This paper examines the relative expected efficiency of four general strategies which have been proposed for achieving agricultural nonpoint pollution abatement. Emphasis is placed on the implications of differential information about the costs of changes in farm management practices, the impracticality of accurate direct monitoring, and the stochastic nature of nonpoint pollution. The possibility of using hydrological models to reduce, but not eliminate, the uncertainty about the magnitude of nonpoint loadings is incorporated into the analysis. The principal result is that appropriately specified management practice incentives should generally outperform estimated runoff standards, estimated runoff incentives, and management practice standards for reducing agricultural nonpoint pollution.
The increasing trend of food scandal crises is not well followed in recent studies of spatial price transmission. This paper analyses the impact on the domestic market of an Aflatoxin M1 outbreak in the Serbian dairy sector during 2013/2014 using a spatial price transmission approach. Monthly farm milk prices in Serbia for the period 2007/2014 were contrasted with leading dairy exporting countries New Zealand, USA and Germany, which did not have a food scare in their dairy sectors. To estimate the impacts a Markov-switching vector error-correction model was utilized. For all four dairy markets the model identified two price change regimes: standard and extreme. Although it was predictable, an extreme regime was not identified during the Aflatoxin M1 crises in Serbia because of some specific characteristics of its dairy production. The results suggest that the Aflatoxin M1 outbreak ‘froze’ the Serbian dairy market and temporally disconnected it from the world milk market. Farmer’s prices fell below their long-run equilibrium levels. The total loss of the Serbian farm-level dairy sector during the crisis reached up to 96.2 million EUR. These ‘missed opportunity’ significantly slowed investment in the dairy sector.
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