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Purpose – Enabling decision-makers in Israel to better assess the prospects of government policies aimed at changing inter-generation income distribution for the benefit of the retirees. Design/methodology/approach – Based on a comprehensive data set, the paper utilizes multivariate ordered-probit regression for empirical investigation of the motivations for support between parents and children in Israel. Findings – The main finding is that child-parent support in Israel is usually driven by a combination of exchange and altruistic motives, rather than altruism alone. Practical implications – Child-parent support will not reduce the impact of governmental policies aimed at redistributing income among different generations. If the Government of Israel raises the income level of its citizens aged 65 and over, the improvement in this population's condition will most probably be bigger than that caused directly by the amount the government has added to their income. Originality/value – Empirical evaluation of the motivations for support given by children to their retired parents in Israel. Israel is a multicultural, immigrant country, home to people originating from all over the world, which provides an interesting cross-cultural perspective. In addition, the underlying database used in this study includes much more information than most databases utilized by earlier studies.

This paper develops a regional-level planning model aimed at allocating treated sewage sludge among potential users. The model incorporates, in one endogenous system, the economic, biological and environmental relationships and its objective is to maximize the regional social welfare. A few allocation approaches from the concept of transferable utility games are applied to determine a reasonable and fair allocation of the additional net benefits resulting from regional co-operation which is acceptable to all relevant economic units (players). The analysis is applied to a region in Israel and the results support regional collaboration among the relevant players which increase economic benefits by 19% and enable avoidance of sea pollution.

The article explains the phenomenon of counter-urbanization, which has become prominent in most developed countries. We develop a model that provides an economic rationalization for the observed willingness of incumbent farmers of a rural region to absorb nonfarmer urban migrants. The analytical findings show that counter-urbanization increases the region's welfare-maximizing population, decreases the optimal number of incumbent farmers, and increases the per capita welfare. The empirical results, which are based on data from rural Israel, demonstrate that while the optimal population of farmers decreases slightly, the total optimal population of the region more than triples and farmers' per capita welfare almost doubles. Copyright 2011, Oxford University Press.

Summary Governments generally use a mix of temporary hectare payments and provision of public services to stimulate the organic crop sector. In this paper, a conceptual model is developed for determining a socially optimal hectare payment for any given level of public services. Farm heterogeneity, due to the variability of soil quality and management skills, is explicitly taken into account. Using an nth price auction mechanism, farmers indicate what their reservation subsidy is for a given level of public input provision. The results of this auction are used to determine the government’s optimal policy choices.

A coastal city can either dispose of recycled effluent by dumping it in the sea, or transfer it to farmers in its hinterland for irrigation. Who should bear the cost of recycling? Three alternatives are employed: a central planner who maximizes the combined utility of city and farmers; regulation by prices, for which purpose we develop the city's supply function;and a bargaining framework for the allocation of costs. The main conclusions are that “the polluter pays” rule cannot be justified in principle and that bargaining may result in inefficiency. We demonstrate with an example from Israel that essentially conforms to the theoretical structure. Copyright 2001, Oxford University Press.

The efficiency of agricultural inputs may be reduced by ignoring the inherent variability in soil texture and the non-uniformity of the input's application. This paper focuses on variable-rate irrigation, which is performed via subdivision of the spatially variable field area into a controlled number of individually irrigated management units (MUs). The impact on profits and input decision of the MUs' size, the (technology-dependent) degree of irrigation uniformity, and the (cultivation-dependent) soil properties is investigated. A framework to evaluate the loss from imperfect information about the spatially random soil properties is developed and applied to sweet corn production. The analysis suggests that utilisation of site-specific farming and adoption of improved irrigation and/or cultivation technologies do not guarantee water saving. Copyright 2000 by Oxford University Press.

The well-known Allais paradox is reformulated as a daily farm decision problem. Only 26% of the farmers exhibit violations of the expected utility hypothesis. Moreover, the tendency for violation decreases with the farm operator's education, experience and family size. No effects of the farm main crop or its scale were detected. Finally, when taking into account the possibility of choice errors, we find that the violation rate is statistically insignificant.

A theoretical framework is developed to study the effects of socioeconomic factors on farmers' risk attitudes and production decisions. No maintained assumptions about the individual's utility are required. A key element in this framework is the categorization of socioeconomic factors by their effect on the farmer's risk attitudes. A simple methodology for this categorization, based on the equivalence between the Arrow-Pratt measure of risk aversion and the probability of winning demanded, is proposed. The latter is illustrated with data collected in a survey of 180 Israeli farmers from 20 villages.

This study offers a high-resolution model of nationwide water supply. The model is sufficiently detailed to represent all main water sources in an economy, the principal segments of the conveyance system, urban, industrial and agricultural demand regions, and various water types, including fresh, saline and recycled. Calibrated for Israeli 2010 data, we find that the optimal extraction of fresh water is only 2% larger than the total observed supply from those sources. However, for some specific sources, the deviation between optimal and observed quantities is significant. Assuming average constant recharge, the optimal aggregated desalination is 57% of the 2010 desalination capacity and only 33% of the present desalination capacity. Even with an assumed 40% decline in recharge (for example, due to climate change), the model uses only 50% of the present desalination capacity. This may suggest that the construction of desalination facilities in Israel, which began in 2005, could have been delayed. The model establishes a comprehensive system of pumping levies and user fees that support the optimal allocation. However, due to considerable scale economies, the average cost is almost 50% larger than the marginal cost. The implications are that the welfare cost of the recent Israeli Balanced Budget Water Economy legislation is more than 100 million USD per year, about 10% of the water economy share of the GDP.

This paper considers input pricing rules for a producer cooperative which supplies its members with two inputs: a publicly provided private input (water), and a local public input (road services). An Israeli Moshav which allocates land equally among producers is a good example. The cooperative uses a two-part pricing rule: a product-dependent uniform fee (head tax) and a user charge per unit of the private input. Discrimination of head tax among the producer groups is shown to dominate that of user charge in the short run. However, land reallocation among producers can result in a Pareto-superior pricing rule and the Henry George theorem emerges in the long run. Thus, allowing land leasing while maintaining equal rights to land increases producer welfare.

A theory of settlement planning focussing on village-level production services is presented, and settlement plans are compared. The analysis draws on the modern theory of local public goods. Conditions for optimal level of services and optimum settlement size are derived, together with rules of finance of collective operations. The value of the right to settle is calculated for the cases considered.

This paper analyzes the operation of an agricultural multipurpose service cooperative in which family farms are the producer-consumer economic units. The cooperative is aimed at maximizing the utility of its member-patrons. The cooperative provides services and sets prices, taxes, and usage restrictions in conformity with the individual's decision making rules. The cooperative can establish a mode of operation that will induce the individual members to behave in a manner compatible with the requirements for Pareto optimality. The economic stability of the cooperative cannot be guaranteed.

The subject of technological innovations in agriculture has attracted considerable attention among development economists because new technologies offer opportunities to increase income substantially. Immediate and uniform adoption of agricultural innovations is quite rare. Some innovations have been well received while others have been adopted by only a very small group of farmers. The aim of this paper is to identify, estimate and explain the parameters which promote the adoption and speed the rate of diffusion of drip irrigation technology in cotton‐growing. Using cross‐section time‐series regression models, the analysis was applied to a sample of 38 kibbutz cotton‐growers in two regions of Israel. It was found that profitability is the major motive for adoption of drip irrigation in cotton by a profit‐maximizer kibbutz farm. Additional significant explanatory variables which affect the rate of diffusion are detailed in the paper.

With some agri-environmental restrictions, municipal wastewater can be utilized for agricultural irrigation and river rehabilitation. This paper develops a single-year planning model for a region in Israel which consists of a city and three potential wastewater consumers. The model incorporates, in one endogenous system, the economic, physical and biological relationships in the water-soil-plant environment system and its objective is to maximize the regional social welfare composed of the sum of agricultural and environmental net benefits. The model determines the optimal crop mix and the optimal allocation of the limited water and land resources among all potential users. Then, different allocation approaches from the concept of transferable utility games are applied to determine a reasonable and fair allocation of the additional net benefits which will be accepted by the players. The results support the collaboration among the economic entities and indicate economic and environmental advantages which can serve the decision-makers.

We examine the role of altruism in determining optimal transfers from a principal (a mother) to selfish agents (her children) in return for attention services. Transfer-attention contracts are studied in a setting in which informational asymmetries arise from the inability of a parent to determine the extent of her children's selfishness. We find a predominating exchange motive for transfers in the symmetric informational regime we study. However, both altruism and exchange are important motives under asymmetric information. We show that altruism facilitates transfer-attention exchange arrangements with certain trade partners under incomplete information, but diminishes trade with others.

Since the seminal work of Ward [19] on the pure model of a labor managed firm (LMF), a number of authors have extended the theory of the cooperative firm. Initially, the literature focused on the theory of the LMF under certainty. Domar [4] analyzed the behavior of a multiproduct LMF, while Vanek [18] and Estrin [6] investigated a general theory of labor managed market economies. Maurice and Ferguson [14] and Bonin and Fukuda [3] analyzed input decisions of the LMF in a multifactor framework, and Furubotn [7], Berman and Berman [1], and Estrin [5] extended the theory to long run equilibrium. Recently, Muzondo [15], Bonin [2], Paroush and Kahana [16], Hey and Suckling [9] and Hey [8] investigated the effects of output price uncertainty on the LMF that uses a single input, labor. There is an emerging consensus on three fundamental aspects of the theory of the LMF under output price uncertainty. First, Ward's result that the cooperative has a downward sloping supply curve is robust under price uncertainty. For example, Paroush and Kahana demonstrated that the cooperative has a perverse response; that is, an increase in mean output price decreases labor employment and output supply. This result was confirmed by Bonin and by Hey and Suckling. Second, in contrast to the risk averse competitive profit maximizing firm, Muzondo [15, 133] demonstrated that the risk averse LMF with a single variable input, labor, "employs more labor and produces more output than a risk neutral LM firm." ' Paroush and Kahana [16, 213] have also found that the "cooperative firm, even if risk averse, produces more and increases its demand for labor than its certainty equivalent twin."2 Horowitz [10] argued that a risk averse LMF uses more labor and produces more output than does a risk neutral LMF even in the n -factor case.3

Groundwater has the characteristics of commonly owned property, and its use is likely to be inefficient in the absence of regulation. Several management tools can be used to regulate groundwater withdrawals, with no one tool dominating the others in terms of efficiency of water use. However, the welfare distributional effects of various management schemes on individual users who vary in their derived demands for groundwater might be quite substantial, and different users may find considerably different schemes attractive. The equity problems associated with the division of management benefits may dominate the decisions about support of or opposition to groundwater management, and hence they must be undertaken with considerable care and resolved by consensus among users. Although the negotiations are expected to be extensive and complicated, there is a substantial basis for agreement because all users stand to gain; the question is, who will gain the most?

Groundwater use is likely to be inefficient in the absence of regulation and hence there is substantial interest in optimal groundwater withdrawals over time. Under an optimal regime withdrawals, pumping lifts, and profits converge to steady-state levels. In this paper we show that optimal steady-state lifts, withdrawals, and marginal user costs can be readily calculated for multi-cell models of confined aquifers. Applications to the design of economically efficient groundwater management policies are discussed, comparisons to previous work and to the safe yield concept are made, and an illustrative example is given.

Empirical estimates of benefits from groundwater management are reported for an area in California with heavy reliance on groundwater supplies. Benefits are quite sensitive to the water demand schedule and interest rate but less sensitive to other parameters. However, in all cases considered the increases in welfare from groundwater management are less than ten percent. Tax revenues received under a system of pump taxes are four to five times as large as the benefits from management. Thus, groundwater users gain under a system of quotas but may suffer substantial welfare losses under pump taxes.