This article presents current investment and operating costs of ethanol and biodiesel plants for alternative prices of feedstock. The price of these two fuels is estimated for alternative prices of crude oil with the existing renewable fuels policy. The excise tax credit, currently $0.51 per gallon of ethanol and $1.00 per gallon of biodiesel, is a major contributor to the fuel price and profitability of these industries. The analysis demonstrates how the crude oil price, feedstock price, and excise tax credits interact to impact profitability of these industries.

Economists have shown an increasing interest in systems theory and simulation. The recent reviews by Anderson and LaDue and Vincent indicate the literature is repleat with models of business and farm firms developed by researchers from several disciplines. A smaller but no less sophisticated group of models is focused on simulated physical or biological processes. An even smaller segment of the literature deals with economic applications of models which simulate physical and biological phenomena.

Economists have become interested in models simulating physical and biological phenomena because of their experimental value. When a satisfactory approximation of reality can be created within the context of the model, experiments can then be conducted to determine the effects of changes in exogeneous factors on outcomes predicted by the model.

The introduction of vertical coordination in the hog industry has provided producers with new business arrangements for raising hogs. While some researchers have elicited utility functions for hog producers on the basis of income risk, none have addressed autonomy, a factor which appears to be important in business arrangement selection for independent family hog operations. In this study, a method is developed for eliciting a multi-attribute function with attributes of income and autonomy. Utility functions are elicited for a group of Minnesota farrow-to-finish hog producers. For these producers, autonomy dominated risk as the most important attribute in business arrangement selection.

The variables a manager faces in making decisions may be divided into two broad categories—those which are determined by the manager and those which are outside of his control. Agricultural economists have made many efforts to develop expectation models for one or more of the uncontrollable variables facing farmers and have suggested procedures for utilizing the resulting expectations. Recent developments in statistical decision theory provide a logically consistent framework for incorporating the predictions of expectation models [4, pp. 192-196]. Applications of Bayesian analysis utilizing predictions of one uncontrollable variable have been reported in the literature [1, 3]. However, many decision problems logically require expectations of two uncontrollable variables (such as price and yield) or more. This article illustrates a method of including predictors for more than one uncontrollable variable in the Bayesian framework, and reports some empirical results of an application to a stocking rate problem.

Nitrate contamination of municipal and domestic well water supplies is becoming an increasing problem in many rural and urban areas, raising the cost of providing safe drinking water. The objective of this paper is to describe a marketable permit scheme that can effectively manage nitrate pollution of groundwater supplies for communities in rural areas without hindering agricultural production in watersheds. The key to implementing this scheme is being able to link nitrate leaching from nitrogen fertilizer applied to crops at a farm to nitrate levels measured at a drinking water well.

A closed underground water supply whose annual recharge is insignificant relative to its annual withdrawal is a stock resource subject to eventual economic exhaustion. Furthermore, it is a common property resource because its users tap the same reservoir. Economists have expressed their concern over the intertemporal misallocation of such fugitive resources, arising from a possible divergence between social and private costs [5, 6, 7, 8, 9]. While the practical determination of the marginal social cost of a ground water stock at different points in time is a formidable task, economists have suggested methods of evaluating ground water as a stock resource [5,7,9].

Economic analyses of firm behavior are typically based on the assumption of maximization or minimization of a single goal. While economists recognize that multiple goals are important in making business decisions, a single goal, such as profit maximization, is used because it is operational and it provides an analytical approximation of firm behavior. However, the reduction of year-to-year income variability, providing an acceptable family living level, increasing net worth, additional leisure time, and many other goals have been suggested as being important to some farm firms. Some analyses have considered two or more of these goals by maximizing one subject to a constraint on another. In other cases, a utility function has been estimated for an individual farmer incorporating both expected income and variability of income. Although these efforts have been useful, progress towards incorporating multiple goals into empirical models has been inhibited by the inability to correctly specify important goals and the difficulty of incorporating several goals into frequently-used models. The recent development of simulation routines for farm firm analyses provides an analytical procedure that is sufficiently flexible to incorporate multiple goals. While it may be difficult to provide all of the information that is needed concerning goals and their use in decision making, additional information indicating the ranking of goals and the manner in which this hierarchy differs for farmers under alternative economic and noneconomic conditions provides a better basis for the selection of organizational and financial strategies.

Although the importance of multiple goals in the decision-making process has been recognized for years by economists, economic analyses typically are based on the assumption of maximization or minimization of a single goal. Some firm growth analyses have considered two or more goals by maximizing one goal subject to constraints on the remaining goals. In other cases, utility functions that incorporate expected income and income variability have been estimated for individual farm operators. Although these approaches are an effort to incorporate more than one goal in the decision process, firm growth research in general has not been based on multiple-goal decision models.

Conservancy districts can plan and apply land treatment and structural measures to reduce flooding and associated damages. The Conservancy District Act permits conservancy districts to appraise benefits and levy assessments to pay the cost of installing, operating, and maintaining works of flood protection not included in legislative appropriations. We are concerned with the method whereby these specified costs are distributed among flood plain farmers.

The assessment criterion is: Each beneficiary shall be assessed in relation to the proportion of benefits received. That is, flood plain farmers are to pay the proportion of specified flood protection costs that equal the proportion of total benefits received. The objective of assessing is consistent and equitable, but there is yet to be developed a method for computing assessments which meet this norm or objective.