AGRICULTURE AND THE ENVIRONMENT

The distinctive nature of environmental quality problems in agriculturean industry based on the extraction of highly variable natural resources under stochastic conditionshas important implications for policy design. First, we examine the source of environmental quality problems and the strength of incentives for resource stewardship that may incidentally induce farmers to protect environmental quality. In turn, we examine environmental policy design under two features that are pervasive in agriculture: (1) heterogeneity caused by resource variability and (2) uncertainty. Next, we examine the effects of interactions between agricultural, environmental, and resource policies. Finally, we review important areas for further research.