ESTIMATED ECONOMIC IMPACTS OF CANCELLATION OF A HYPOTHETICAL SOYBEAN PESTICIDE

A regionalized econometric-simulation model (AGSIM) was used to evaluate the economic impacts of canceling the use of pesticide X.1 The model, which was designed specifically to estimate the aggregate economic impacts of policies or programs that change per-acre crop yields and production costs, includes acreage response functions for five major field crops (cotton, soybeans, corn, grain sorghum, and small grains) in each of 13 producing regions (figure 1) in the U.S. Each acreage response function depends on expected per-acre net returns of that crop and any competing crops, thereby allowing logical . derivation of acreage shifts resulting from changes in per-acre yields and production costs. Yield and acreage equations for all crops in a region were estimated as a block of equations using Zellner's procedure for seemingly unrelated regressions. For competing crops in a given region, the symmetry condition was imposed on cross-effects. Signs of all coefficients for own net return coefficients were positive, and all signs of cross net return coefficients were negative