Estimating Producer's Surplus with the Censored Regression Model: An Application to Producers Affected by Columbia River Basin Salmon Recovery

Journal of Agricultural and Resource Economics 25(2):325-346

22 Pages Posted: 24 Feb 2016

See all articles by Michael R. Moore

Michael R. Moore

University of Michigan - School of Natural Resource

Noel Gollehon

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Daniel Hellerstein

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS), Resource and Rural Economics Division

Date Written: February 22, 2000

Abstract

Application of the tobit model to estimate economic welfare is transferred from the consumer side to the producer side. Supply functions are estimated for multioutput irrigators in the Pacific Northwest. Empirical procedures are then developed for computing expected producer's surplus from the output supply functions. Confidence intervals for the surplus measures are generated using the Krinsky-Robb method. An experiment predicts decreases in surplus given increases in water pumping cost. The experiment replicates possible increases in hydroelectric prices due to the salmon recovery program in the Columbia-Snake River Basin. Output substitution explains producers' ability to mitigate the effect of the price increases on producer's surplus.

Keywords: Endangered Species Act, multioutput supply, Pacific Northwest, producer's surplus, salmon, tobit regression, water price

JEL Classification: Q28, Q25, D61

Suggested Citation

Moore, Michael R. and Gollehon, Noel and Hellerstein, Daniel, Estimating Producer's Surplus with the Censored Regression Model: An Application to Producers Affected by Columbia River Basin Salmon Recovery (February 22, 2000). Journal of Agricultural and Resource Economics 25(2):325-346. Available at SSRN: https://ssrn.com/abstract=2736630

Michael R. Moore (Contact Author)

University of Michigan - School of Natural Resource ( email )

Ann Arbor, MI 48106-1248
United States
313-647-4337 (Phone)
313-936-2195 (Fax)

Noel Gollehon

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5539 (Phone)

Daniel Hellerstein

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS), Resource and Rural Economics Division ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5613 (Phone)
202-694-5756 (Fax)

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