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Ozone pollution and farm profits in England and Wales

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Abstract:

Tropospheric ozone is an air pollutant known to adversely affect crop yields across Europe. Experimental work is underway to quantify yield effects at ambient ozone levels for a number of crops. In this article, we undertake direct, farm-level evaluation of the impact of ozone by estimating a multi-output profit function using a panel dataset of cereal farms in England and Wales. A system of equations, comprising the profit function, input and output share equations is estimated using a fixed-effects seemingly unrelated regression technique, with ozone as a quasi-fixed input. Estimated parameters are used to calculate tropospheric ozone-related profit and output supply elasticities. The main findings from the profit function show that a 10% increase in average ozone levels would decrease variable profits by 1.3% and wheat output supply by 1%. These results are of a significantly lower magnitude, but qualitatively consistent with findings from similar studies carried out in North America.

Document Type: Research Article

DOI: https://doi.org/10.1080/00036840701858158

Affiliations: Department of Agricultural and Food Economics, University of Reading, Reading RG6 6AR, UK

Publication date: 2010-08-01

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