Putting a value on environmental services , quality

quality are not bought and sold in traditional markets. A simple price variable, for example, representing the costs of reducing runoff does not exist. Instead, economists have developed the notion of “shadow prices” that can be estimated from production and environmental data that give either the value of a non-marketable “good,” such as a unit of indigenous nitrogen in the soil, or the abatement costs of reducing a “bad,” such as nitrates in water. Such shadow prices can be used to develop alternative production systems, help producers meet environmental goals at the lowest costs, and help policy makers cultivate incentive systems to reduce agricultural pollution. This article quantifies the costs associated with two potentially polluting activities: mechanized trips across a field, which may generate air pollution; and total quantity of pesticides used in production, which has the potential to contaminate ground and surface water. In addition, we report the results of estimates that help to illustrate the productive and joint productive/environmental efficiency of alternative production systems.