Calibration of shadow values in constrained optimisation models of agricultural supply
Open access
Date
2017-07Type
- Journal Article
Abstract
This paper proposes a new information-based method to calibrate the shadow values of constraints in Positive Mathematical Programming models of agricultural supply. Shadow values are chosen so as to minimise model deviation from observed activity- and input-specific expenditures, enhancing the informational basis of the calibrated model. We provide an application to nitrogen policy in California using an agronomically and economically calibrated regionalised model. Regional shadow values of water are generally much higher than those suggested by the traditional method of Howitt, R. E. (1995b. American Journal of Agricultural Economics 77(2): 329–342). The implied statewide elasticity of demand for nitrogen is minimally affected by the choice of shadow values, however predicted environmental outcomes differ as this choice affects the distribution of nitrogen across regions and crops. Show more
Permanent link
https://doi.org/10.3929/ethz-b-000191489Publication status
publishedExternal links
Journal / series
European Review of Agricultural EconomicsVolume
Pages / Article No.
Publisher
Oxford University PressSubject
positive mathematical programming; linear programming; calibration; shadow value; nitrogen policyNotes
It was possible to publish this article open access thanks to a Swiss National Licence with the publisher.More
Show all metadata