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We develop an Israeli version of the Multi-Year Water Allocation System (MYWAS) mathematical programming model to conduct statewide, long-term analyses of three topics associated with agricultural reuse of wastewater. We find that: (1) enabling agricultural irrigation with treated wastewater significantly reduces the optimal capacity levels of seawater and brackish-water desalination over the simulated 3-decade period, and increases Israel's welfare by 3.3 billion USD in terms of present values; (2) a policy requiring desalination of treated wastewater pre-agricultural reuse, as a method to prevent long-run damage to the soil and groundwater, reduces welfare by 2.7 billion USD; hence, such a policy is warranted only if the avoided damages exceed this welfare loss; (3) desalination of treated wastewater in order to increase freshwater availability for agricultural irrigation is not optimal, since the costs overwhelm the generated agricultural benefits. We also find the results associated with these three topics to be sensitive to the natural recharge of Israel's freshwater aquifers, and to the rate at which domestic-water demand evolves due to population and income growth.

Perennial crops require substantial initial investment in groundwork and planting, as well as a multiyear gestation period without commercial yield. Therefore, a crop's cycle (from planting to felling) should be long enough in order to cover the fixed cost and become profitable. The problem becomes involved when the cycle's duration is stochastic due to occurrence of uncertain event that terminates the cycle prematurely. Studying orchard management under stochastic drought events, we show that to each perennial crop that is profitable without drought hazard, there exists a critical drought hazard above which the crop turns loss making. We refer to this critical drought hazard as the crop's drought vulnerability index and show that it increases with the length of the gestation period, the ratio of fixed cost to average annual profit and the interest rate, and decreases with the natural (uninterrupted) cycle length. We then investigate the economic value of a stable water source, such as recycled water, that stabilizes the water supply and diminishes the drought hazard. An empirical application in northern Israel reveals that the stabilization value of recycled water due to its role in eliminating the drought hazard far exceeds its supply cost.

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.

Using a survey that was conducted among students and based on the principles of the “dictator game”, it was found that the ability of the government to modify the distribution of income in the economy for the benefit of young-persons ages 20–30, or only for the neediest among them, is limited. This is especially true when the number of children in the family is large and when the parents’ age is younger. We found that the average altruism level of young-persons ages 20-30toward their parents is high (0.8). Key factors that significantly affect the level of altruism are the gender of the child, whether there is a single child, and whether or not the children live with their parents. Additionally, the empirical analysis identifies families with parents that have various motivations to support their mature children.

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.

Because of environmental concerns, many states are regulating animal manure applications to crops. A conceptual model is presented to describe manure demand for crop nutrient application under alternative regulatory standards. Demand relationships are incorporated into a spatial equilibrium model to estimate welfare costs of phosphorus and nitrogen regulatory standards for manure applications. Model estimates for Virginia indicate that regulatory standards for manure application achieve large reductions in excess nitrogen and phosphorus and result in 5–15% welfare losses excluding nonmarket environmental valuation. Copyright 2004, Oxford University Press.

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.

Recent studies dealing with the potential of Renewable Energy Sources (RES) for desalination along the Mediterranean Coast and in the Middle East choose to use RES to generate electricity first, and then use this electricity to power desalination. The present work eliminates the phase of electricity generation by using solar thermal energy directly for distillation by evaporation. Saving the thermal to mechanical conversion losses allows the proposed Multi Effect Distillation (MED) process to compete economically with Reverse Osmosis (RO) process of significantly lower energy consumption. The new opportunity to revive direct thermal evaporation, arises from a new collector technology developed by Solel Solar Systems, that is coupled to the familiar MED process modified by IDE Technologies to match the solar steam characteristics. Solel has applied its unique technique of selective coating to demonstrate a very efficient solar radiation collection, achieving high temperatures with relatively low installation costs. While the generated steam is not sufficient for efficient generation of electrical power to be used for RO — its quality far exceeds the minimum necessary for the existing methods of steam powered desalination by evaporation. Our analysis shows that a combination of a large number of effects of evaporation, together with high pressure saturated steam available for recycling, yields a dramatic improvement in the production rate of water desalination, accompanied by relatively modest increase in the desalination installation cost. For the specific case analyzed in detail, replacing the commonly used low temperature MED with the new combination, increases the Economic Ratio (ER) from 7 to 16 — a factor of 2.3, while the installation costs grew by only 60%. This implies that the distillate production costs are significantly lower with the new proposed combination. The cost increase is mainly due to the higher costs for the expansion of the desalination system, with relatively low additional costs for producing the high temperature solar steam. A basic assumption, drawn from economic considerations and technological constraints, is that the desalination system would operate continuously, while the solar system, which is limited to daytime operation, would feed a steam generator combined with a storage tank. Therefore utilization of solar energy requires either large and expensive heat storage capacity or fossil fuel backup — a hybrid plant. The effects of storage and fuel cost are presented. The paper refers to three levels of desalination capacity: 1) A small 1000m3/d plant, typical for plants serving small settlements or industries at rural locations, isolated from fresh water and grid power sources. Applying the present model distillate cost for such a solar powered plant along the Red Sea coast is about $1.2/m3 for solar-only plant with large capacity steam storage, and $1.1/m3 for hybrid plant using $0.18/kg diesel oil when solar-steam is not available. Where brackish water are available for mixing, these costs decline approximately by 30%; 2) The medium size 10,000m3/d plant is of the scale actually required for the town of Eilat. Here the Solar-MED plant would produce distillate at $0.92/m3 and by blending with brackish water available on site, the cost would decline to $0.74/m3; 3) On the other extreme we evaluated a large 100,000m3/d plant, on the scale of a national water supply plant. Here the distillate cost is about $0.69/m3 for hybrid plant (including land cost) at an available site close to the southern end of Israel's Mediterranean shore. These preliminary results suggest a competitive distillate cost as compared to grid-powered RO, when electricity cost is about ¢6.5/kWh. To conclude: Solar-powered desalination is conceivable in Israel at a reasonable cost, and has even broader economic potential along the Red Sea and similar sites.

Anecdotal evidence suggests that defense procurement processes lead to the purchase of weapons of apparently excessive quality. In this paper, we present a model that suggests that this could be the result of the timing and informational structure of procurement decisions.

Many observers of Israel's defense resource allocation process believe that insufficient resources are devoted to troop quality, while excessive resources are devoted to weapon quality. In this paper, we offer a potential explanation for this phenomenon. In our example, officers seek to signal their ability through their budgeting choices. Signaling behavior, combined with the timing and informational structure of defense decision‐making, results in a sub‐optimal allocation of resources to training and troop quality.

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.

This paper develops and applies a mathematical model for determining the economically optimal scheduling of fertilization and irrigation (fertigation) that maximizes the farmer's profits. The analysis assumes a single crop (corn) and a single growing season. For a given total seasonal fertigation level, the optimal scheduling solution to the optimization problem identifies not only the maximum profits but also the minimum total nitrogen leached below the root zone and, therefore, the minimum groundwater contamination. The conceptual framework, coupled with the experimental data for corn, are used to investigate the impacts of taxing the total nitrogen leaching and an action equivalent taxation of nitrogen fertilizer. It is demonstrated that the increase in the fertilizer tax required to achieve a given level of reduction of total nitrogen leaching is much smaller in relation to the change in the tax on leached nitrogen required to achieve the same reduction.

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.

Water scarcity is a “fact of life” in Israel, where demand for water routinely exceeds its supply. The commonly agreed-upon policy to bring demand and supply into balance failed mainly due to population increase. In addition, he years 2001–2005 saw the most severe drought to hit Israel in a century. In this chapter we discuss how different water issues were dealt over time by the Water Authority in Israel.

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.

The optimal long-run fertilisation and irrigation of a perennial crop is approached via two stochastic dynamic optimisation models. The first model assumes that the ex-post level of the state variable--leaf nitrogen (LN)--is known with certainty. The second model assumes that the level of leaf nitrogen is not observed, but that the farmer has a prior probability distribution on the level of leaf nitrogen, which can be updated to yield a series of posterior probability distributions conditioned on past input decisions. Comparison of the values of the objective functions of both models yields an expected economic value of complete and costless information of leaf tissue analysis. The analysis is illustrated for a mature citrus grove. The impact of improved information on nitrogen use and leaching is also examined empirically. Copyright 1995 by Oxford University Press.

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.

[1] Following suitable treatment, municipal wastewater can be used for agricultural irrigation; the potential benefit to the agricultural sector is especially significant in arid and semiarid regions, where fresh water is scarce. The analysis focuses on a region which consists of a principal (a wastewater “producer” (a city)), and two competitive agents (water users (two groups of farmers' associations)), who make decisions under conditions of asymmetric information. First, we develop an optimization model aimed at maximizing the principal's profits from conveying treated wastewater without damaging the farmers' reservation utilities or profits. The analysis determines the treated-wastewater allocation, income transfers, and profit allocation among the three assumed economic entities. Contracts composed of transfer payment–wastewater combinations are studied in a mechanism design setting in which the city has incomplete information on the farmers' demand for treated wastewater. The theoretical analysis is applied to the situation in the Sharon region of Israel. The empirical results show that regional cooperation is profitable for all of the involved economic entities.

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.

It is now well recognized that an efficient management of scarce water resources is crucial for guaranteeing the sustainability of agriculture. Fresh water is one of the most limiting factors for agricultural production in both Israel and France. As competition with other sectors (urban, industrial and environmental) increases, the Israeli farmers find themselves relying more and more on the utilisation of recycled and saline water. In France, an increase of irrigated areas in the last two decades has led in case of drought to severe degradation of the environment and to inefficient administrative banning on water uses. Thus new policies and approaches need to be designed to improve water management strategies. Our principal objective is to formulate policy recommendations in both countries by evaluating the consequences of new alternatives for the allocation of this scarce resource, in order to guarantee economically efficient water sharing subject to several environmental constraints. Therefore the project is aimed at developing and implementing agro-economics models which describe the economic, environmental and organizational aspects involved in sharing different types of water (i.e. fresh, recycled etc.) among few potential consumers: the agricultural sector (with different types of irrigated cultures and crop mix), the environmental sector and the urban and industrial sector, at the regional or water basin levels. The models evaluate and compare several schemes of cost and profit allocation between the economic entities involved: (i) direct negotiation by utilizing a mechanism design model; (ii) allocation via an agreed upon objective/neutral middle-man by using different approaches from game theory and (iii) allocation via an adequate pricing system. We developed our agro-economic models/approaches based on the relevant state of the art literature, especially the literature that deals with water pricing practices in the world under uncertain conditions. For the Israeli part, a model determined the optimal crop mix and the optimal allocation of the limited (fresh and recycled) water and land resources among all potential water users. The selected region (the Sharon region, in central Israel) includes 4 economic entities: a city (the wastewater producer), two groups of farmers and a river authority. The objective here is to maximize the regional social welfare, which is composed of the sum of the agricultural and environmental net benefits while taking into consideration the impacts of salinity and nitrogen on the commercial yields of the various crop and the environmental damage associated with irrigation with recycled water over an aquifer. The model suggests economic and environmental improvements to the potential wastewater consumers: the farmers might be able to increase their irrigated areas and benefits and that the river authority is expected to increase its stream flow and benefits. On the practical side, the work shows that in Israel, cooperation between all the economic entities in the selected region is profitable to each entity and also improves the environmental conditions. In France, we studied an original pricing scheme aiming at the improvement of the ecological state at the river, by guaranteeing a minimum water level in the river, and an increase in farmer’s profit so that they would accept to adopt such a pricing system, while a constraint was the budget equilibrium of the water user association. Our result is very encouraging, since we see that locally there is a real demand of such analytical results, obtained with a thorough analysis of the properties of such pricing systems, in order to accompany the ad hoc tentative essays of the water user association. Practically too, we show that the economic efficiency of the agricultural water may be considerably enhanced, while the environmental conditions may be improved, with a pricing system that field studies showed acceptable. The cooperation of French and Israeli teams consists in exchanging on the economic and mathematical tools (we both use mathematical programming, game theory and mechanism design approaches) when developing the models. We discussed the difficulties involved in implementing our models in our respective countries (taking into account the quality of water in Israel and the uncertainties of water supply in France) while taking into consideration the current experiences and possible solutions currently applied in both countries. These two kinds of contributions (on the theoretical part for solving the model difficulties, and on the practical applications) showed the scientific interest of the cooperation. This cooperation was concretised by the writing of a first scientific paper accepted for the 13th World Water Congress, two papers were already been submitted to ranked journals (a French economic review and the Journal of Agricultural Economics) and we expect to submit three more manuscripts to scientific reviews during the next months. Moreover, discussions on the use of waste water in Israel showed there was some interesting work to do on comparable contract design for sludge disposal in France. This cooperation was carried out through meetings with French and Israeli partners in Aix en Provence (2006), Paris (2007), Montpellier (2007), and through e-mail exchanges. Future works would be very interesting in order to 1/ extend our scientific research in the fields of irrigation and waste water agro-economics, notably in France in order to explore other possibilities of our first results displayed 2/ extend our joint research to other fields of interest such as investigating sludge allocation among competitive users both in France and in Israel, 3/ work on the links between the ‘pricing’ and the ‘planning’ approaches into a unique project such as developing pricing mechanism to wastewater in Israel, and working on the implementation on the European Union Water Framework Directive in France.

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.

The split application of nitrogen provides insurance against the risk that late spring application will be infeasible because of wet soil. Risk aversion and production uncertainty have little impact on total nitrogen available to the crop but do affect the split in application and the total nitrogen applied. A risk-averse farmer applies more (less) nitrogen prior to planting and total nitrogen than a risk-neutral farmer if nitrogen and water are substitutes (complements). For the case of substitutes, the nitrogen lost through leaching is the premium which the risk-averse farmer pays to insure a proper level of nitrogen.

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.

The paper focuses on farm-level nitrogen fertilization strategies of Dutch arable farmers for analyzing the substitution of organic fertilizers (manure) with chemical fertilizers. The model developed investigates the impact of the major parameters affecting the inferiority of manure compared with chemical fertilizers, including the low availability and non-uniformity of the nitrogen in manure, and the low level and high non-uniformity of plant-available nitrogen supplied via manure. The sensitivity of the optimal fertilization decisions and its associated environmental impact to product price, manure cost, and environmental tax is also examined. The theoretical analysis is applied to a representative Dutch grower of ware potatoes in the northern part of the Netherlands. The results suggest that in the absence of a subsidy the representative farmer will prefer to apply nitrogen only via chemical fertilizers.

Within the EU, uncertainty about the possibility of acquiring land can be quite significant for individual farmers in sectors like dairy farming. Farm-level investment decisions are commonly made ex-ante, when the farmer is not certain about the possibility of purchasing land. This possibility is realised only in a future period. In this paper, we have developed and applied a simple two-period model in which a profit-maximising farmer, facing uncertainty about the possibility of acquiring land, has to choose the optimal mix of capital (buildings) investment and land endowment. We illustrate the model using data from Dutch dairy farms.

The new Rural Development Regulation of the EU reflects the shift of attention within rural areas from agricultural production towards rural development and embraces both, farmers and non-farm residents. While agricultural production is required to comply with environmental standards, rural areas also have to fulfil the growing demand for landscape, outdoor recreation and wildlife conservation. This paper develops a model of a rural area where farmers and non-farm residents live together. A central government uses a combination of two-policy instruments--direct compensation payments and public services -- aimed at encouraging farmers to adopt environmentally beneficial practices and at the same time to increase the provision of country-side amenities and the sustained vitality of the rural area. The optimal mix of the policy instruments is evaluated under various governmental objectives. The analysis suggests that a combination of direct payments to farmers with the supply of local public services is a promising tool for rural policy development initiatives in the EU.

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.

Environmental and health risk concerns associated with the use of agricultural chemicals in the United States are increasing. In response, public policies designed to alter farming practices and the use of agricultural chemicals are being proposed and implemented. In addition, agricultural price stabilization and income support policies are being reviewed for environmental implications. This paper provides a farm-level analysis of the interrelationships between the current U.S. commodity program for corn and selected policies for controlling the use of corn rootworm insecticides. The farm modeled is for Chickasaw County, Iowa. Results show significant opportunities for coordinating agricultural commodity and environmental policies. Corn rootworm insecticide use can be reduced with only modest effects.

The study investigates the value of additional information on the response function to soil salinity of a given crop (potatoes), with regard to a stochastic long-run optimization model for utilization of saline water to a single farm framework. The analysis provides a conceptual and methodological framework for investigating the expected value of sample information (DVSI), as well as an efficient tool for empirical application. Although a few approximations have been used, the results provide an estimate of EVSI and indicate the need for additional information.

Crop insurance provides a potential tool for reducing agricultural chemical use by providing a substitute for the risk management benefits of pesticides. This article describes the results obtained from an integrated modeling system developed to assess the efficacy of crop insurance used in this manner. While crop insurance is found to reduce pesticide application, the extent of its impact depends significantly upon the distribution of risk aversion in the target population and the reductions can be costly, ranging from $25 to $45 per pound of active ingredient.

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

The study is aimed at formulating and empirically applying a dynamic farm-level model for the planning of optimal beef feedlot production and marketing strategies. A dynamic programming (DP) model is used to calculate the optimal feeding schedule (i.e. liveweight gain sequence), market liveweight and stock replacement for a single bull calf over a one-year planning period, taking into account seasonal fluctuations of planning parameters such as beef prices, feeding costs, nutritional requirements, and stock replacement costs and obtainability. The DP model includes a linear programming (LP) subroutine for calculating least-cost feed rations. The planning model is empirically applied using data and assumptions representative offeedlots in the Coastal Plain region of Israel where most feedlot production and marketing decisions are made by ‘rule-of-thumb’ using set liveweight gain sequences, market standards and stock replacement decisions. The empirical findings indicate that the profitability of feedlot production and marketing could be increased by an average of 10% over that obtained from ‘rule-of-thumb’ decision rules.

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?

Agricultural production involves a large number of random variables, many of which are physical and biological functions connected with the production process. The knowledge of the biological response function of crop yield to soil salinity is essential in decision-making regarding irrigation with saline water. In this paper we investigate (analytically and empirically) the expected profitability to farmers (the decision makers) of acquiring additional information on this biological function. The true values of the parameters of the response function are usually unknown to the decision maker, and therefore he uses the estimates of the parameters and may become a victim of a suboptimal solution. The deviation from the optimum may be measured by a loss function and the calculation of its expectation. The estimates of the parameters (which are arguments in the loss function) are based on a priori information available to the decision maker. He can acquire additional information that will reduce the variances of these estimates and, hence, will improve his ability to choose a suitable strategy with resulting decrease of the expected loss (or, equivalently, increase of the expected profit). Expected value of sample information (EVSI) is defined as the difference between the reduction of the expected value of the loss function due to the additional information and the cost of its acquisition. The optimal number of observations to be acquired is the one that maximizes EVSI.