Valuing tradeoffs between agricultural production and wetland condition in the U.S. Mid-Atlantic region

Abstract

This study uses the directional output distance function, a multi-output economic production frontier model, to value the physical tradeoffs between agricultural production and wetland condition in the U.S. Mid-Atlantic region Nanticoke River watershed. We combine detailed ecological indicator data to measure wetland condition with satellite imagery land use data on agricultural production in the watershed. Our estimation procedure adapts the bootstrap methods originally developed by Simar and Wilson (1998) for nonparametric efficiency estimates to the quadratic directional output distance function. We find substantial variation in tradeoff values across the watershed, which could be used to target wetland conservation efforts in the region.