow-calf enterprises to these investors is considered using a representative farm/economic engineering approach. Investments in farm real estate that is characterized by limited capability soil resources are found to yield negative labor and management incomes but to be economically viable when change in net worth and present value of family after-tax income are considered.
Leasing of agricultural land is gaining in importance in North America. The impact of leasing on soil management practices is examined in an area in the Canadan province of Ontario. Prevailing land contracts are insecure and the rental land market appears to be imperfect in the area. Under these conditions leasing leads to undesirable soil management practices and consequently to a lower state of conservation and to lower crop productivity over time. A difference in soil management and crop productivity has been observed between owner-operated and rented land.
Insurance rates for crop yield protection programs have traditionally been calculated from county average yields. Where grower acreages and yields are not homogeneous, this approach leads to higher premiums and payouts and greater incidence of adverse selection. With individual grower data a production weighted rate premium calculation method can be used which avoids these problems. Furthermore, the definition of rate classes is not constrained to county boundaries. The additional complication of technical change is addressed and one solution is provided. Results are presented for the cranberry industry.
Agricultural land provides a variety of “nonmarket” services to the Commonwealth, including wildlife habitat, scenic vistas, and recreation. This study utilizes an iterative bidding game to estimate willingness-to-pay of residents of three central Massachusetts counties to preserve state agricultural land. Through the use of these data, estimates of the value of these nonmarket amenities are derived so that a fuller measure of the value of agricultural land can be obtained. This information may be useful to policy makers administering such programs as the Agricultural Preservation Restriction Act (Chapter 780) which are designed to arrest the conversion of Massachusetts farmland to urban uses.
In recent studies of erosion control in agricultural production it has been standard practice to use timeless or static models of agricultural production processes. In this paper implications of a dynamic model of agricultural production for erosion control decision making are compared to those of a static model. On the basis of this comparison it is suggested that future research on the economics of erosion control and erosion control policy may benefit from the use of dynamic modeling methods.
