Agriculture, the Economy, and the Environment

The past few decades have seen much growth in U.S. agricultural productivity and a simultaneous increase in the efficiency of agricultural production. There has, however, been a growing concern regarding the environmental and health impacts of agricultural activities. This concern has led researchers to increasingly consider both desirable, or “good,” and undesirable, or “bad,” outputs in analyses of productivity and efficiency. The majority of these studies, though, consider both “good” and “bad” outputs as non-separable joint products of the entire set of inputs, rather than considering “bad” outputs as by-products resulting from a subset of polluting inputs. The first two chapters of this dissertation conduct a state level evaluation of U.S. agricultural performance, assuming weak disposability between polluting inputs and undesirable outputs. The objective is to answer three main questions: (1) How can efficiency be measured when both good and bad outcomes are present?; (2) How can one measure productivity growth with both good outputs and bad outputs?; and (3) How can one measure the opportunity cost of reducing bad output in terms of forgone good output? To answer these questions, the nonparametric methodology of Data Envelopment Analysis (DEA) is followed. The dataset covers the 48 contiguous states in the U.S. from 1960 to 2004 and provides information on agricultural inputs as well as “good” and “bad” outputs of crops. The results show that there is more room for reducing “bad” outputs and polluting inputs (e.g., pesticide and fertilizer) than for expanding good outputs (e.g., crops, livestock, and farm related output), particularly in the major corn and soybean producing states. The last chapter conducts a broad-based analysis of production agriculture by measuring its contribution to state-wide economies and employment in eight Northeastern states. Agriculture is defined as encompassing agricultural production (crops, livestock, fisheries, and forestry) and processing (including seafood). Using 2012 data and IMPLAN, agriculture in these eight states is estimated to have contributed $99.4 million to regional total sales and generated 474,482 jobs. The sales contribution amounts to $5,678 per acre in farmland or $2,312 per resident