TECHNOLOGY AS AN AGRICULTURAL POLLUTION-CONTROL POLICY

In this paper we consider the market-level impacts of factor-augmentin g innovations designed to reduce the use of fertilizers and pesticides , first within the context of a simple two-factor model, and then thro ugh a simulation model of the U.S. corn market. In both models, the im pacts depend on the output demand elasticity and input substitution el asticities. The principal conclusion of the simulation analysis is tha t the potential for new techniques to reduce the use of agricultural c hemicals is limited. Capital-augmenting innovations would actually rai se fertilizer and pesticide usage. Land-augmenting innovations would a lso tend to increase pesticide usage.