Economic effects of the Boll Weevil Eradication Program on the Western Tennessee economy

Boll weevils have inflicted serious losses to cotton producers throughout this century. For the last two decades, the Boll Weevil Eradication Program has been successfully implemented in several cotton producing areas in the country. By effectively eliminating boll weevils, this government-sponsored program has contributed to lower insect control costs, improved cotton yields, and increased cotton acreage. The Boll Weevil Eradication Program has improved the profitability of the cotton farm business.

An eradication program was approved for Southwestern Tennessee in early 1997 and plans to extend the program to Northwestern Tennessee are under way. This study evaluated the potential economic effects of the program on the economy of Western Tennessee. Economic effects were analyzed at the farm, aggregate, and regional levels over a 10-year period that included an eradication and a post-eradication period.

This study used an integrated analytical approach to evaluate the economic impacts at each level of analysis. Budget techniques were used to evaluate the effects of the program on farm profitability. Based on expert opinions and previous studies, yield gains and insect control savings were forecasted. Scenarios were used given the difficulty in obtaining exact predictions. When program costs were considered, the results indicated that potential private benefits of the program exceed the private costs.

Aggregate effects were evaluated using the policy simulator model POLYSYS and an acreage response model. The analysis included cotton, com, soybeans, and wheat, which comprise the major cash crops in the regions. POLYSYS provided projected estimates of crop yields, costs, and prices under scenarios with and without eradication. No changes in prices were found when comparing scenarios. The acreage response model predicted program-induced increases in cotton acreage of up to 13% during eradication and up to 27% after eradication. Acreage reductions in other crops were not very significant. Corresponding changes in production were also estimated.

The evaluation of the regional economic effects of the program was performed with the use of the non-survey input-output IMPLAN model. A hybrid-IMPLAN model was developed by updating the regional output data of the agricultural sectors and the cotton production function. The use of a hybrid model introduced more accuracy into the impact analysis. Program-induced demand changes were designed to shock the baseline economy. Three sources of impacts were identified. Adjustments in cotton input expenditures at the farm level translated into changes in intermediate purchases, which were used to shock the input suppliers of cotton. Aggregate changes in crop production translated in corresponding changes in the demand for the crop sectors. Additional funds to the program provided by the government and administrators of the program represented a net increase in the purchases of agricultural services. Impact results were obtained in terms of output, employment, income, and value added. The results suggested that the program is expected to have a positive effect on the economic activity of the region.