ABSTRACT
This chapter describes a dynamic model of agricultural production that incorporates intertemporal and externality effects is developed and linked to the analysis of long-run productivity. This model provides a means of analyzing the effects of environmental policy on future productivity levels. The chapter presents the environmental externalities in agriculture and the nature of existing regulatory policy to mitigate. It also presents the appropriateness of conventional production models and productivity measures to incorporate these externalities, along with suggestions for an alternative joint production model. The chapter explores a dynamic production model is developed for a sector that jointly produces intended agricultural output, cotton, and an unintended intertemporal externality, pesticide resistance. It also concentrates on the pesticide resistance problem for a cotton-producing region in California, parallels to other regions and commodities, as well as to other environmental and resource externality problems, exist.
