Upload
junior
View
32
Download
0
Embed Size (px)
DESCRIPTION
Economic Concepts Related to Appraisal II. Outline. What is meant by economics Sustainable agriculture What are the basic issues related to appraisal Example of soil erosion. Economics of Sustainability. Economics It is not the study of money, it is the study of scarce resources - PowerPoint PPT Presentation
Citation preview
Economic Concepts Related to Appraisal II
Outline
• What is meant by economics• Sustainable agriculture• What are the basic issues related to appraisal• Example of soil erosion
Economics of Sustainability
• Economics– It is not the study of money, it is the study of
scarce resources• Microeconomics is the study of the firm or
individual• Macros economics is the study at the societal
level
Economics of Sustainability
• Some of the costs and/or benefits are pecuniary while others are non-pecuniary
• In addition, some of the costs and/or benefits do not fall to the ones who create them (externalities)
• When studying economics we are trying to see how an individual or society allocates its scarce resources to achieve its goals
Sustainable Agriculture: What Does it Mean
– “The appropriate use of crop and livestock systems and agricultural inputs supporting those activities which maintain economic and social viability while preserving the high productivity and quality of Iowa’s land.”
– “ … not a concretely defined set of management strategies and technology, but an approach which targets the enhancement of natural processes…”
Economics of Sustainable Agriculture
1. Profit2. Ability to generate an income3. Risk4. Labor use including timeliness, quality, and trade-
offs5. Energy use
Economics of Sustainable Agriculture
6. Environmental Quality7. Impact on rural communities8. Impact of food supply including safety and cost9. Structure of agriculture10. Efficient and effective use of resources
Appraisal Issues
1. Valuing benefits and costs1. Externalities2. Non-market goods and services3. Common property4. Resource depletion
2. Resource Distribution3. Time4. Changes in technology5. Changes in preferences
Primary Reason for Owning Farmland Based on Place of Residence
0%
10%
20%
30%
40%
50%
60%
Current Income LT Investment Family/Sentimental Home/Way of life Recreation
Lives in Iowa Does not live in Iowa
Erosion Class• None or Slight
– More than 7 inches of A or A plus E Horizon• Moderately Eroded
– 3-7 inches• Severely Eroded
– Less than 3 inches• Overwash
– 8-18 inches of recently deposited material above A Horizon
WATER EROSION – WINNESHIEK COUNTY(LOOKING RIGHT AT HARVEST)
WATER EROSION – CHICKASAW COUNTY
WATER EROSION – WINNESHIEK COUNTY(LOOKING CENTER)
WATER EROSION – BUTLER COUNTY
WIND EROSION – BUTLER COUNTY
BREMER COUNTY 1999
BREMER COUNTY – 1999
PESTICIDES, NUTRIENTS AND SEDIMENT –
WHERE DO THEY GO?
ROOT RIVER AFTER 2” RAIN
THE MISSISSIPPI RIVER
SOURCE: NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION
POINT WHERE THE WATERS OF THE MISSISSIPPI RIVER MEET THE WATERS OF THE GULF OF MEXICO
AGRICULTURE AND HYPOXIA
• HYPOXIA = LOW OXYGEN• < 2 PPM OXYGEN WILL NOT
SUPPORT FISH AND OTHER AQUATIC LIFE
• NUTRIENT ENRICHMENT FROM FERTILIZERS AND EROSION (SEDIMENTS) ARE MAJOR CAUSES OF HYPOXIA
• THE CORN BELT IS A PRIMARY SOURCE FOR NUTRIENT ENRICHMENT
HYPOXIC ZONE IN THE GULF OF MEXICODECEMBER, 2007
SOURCE: NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION
Erosion Cost Categories
• Individual farmer– Fertility loss– Reshaping of field landscape– Loss of organic matter
• Society– Water quality, recreation, navigation, drinking water,
etc.• Land owner
– Decrease in value of the land
External Costs• Cost of erosion estimates range from $19 to $6.20
per ton• In the Corn Belt there was 3.9 T/acre water
erosion and .2 T/acre wind erosion• Range from $77.90 to $25.42 per cropland acre in
the Corn Belt• Tegtmeier/Duffy estimates from $14.09 to $45.68
for all external costs• USDA average for soil $25.42 versus total $29.89
Total Soil Erosion in Tons per Cropland Acre
0
2
4
6
8
10
12
1982 1987 1992 1997 2003
IA US
Sheet and Rill Erosion in Tons per Acre in Iowa
0
1
2
3
4
5
6
7
8
1982 1987 1992 1997 2003
Chickasaw
Clayton
Clinton
Des Moines
Dubuque
EmmetFlo
yd
Fremont
Hardin
HumboldtLyo
nMills Page
Pocahontas
Polk
PottawattamieSto
ryTaylo
r
Woodbury
Wright
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%Percent of Iowa's Farmland with Eroded Soils
Average 19%
Corn Soybeans CSR -
2
4
6
8
10
12
14
16
18
20
Change in Corn, Soybean and CSR Based on Erosion Phase
Maximum Minimum Average
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 200%
2%
4%
6%
8%
10%
12%
Dollar Damage as a Percent of ISU Land Value
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 310.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Range in Percent of Land Value Lost for 154 Soils in 20 Iowa Counties
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 200.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
5.00%
Percent Range in Total Value of a Counties Land Value Lost Due to Eroision, 2010
Chickasaw
Clayton
Clinton
Des Moines
Dubuque
EmmetFlo
yd
Fremont
Hardin
HumboldtLyo
nMills Page
Pocahontas
Polk
PottawattamieSto
ryTaylo
r
Woodbury
Wright
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450 Average Loss per Acre Due to Erosion
CSR Value CC
CSR Average$245 per Acre
Return Average$207 per Acre
Erosion
• Do farmers take erosion into account when making their decisions?
• Do land buyers/renters consider erosion level when acquiring land?