Agricultural & Applied Economics: Inside Ag Econ
Redirection Proposals (Draft August 22, 2002)
ECONOMICS OF THE USE, MANAGEMENT AND CONSERVATION OF
WATER AND LAND RESOURCES IN THE STATE OF GEORGIA
Problem Statement:
The Farm and Security Act of 2002 expands the conservation titles of past farm bills with a new conservation security program, expanded conservation reserve programs and environmental quality incentives. These programs will allow Georgia farmers and agribusiness to better manage land and water resources to achieve economic growth and protect natural resources and the environment. Water quantity and quality constraints pose major challenges to economic growth, environmental protection and quality of life in the State of Georgia. Businesses in the state have suffered economic losses caused by shortages of water for use as productive inputs with agriculture being hit especially hard. From private wells going dry to lawns withering away in the summer heat, private homeowners also suffer economic and quality of life losses from water shortages. Water quality constraints are also a major issue throughout Georgia. Point and non-point water pollution sources that degrade drinking water quality directly impact human health. Degradation of stream, lake and coastal water quality also impact quality of life directly by constraining recreational and aesthetic uses of these water bodies. Local economies and quality of life suffer further as expenditures associated with water-based recreation and tourism decrease. Water quality regulations developed and enforced by government agencies indirectly impact quality of life by setting environmental constraints that businesses must meet and pay for by increasing product prices paid by consumers and(or) reducing production including perhaps moving their operations to other states or even countries.
As is the case with water, there is also not enough land in Georgia to completely satisfy all demands. Hence, there is growing competition for limited land in the state with land generally being allocated to the highest bidder. This competition and land use turnover has resulted in an accelerated loss of agricultural land in the state. Loss of agricultural land is a concern because of the resulting reduction in food and fiber production and associated jobs and income in the agricultural sector and the loss of open-space and other environmental benefits the general public attributes to farmland. Farmland protection studies indicate that one of the most effective means of conserving farmland is to pay farmland owners monetary incentives to keep their land in agriculture (for example, agricultural land conservation easements). Effective incentive programs for farmland protection, however, require accurate information on the value of agricultural land. Much research has been done and continues to be done on the determination of farmland values. This research is severely hampered by the inadequacies of the data and by confusion in the definition of the market for farmland. For example, when farmland sells to a homebuilder, the price paid does not reflect the value of the land for use in farming.
Objectives:
In order to make economically and environmentally sound land and water management decisions, private businesses, private individuals and organizations, and government agencies have an enormous need for information on the economic benefits and costs of alternative uses and allocations of water and land. The general purpose of this proposed project is to help fill information gaps related to the economic benefits and costs of water quality protection, water quantity use and conservation, and farmland use and conservation in the State of Georgia. The overall objective of the project is to develop a comprehensive educational program on the economic choices facing Georgia citizens with special emphasis on the new and expanded opportunities presented by both Federal (F&SA 2002) and state programs. This education program will draw on an applied research program with the following specific objectives:
1) Examine the most profitable means for businesses focusing on agriculture to obtain adequate water quantity for production while complying with federal and state water quality regulations;
2) Examine the most economical means for state and local governments to comply with federal and state water quality regulations subject to water quantity needs and demands;
3) Estimate the economic value of water quantity and quality in alternative uses to facilitate water allocation and water policy and project tradeoff analysis;
4) Investigate integrated approaches for managing watersheds to support economic growth and development while protecting environmental quality;
5) Apply unique research techniques including experimental economics to estimate farmland values, explore the underlying determinants of farmland value and identify the key factors in promoting farmland conservation;
6) Conduct research on community values and priorities related to farmland preservation and land uses to better understand the public demand for, and valuation of, farmland preservation, open space, and nearby agrarian land uses;
7) Extend research findings and recommended solutions to issues and problems related to land and water use, conservation and management to state clientele through an integrated research and extension outreach program utilizing extensive world wide web technology, distance learning and more traditional extension delivery mechanisms.
REDIRECTION FUNDS AMOUNT
PERSONAL SERVICES
Faculty (0.65 Ext) $ 53,235
Faculty (0.35 Res) $ 28,665
OPERATING
Research Operating $ 38,000
Extension Operating $ 2,000
TOTAL ESTIMATED COST $ 121,900
The thrust of the above position is to provide expertise and support to state and local governments, private businesses (e.g., agricultural firms), private individuals (e.g., land owers) and other interested state clientele (e.g., NGOs) in the analysis of the economic benefits and costs of decisions and policies related to the use, management and conservation of water and agricultural land. The person in this position, for example, would provide agricultural firms with information on the most economical means of meeting water quality regulations and would assist farmland owners with evaluating the economic pros and cons of farmland protection incentives and programs such as conservation easements. An extension position of this nature in the natural resource and environmental economics area was identified as a strategic priority for the Department of Agricultural and Applied Economics during the last CSREES review of the department and the CAES strategic planning process several years ago. Operating funds requested will support the above position and the research objectives of the project (e.g., costs of collecting data on water and land demand, supply and value and costs of implementing experimental economics sessions on farmland valuation and use decisions).
Cooperators:
Barry Barnett (AAEC, Research and Teaching), John Bergstrom (AAEC, Research and Teaching), Jimmy Bramblett (AAEC, Research and Extension), Terry Centner (AAE, Research and Teaching), Jeffrey Dorfman (AAEC, Research and Teaching), Cesar Escalante (AAEC, Extension and Research), Jack Houston (AAEC, Research and Teaching), Warren Kriesel (AAEC, Research, Teaching and Extension), Andy Keeler (AAEC and Institute of Ecology, Research and Teaching), Bill Givan (AAEC, Extension and Research), Curt Lacy (AAEC, Extension and Research), John McKissick (AAEC and Center for Agribusiness and Economic Development, Extension and Research), Jeff Mullen (AAEC, Research and Teaching), Tim Park (AAEC Research and Teaching), Mark Rissie (Agricultural Engineering, Extension and Research), Don Shurley (AAEC, Extension and Research), Nathan Smith (AAEC, Extension and Research), Ron Cummings (Georgia State University), Nancy Norton (Albany State University), Virgil Norton (Albany State University), and Laura Taylor (Georgia State University).
TIFTON MAJOR IN AGRISCIENCE AND ENVIRONMENTAL SYSTEMS:
AGRIBUSINESS MANAGEMENT
With approval by the Board of Regents of the new major in agriscience and environmental systems to be offered at the CAES Tifton campus, a faculty position in Agricultural and Applied Economics is needed to teach in the new program and to serve as its undergraduate coordinator. The position will focus on management, finance and marketing for agribusiness firms in the food and agricultural sector. This would be a tenure track position with 0.70 EFT instruction and 0.30 EFT extension.
Teaching responsibilities will emphasize undergraduate courses that focus on the firm-level management of agribusinesses. Teaching responsibilities would also include academic advising, student recruitment, job placement, coordinating internships, and involvement with student organizations. This position would be instrumental in implementing the new Tifton position.
This position will also conduct outreach (Extension) activities related to Georgia agribusinesses that would be of interest to industry or commodity groups. Such activities could include feasibility studies for new agribusiness ventures, market surveys, and educational programs related to business and marketing plans. This position will provide valuable connections with agribusinesses in South Georgia for CAES and its Center for Agribusiness and Economic Development.
REDIRECTION FUNDS AMOUNT
PERSONAL SERVICES
Faculty (.70 EFT Ins) $ 44,100*
Faculty (.30 EFT Ext) $ 24,570
Secretarial support (Ins) $ 12,000*
OPERATING SUPPLIES
Instruction Operating $ 9,000
Extension Operating $ 2,000
TOTAL ESTIMATED COST $ 91,670
* Salary on instruction portions of positions excludes benefits.
FOOD ECONOMICS:
MARKETING, MANAGEMENT, QUALITY, SAFETY AND SECURITY
Justification: The Griffin campus has become a leading institution in the area of food safety and new product engineering. Further, food quality, food safety and food security are issues of concern to the food distribution industry and to consumers alike. The number of issues in these areas outweighs the capacity of the faculty in the Department of Agricultural and Applied Economics to match the research and outreach needs. For example, the proposed food industry incubator, supported by the Department of Food Science and Technology, Griffin-Spalding governments, the Georgia Development Authority and the GRA calls for strengthening applied economic research and outreach.
Position description: This position would develop a research and outreach program in the area of consumer acceptance of new products and feasibility studies of new produce introductions. The program will include consumer studies of new products and highly modified foods. Cooperation with faculty from Food Science and Technology in the area of market testing of new products, sensory evaluation, and willingness-to-pay is expected. The outreach component will focus on the assisting businesses apply results of market research in managing the development and introduction of new food products with the emphasis on the implications of new product marketing to intra-firm resource management.
Another part of the position will focus on quality, safety and security. Among the issues to examine include the critical points of vulnerability in the food supply chain, especially during transportation and storage. Can they be specifically identified? What monitoring and measurement tools and techniques can be implemented? What is the cost to the industry and to the consumer to ensure a safe and secure supply of quality food? Two food industries crucial to Georgia's agricultural economy that lend themselves to analysis and scrutiny are the fresh produce (fruits and vegetables) and the poultry sectors. A collaborative effort among departments within the College of Agricultural and Environmental Sciences, as well as other colleges at the University of Georgia, is being encouraged. The Agro-Security Task Force has established a framework for this collaboration and has conducted an awareness workshop, including many state and federal agencies.
Collaborators within the College of Agricultural and Environmental Sciences:
Agricultural and Applied Economics: Wojciech Florkowski, Forrest Stegelin, Charlie Huang, Luanne Lohr, Steve Turner, Terry Centner, Greg Fonsah and Tim Park
Center for Agribusiness and Economic Development: John McKissick
Center for Food Safety and Quality Enhancement: Michael Doyle, Larry Beuchat
Food Science and Technology: Yen-Con Hung, Robert Shewfelt, William Hurst, Estes Reynolds
Horticulture: Darby Granberry
Poultry: Gene Pesti, Michael Lacy
REDIRECTION FUNDS AMOUNT
PERSONNEL SERVICES
Faculty (1 EFT Res) $ 81,900
Staff Support (Res) $ 5,000
TRAVEL (Res) $ 2,000
OPERATING SUPPLIES (Res) $ 2,500
TOTAL ESTIMATED COST $ 91,400
ECONOMICS OF NUTRIENT AND WASTE MANAGEMENT
Nutrient and animal waste management decisions have several important dimensions, including the rate, timing and method of field application, field preparation for application, off-field practices to mitigate runoff, and storage and handling practices. On the farm, the level and/or variability of economic returns to crop and livestock production may be affected by each of these dimensions. These same factors also have implications for the integrity of our natural resources and the quality of life off the farm. In response to concerns about the negative effects of agricultural nutrients and animal wastes on air and water quality, federal, state, and local governments have enacted legislation limiting the management options of agricultural producers. These limitations frequently generate additional costs to producers. Understanding the magnitude and distribution of these costs as well as the potential benefits associated with enacted and proposed regulations is essential to crafting regulatory standards and conditions in the public interest. Understanding the risk associated with the transmission of disease producing microbes on forages and crops produced with plant nutrients supplied by animal fecal material is critical in developing a sanitary biological nutrient system. Similarly, understanding the relationship between management practices and the level and variability of farm income is essential to the economic viability of the agricultural sector. To these ends, a comprehensive, multi-disciplinary research and extension program has been developed that includes the following components:
- Analysis of diverse state regulations pertaining to animal waste management to discern regulatory strategies appropriate and inappropriate for mitigating Georgia's pollution problems;
- Development of models to identify management practices consistent with environmental regulations that maximize net returns to poultry, livestock, dairy, and crop production;
- Estimation of costs required to comply with total maximum daily loads, and the impact of farm management, land use, and best management practices on nutrient and fecal coliform loadings in select watersheds throughout the state;
- Estimate risk of disease-born microbes transfer through forages and other crops when plant nutrients are supplied by animal fecal material.
- Analysis of the impact of changes in rules governing irrigation permits on cropping patterns, the geographic and temporal distribution of surface and groundwater withdrawals, agricultural nutrient loadings, the status of Georgia's impaired waters, and farm income.
UGA Cooperators:
John Allison (AAE), Jimmy Bramblett (AAE), Terrence Centner (AAE), Dana Cole (Veterinary Medicine) Lane Ely (Dairy Sc.), Gary Gascho (Crop & Soil Sc.), Jack Houston (AAE), Keith Kightlinger (AAE), Curt Lacy (AAE), Jeffrey Mullen (AAE), Larry Newton (Animal Science), Mark Risse (BAE)
REDIRECTION FUNDS AMOUNT
PERSONAL SERVICES
Grad Assistants $ 36,300
Ag Res Tech 50% EFT $ 25,375
TRAVEL $ 2,500
OPERATING SUPPLIES $ 6,500
TOTAL ESTIMATED COST $ 70,675