Effects of Alternative Ozone Concentrations and Response Data on Economic Assessments: The Case of California Crops

Abstract

The economic impact of various ozone concentrations on California agriculture is examined using an economic model of crop production that accounts for interdependence among crops. Such interdependence recognizes that net economic effects are determined not only by yield sensitivity to ozone but also by market conditions that affect relative crop prices and profitability. Changes in crop yields due to alternations in ambient ozone concentrations are used to drive the economic model. The predicted yield changes are derived from NCLAN data under a range of assumptions concerning functional form and yield effects. The results indicate that the economic effects of ozone are substantial for 13 included crops. The economic estimates display varying sensitivity to the functional form of the response relationship. The need for additional experimental data to more precisely define the relationship depends on the range of policy actions being considered.