Doctoral Dissertations

Date of Award

6-1974

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Agricultural Economics

Major Professor

Merton B. Badenhop

Committee Members

J.A. Martin, H.E. Jensen, D.W. Brown

Abstract

This study analyzed two incompatible uses of the land and related water resources of the floodplain of the Obion-Forked Deer Rivers in western Tennessee. The related problems of flooding and a high groundwater table limit crop yields to levels below the potential productivity of the floodplain soils and prevent the dedication of other floodplain lands to agriculture. Stream channelization has been proposed as a solution to these problems. The flood protection and land drainage which channelization offers are desirable for agricultural purposes and represent an enhancement of the quality of the natural environment to rural landowners and related interests. However, the existing wetlands-forest environment and associated fish and wildlife habitat are desirable for the purposes of sportsmen and other environmentalists. The transformation and. loss of this environment through channelization and following land use changes represent a decrease in environmental quality to these interests. Either resource allocation would thus enhance the welfare of one set of interests at the expense of other interests.

The analysis was based on the proposition that resources should be allocated to the use which makes the greatest contribution to the welfare of society as a whole. Monetary values were used as a proxy for welfare with the assumption that a gain or loqs to any individual is a corresponding social gain or loss.

The value of the transformed environment or net development value was computed as the change in net agricultural returns attributable to channelization and following land use changes less the costs of channelization. The value of the current environment or preservation value was computed as the net values of forest products, fish, and wildlife which would be lost through development. Preservation value estimates were incomplete because of the current inability to predict the effects of channelization and land use change on potentially important parameters.

A project life of 50 years was assumed. Estimates were made for three levels of land use change at 8, 9, and 10 percent discount rates. Development values were estimated for five assumed crop price sets. While preservation values were estimated for six different sets of values, comparisons were made at the largest value set to reflect the loss of options which development entails.

The results indicated that the current environment should be maintained if crop prices were expected to approximate the three lower sets used in the analysis. The optimum resource use would be a matter of judgment if crop prices were expected to approximate the two highest sets because of the incompleteness of the preservation value estimates. Agricultural development would be the optimal alternative only if these unquantified, and perhaps unquantifiable, parameters were not judged to at least equal the differences between the net development and preservation values.

The divergences between the social and the private costs and returns associated with channelization indicated that land use controls would be required to assure socially optimal resource allocation. The analysis also suggested that arguments other than a significant benefit stream would be required to justify public financing of the project.

This analytical approach can identify the optimal resource allocation in a specified set of alternatives but provides no information to evaluate the possible existence of a superior, unspecified alternative. The important question of the optimal social organization for efficient and equitable decision making is also unanswered by this approach to the problem.

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