From total factor productivity to total resource productivity: Incorporating trends in pesticide pollution into productivity growth measures in United States agriculture

This thesis advances measurement methods of productivity growth in U.S. agriculture. The first part of the thesis links the aggregate U.S. productivity growth model with the corresponding state-specific measures. The result is a model of productivity growth that correctly identifies the sources of productivity growth within the U.S. farm sector. The overwhelming source of productivity growth has been productivity growth within the states; reallocations of primary inputs across states have had negligible impact of aggregate productivity growth. Although productivity in the aggregate farm sector has enjoyed a relatively smooth upward trend, the study reveals two interesting details. First, the aggregate measure has masked considerable variation in productivity growth across states. Second, the farm sector did experience a productivity growth slowdown in the mid-1970s.;Next the thesis develops a measure of productivity growth that accounts for the spread between the marginal value of resources to consumers and the marginal value of resources to producers, and therefore allows productivity growth to reflect true gains in economic efficiency. The new model, total resource productivity (TRP), is wholly consistent with the current model of TFP. TRP is derived from a welfare-based planner's model but retains the familiar production function residual measure of productivity growth. The relation between TFP and TRP growth is derived. The model shows TRP growth is a function of TFP growth and the spread between producers' marginal cost of abatement and a social planner's marginal value of the nonmarket resource. The model is applied to state and regional data on U.S. agriculture and unique data on environmental pollution from farms for the years 1972 to 1993. A translog cost model of the farm sector is used to estimate the marginal cost of water pollution abatement for farmers. TRP growth is calculated by region for U.S. agriculture and compared to TFP. Preliminary conclusions suggest TRP growth in U.S. agriculture to be only modestly higher than productivity growth as measured by TFP.