Compromise Solution for Economic-Environmental Decisions in Agriculture

P. G. Lakshminarayan, Jay D. Atwood, Stanley R. Johnson, Vince A. Sposito
February 1991  [91-WP 72]

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Lakshminarayan, P.G., J.D. Atwood, S.R. Johnson, and V. Sposito. 1991. "Compromise Solution for Economic-Environmental Decisions in Agriculture." Working paper 91-WP 72. Center for Agricultural and Rural Development, Iowa State University.


Least cost production versus the environmental on- and off-site erosion damage of agriculture is evaluated in a policy context for a major Corn Belt watershed. Compromise programming, previously utilized in firm-level multi-criteria decision making problems is applied to a regional agricultural production model with environmental policy goal trade-offs. The crop sector model allocates land, water, labor, capital, and commodity-program base acres to crop production. Production options include four conservation practices, three tillage methods, and several crop rotations. Crop yield and fertilizer levels are dependent upon erosion. Cropping options selected allow for both wind and water erosion.

The vector of objectives include three minimization functions: current production cost, future value of productivity loss, and sediment damage. Vector optimization technique was used to generate the payoff matrix containing efficient but simultaneously unobtainable solutions. Given the ideal but infeasible solution vector we generated efficient solutions in the compromise subset corresponding to the L1. L2. and Loo metrics. Trade-off relations were developed using the noninferior set estimation technique.