Approved by

With rising demographic growth, there is increasing interest in analytical studies that assess alternative policies to provide an optimal allocation of scarce natural resources while ensuring environmental sustainability. This dissertation consists of three essays in applied resource economics that are interconnected methodologically within the agricultural produc-tion sector of Economics. The first chapter examines the sustainability of biofuels by simulating and evaluating an agricultural voluntary program that aims to increase the land use efficiency in the production of biofuels of first generation in the state of Alabama. The results show that participatory decisions may increase the net energy value of biofuels by 208 % and reduce emissions by 26%; significantly contributing to the state energy goals. The second chapter tests the hypothesis of overuse of fertilizers and pesticides in U.S. peanut farming with respect to other inputs and address genetic research to reduce the use of the most overused chemical input. The findings suggest that peanut producers overuse fungicide with respect to any other input and that fungi resistant genetically engineered peanuts may increase the producer welfare up to 36.2%. The third chapter implements a bioeconomic model, which consists of a biophysical model and a stochastic dynamic recursive model that is used to measure potential economic and environmental welfare of cotton farmers derived from a rotation scheme that uses peanut as a complementary crop. The results show that the rotation scenario would lower farming costs by 14 % due to nitrogen credits from prior peanut land use and reduce non-point source pollution from nitrogen runoff by 6.13 % compared to continuous cotton farming. i