Equilibrium Effects of Agricultural Technology Adoption: The Case of InducedOutput Price Changes

摘要

Pollution from agricultural activity depends on the agricultural practices ortechnologies that farmers employ. Adoption of less polluting practices can be induced by a variety of policy instruments. Cost-sharing by the government to reduce the costs of technology adoption and/or implementation for producers is an instrument widely used by the U.S. Department of Agriculture. The report examines the problem of designing economically efficient cost-sharing programs. The adoption decision for a farm is based on a comparison of the relative profitability of the existing technology and a new, less polluting one where the profitability of each technology depends on land quality. The problem for government is to determine the optimal subsidy rates that will induce a level of adoption sufficient to achieve some exogenous pollution goal.