This paper adopts a real options framework to evaluate the cost-effectiveness of four types of subsidies that aim to encourage a socially desirable land use under return uncertainties and costly reversibility of land use change. We first present a land conversion model to show how the subsidies...

We study a farmer’s decision to convert traditional crop land into growing dedicated energy crops, taking in account sunk conversion costs, uncertainties in traditional and energy crop returns, and learning. The optimal decision rules differ significantly from the expected net present value...

Intrasectoral issues have received relatively little attention in analysis of the distributional consequences of natural resource policy decisions. This paper presents a framework for such analysis and examines how intrasectoral issues can change intertemporally, focusing on water policy in...

We use a smooth transition vector error correction model to assess price relationships within the US ethanol industry. Daily ethanol, corn and oil futures prices observed from mid-2005 to mid-2007 are used in the analysis. Results indicate the existence of an equilibrium relationship between...

Most existing economic analyses of optimal groundwater management use single-cell aquifer models, which assume that an aquifer responds uniformly and instantly to groundwater pumping. This paper demonstrates how spatially explicit aquifer response equations from the water resources engineering...

Agricultural shallow groundwater extraction can result in desiccation of neighbouring nature reserves and degradation of groundwater quality in the Netherlands, whereas both externalities are often not considered when agricultural groundwater extraction patterns are being determined. A model is...

The cost-effectiveness of alternative green payment policies designed to achieve a targeted level of abatement by heterogeneous microunits is analyzed. Abatement costs and implications for production and government payments are compared using a simulation model for controlling drainage from...

The dynamics of biomass growth implies that the yield of irrigated crops depends, in addition to the total amount of water applied, on irrigation scheduling during the growing period. Advanced irrigation technologies relax constraints on irrigation rates and timing, allowing to better adjust...