One frequently proposed policy is to consolidate rural school districts in order to save money by obtaining economies of size. The effects of school district size on both expenditures and standardized test scores are estimated for Oklahoma. Results indicate that economies of scale with respect to expenditures per student exist up to an average daily membership (ADM) of 965 students, but that as school districts become larger, tests scores decline. Even if savings in school district administration from consolidation are spent on instruction, state average test scores would decrease slightly. Thus, school district consolidation can reduce costs, but it will also reduce student learning.

There is rapidly growing interest in the use of market-based (MB) instruments in environmental policy. The papers in this session discuss three relatively new areas for such policies: groundwater contamination, nonpoint source surface-water pollution and carbon sequestration. The papers point out the potential for MB policies in these areas, but significant challenges remain. This comment highlights challenges related to five issues: monitoring and enforcement, trading ratios, baselines, transaction costs, and risk and uncertainty. All these issues must be addressed before MB policies can take the full step from economic theory to regulatory reality.

A two-stage model is used to examine a landowner's decision to use riparian buffers. First, the farmer chooses whether to continue farming or to sell the land for development. If the farmer continues farming, then he or she must decide whether or not to plant a buffer. If the farmer plants a buffer, he or she must choose its type: trees or grass. Simulations of a representative farmer determine the parameters and parameter values that affect each decision. The farmer chooses to plant a buffer unless the net crop price is high or the land rental rate is low. The choice of buffer type is affected by crop price, farm size, relative incentive payments, relative cost share rates, and amount of deer damage.

Parametric, non-parametric, and semi-parametric approaches are commonly used for modeling correlated distributions. Semi-parametric and non-parametric approaches are used to examine the risk situation for Kansas agriculture. Results from the model indicate that 2000 will be another difficult year for Kansas farmers, although crop income will increase slightly from 1999. However, unless another supplemental infusion of government payments occurs, crop income is expected to be the lowest since 1992.

Laboratory experimental methods are used to investigate the impacts of supply and/or demand risks on prices, quantities traded, and earnings within forward and spot market institutions. Random demand and/or supply shifts can be as much as 25 percent of the expected equilibrium outcome. Nevertheless, results suggest that the spot or forward trading institution itself has a greater influence on market outcomes than the presence of risk within the trading institution. Sellers tend to have relatively higher earnings in a spot market than buyers, regardless of the risk. Total surplus, however, generally is greater in a forward market.

This study presents a way to parametrically model and simulate multivariate distributions under potential non-normality, autocorrelation and heteroscedasticity and illustrates its application to agricultural risk analysis. Specifically, the joint probability distribution (pdf) for West Texas irrigated cotton, corn, sorghum, and wheat production and prices is estimated and applied to evaluate the changes in the risk and returns of agricultural production in the region resulting from observed and predicted price and production trends. The estimated pdf allows for time trends on the mean and the variance and varying degrees of autocorrelation and non-normality (kurtosis and right- or left-skewness) in each of the price and production variables. It also allows for any possible price-price, production-production, or price-production correlation.

Wyoming Game and Fish Department depredation payments were established to increase landowner tolerance toward, and thus the supply of, certain types of wildlife. This study examined how socio-economic and demographic characteristics of farmers and ranchers in Wyoming relate to tolerance toward wildlife and depredation claim submission. The severity of depredation and landowner satisfaction with the depredation policy were evaluated. The financial stability and economic intent of farmers and ranchers significantly influenced tolerance toward wildlife. Landowners tended to be less tolerant of depredation ensuing from elk. The complexity of the submission process was a deterrent to damage claim submissions.

Simulation as an analytical tool continues to gain popularity in industry, government, and academics. For agricultural economists, the popularity is driven by an increased interest in risk management tools and decision aids on the part of farmers, agribusinesses, and policy makers. Much of the recent interest in risk analysis in agriculture comes from changes in the farm program that ushered in an era of increased uncertainty. With increased planting flexibility and an abundance of insurance and marketing alternatives farmers face the daunting task of sorting out many options in managing the increased risk they face. Like farmers, decision makers throughout the food and fiber industry are seeking ways to understand and manage the increasingly uncertain environment in which they operate. The unique abilities of simulation as a tool in evaluating and presenting risky alternatives together with an expected increase in commodity price risk, as projected by Ray, et al., will likely accelerate the interest in simulation for years to come.

The purpose of this session is to discuss various procedures for modeling agricultural price and yield distributions. The model results are then used to provide improved analyses for agricultural risk management with the focus primarily upon the agricultural production sector. Each of the papers presented here contributes to that end. The discussion of these papers will be organized as follows: First, comments on each paper beginning with Richardson, Klose and Gray (RKG), then some general observations and concerns, along with a suggestion of issues for further discussion.

This study focuses on the longstanding impoverishment of the rural South and three of its subregions-Appalachia, the Mississippi Delta, and the Black Belt. The poor quality of life in rural Appalachia and along the Mississippi Delta has been publically acknowledged by programs and commissions for improving conditions. However, the more comprehensive Black Belt subregion that links parts of Southern Appalachia and the Southern Delta has not received such regional policy attention. While the South as a whole is more rural and impoverished than other U.S. regions, this is largely due to the poor conditions in the Black Belt. In addition to region and rurality, a third feature of the pattern is race. It is in the Black Belt that the South's poor socioeconomic conditions are most concentrated. Policy and program attention are needed for regional solutions that take rurality and race into account along with demographic and other subregional characteristics.

Microenterprise programs (MEPs) have become an important research concern and rural development strategy in international development circles. The basic premise of this approach is that microenterprises , that is firms with fewer than 10 employees, can be provided with a series of small loans that allow them to start or expand productive activities and thereby increase incomes and escape poverty. Governments and donor agencies have expanded funding for microfinance programs in low-income countries and more articles appear in the Western media about the success of this new approach in assisting the poor.

While this session focuses on the persistence of poverty in the rural South, my paper looks beyond how the research community can be effective in dealing with poverty to how we might better approach rural development. Persistent poverty is clearly a major element of the development dilemma, but the solution to poverty cannot come through transfer programs that support the poor, although they may play a role. It can only come from a broad development initiative that changes the environment in which the rural poor live and provides them with the opportunity to participate in the economy. This is a large task, and it is not one that we should believe will be easily or rapidly accomplished. But despite the odds we have an obligation to society to identify a role for social science research in the process and to carry out that role to the best of our ability.