The use of fertilisers in maize production has been the focus for many years of agronomic studies on research stations in East Africa. However, information on production risks and profitability of fertiliser use on smallholder farms is generally lacking because most of the early studies have focused on mean yields and yield components on research stations. This study applied rigorous analyses to determine conditions under which (1) production risks are low; (2) the recommended nitrogen (N) and phosphorus (P) fertiliser rates achieve a yield target of ≥3 t ha−1 believed to be a necessary condition to kick start a smallholder-led ‘green revolution’ in Africa and (3) N and P fertiliser use is profitable on smallholder farms in East Africa. Analysis of data from 464 on-farm trials in Kenya, Rwanda, Tanzania and Uganda revealed significant variations in production risks and nutrient use efficiency with season and soil type. On most sites, except in Uganda, production risks were lower with the recommended N and P fertilisers than the control during both the short and long rains. Production risks were three to four times higher with N and P fertiliser relative to the control on Lixisols and Ferralsols, but such risks were much lower on Nitisols, Leptosols, Vertisols, Plinthosols and Cambisols. The probability of exceeding grain yields of 3 t ha−1 with the recommended N and P rates was over 0.60 on Nitisols and Leptosols, but less than 0.20 on Lixisols and Plinthosols. The agronomic use efficiencies of N (AEN), P (AEP) and value cost ratios (VCR) were highest on Cambisols and lowest on Plinthosols. The VCR increased linearly with increase in AEN (R2 = 0.92) and AEP (R2 = 0.87) and less so with increase in grain yields (R2 = 0.47–0.60). Net present values indicated profitably of N and P fertiliser over the long term in only 30% of the site by season combinations in Uganda compared with 69% in Kenya, 81% in Rwanda and 84% in Tanzania. Patterns of N use efficiencies were different from P use efficiencies across soil types. Therefore, we recommend that N and P fertilisers should be appropriately targeted to soils where applied nutrients are used efficiently by maize crops.

The objective of this paper is to demonstrate that the gradient-constrained discounted Steiner point algorithm (GCDSPA) described in an earlier paper by the authors is applicable to a class of real mine planning problems, by using the algorithm to design a part of the underground access in the Rubicon gold mine near Kalgoorlie in Western Australia. The algorithm is used to design a decline connecting two ore bodies so as to maximize the net present value (NPV) associated with the connector. The connector is to break out from the access infrastructure of one ore body and extend to the other ore body. There is a junction on the connector where it splits in two near the second ore body. The GCDSPA is used to obtain the optimal location of the junction and the corresponding NPV. The result demonstrates that the GCDSPA can be used to solve certain problems in mine planning for which currently available methods cannot provide optimal solutions.

Landowners can engage in voluntary conservation with the help of incentive programs. Recommended conservation practices are selected based on management intentions as well as the contribution of those practices to the overall net returns. However, conservation motives are heterogeneous and based on individual risk behavior. Existing cost-share programs might either under-fund or over-fund conservation, which could lead to inefficient management of natural resources. The current analysis evaluates the economic feasibility of variable cover crop strategies, multiple seeding rates, within a soybean production system in silt loam and clay soils. The study utilizes stochastic efficiency with respect to a function, referred to as SERF, for determining the preferred strategies under various risk preferences. The SERF method accounts for the heterogeneity of individual decision-making with regards to conservation adoption. Results indicate that most risk-averse farmers chose tillage radish with medium seeding rate as their preferred strategy. However, as the risk-bearing capacity of an individual increases, the current level of incentives does not motivate to implement conservation. The most preferred plan for risk-neutral farmers is the fallow system in both silt loam and clay soils. The economic and risk assessment framework can improve understanding of the temporal dynamics of different practices and inform policy on conservation structure that promotes agricultural systems that are economically, environmentally, and socially sustainable.

This paper provides a Consent Justification for benefit–cost analysis (BCA). The Consent Justification is based on a tendency toward actual compensation. A substantial justification for using BCA as a tool is the actual Pareto test, called the Consent Justification, in combination with the net present value criterion for individual projects. The traditional justification, the potential compensation test (PCT), is unsatisfactory on several grounds. In addition, the PCT occupies the uneasy position of being the source of extended criticisms in the economic literature and especially in the legal and philosophy literature. The argument for the Consent Justification lies not only in the deficiencies of the PCT, but also, especially, in a showing through simulation that all tend to gain across a portfolio of projects which is not large but rather robust with respect to errors and assumptions.

Social discounting conventions vary widely. Some differences reflect institutional constraints, but many reflect differing assumptions about how a social discount rate should be derived and applied. The divide between advocates of social opportunity cost and social time preference (STP) frameworks seems unbridgeable. There is no consensus among STP advocates on whether the social cost of funding $1 of public spending is barely more than $1 of consumption or perhaps more than $2; or on whether the covariance of public service benefits with income merits a discount rate premium that is trivial or a few percentage points. The practicalities of government fund raising are sometimes overlooked. The issues are here reviewed in the light of the literature and of experience with developing and applying social discounting regimes and extended debates within government.

This paper focuses on systems producing short rotation coppice willows (SRCW) in chickens’ free-range areas. We aim to map chicken farmers’ motivation to implement SRCW, and to assess the economic viability of these systems. Semi-structured interviews were conducted with 18 free-range chicken farmers. Farmers agreed that chickens would prefer SRCW over grassland, which could benefit chicken welfare. They expected establishing an SRCW system would be labor intensive, and doubted if it would be a profitable investment. Some concerns of farmers might be taken away by exchanging information with farmers with SRCW experience. A partial budget analysis was performed to calculate the net present value (NPV) of six different scenarios, differing in the type of chickens, in whether the produced biomass was sold or valorized on-farm and in harvest pattern, all over a 23-yr period. The NPV was positive but low for all scenarios. A sensitivity analysis showed that changes in biomass yield, wood chip price, a price premium for poultry products and current fuel price were most likely to influence the NPV. A risk analysis revealed that NPVs were positive in the majority of the modeled cases. Scenarios in which biomass was used for on-farm heat production showed the highest risk of a negative NPV. A price premium for poultry products may be most effective at increasing profitability, but may only be feasible for farms selling directly to consumers. Establishing a solid market for biomass energy, including guaranteed demand and availability of appropriate machinery for cultivation, may mitigate farmers’ concerns.

Government support uncertainty, scarce yield information, and the inherent risk in bioeconomic phenomena are some of the deterrents faced by investors in the nascent cellulosic biofuel industry. A financial probabilistic model was developed to contrast the economic feasibility of producing cellulosic biofuels from energy cane and sweet sorghum using three technologies: hydrolysis, pyrolysis, and gasification. Hydrolysis and pyrolysis proved feasible (showed possibilities of a positive net present value) without government support and conditioned to stochastic feedstock yields and biofuel prices. Gasification was feasible with government support. Improved feedstock and biofuel productivity would considerably raise the feasibility probabilities for hydrolysis and pyrolysis without government support.

In order to guarantee the success of the nascent cellulose-based biofuel industry, it is crucial to identify the most economically relevant components of the biofuel production path. To this aim, an original stochastic financial model is developed to estimate the impact that different feedstock production and biofuel conversion parameters have on the probability of economic success. Estimation of the model was carried out using Monte Carlo simulation techniques along with parametric maximum likelihood estimation procedures. Results indicate that operational efficiency strategies should concentrate on improving feedstock yields and extending the feedstock growing season.

The economic threshold is a concept strongly embedded within the weed management literature. There are some theoretical concerns with applying a static approach such as the economic threshold to weed management decision making. An improvement is to adopt a population management approach where the intertemporal effects of decisions are taken into account. The focus should be on managing weed populations through time rather than minimizing the yield effect of weeds in a single season or year. Rather than viewing weeds as an annual production problem, the weed seed bank can be considered a renewable resource stock, and the management goal is to deplete this resource stock through time. The principles of natural resource economics illustrate that including the intertemporal effects of weed control will, for a given size of a seed bank, result in a greater level of weed control and a higher economic benefit than if control decisions were based solely on the current period effects. A dynamic economic model was developed of an extensive Australian spring wheat (Triticum aestivum) cropping system to test these principles using wild oat (Avena fatua and A. ludoviciana) as an example. The model was solved for a 20-yr time horizon for a population management approach and the traditional static economic threshold. The economic benefits from a population management approach were significantly greater than those generated by the economic threshold, and the final seed bank was considerably lower. This result suggests that a paradigm shift from thresholds to longer term population management is warranted.

Automatic, or robotic, milking systems have the potential to significantly change the way milk is produced on U.S. dairy farms. However, there is a high degree of uncertainty associated with adoption of this new technology. A real options approach is used to analyze the decision to replace an operational milking system with an automatic milking system. The most important source of uncertainty is shown to be the length of the technology's useful life. Under our assumptions, the automatic system is always an optimal investment if it is certain that it will last longer than the operational system being replaced.

The Net Present Value Sire Summary Professional Package (NPVSS) is a microcomputer program designed for technical personnel to help dairy producers better manage investments in genetic improvement. NPVSS is written in C language, utilizes the MS-DOS operating system, and requires 256K of RAM. It is menu driven and includes parameter screens to define herd management characteristics of individual producers. Profit rankings of bulls can be generated to evaluate alternative: a) objective functions (selection policies for genetic merit in milk income and type scores), b) herd management performance factors (conception rate, calving interval, age at first calving), and c) economic factors (milk price, semen price, discount rate, planning horizon).

Changes to commodity programs in the 2002 Farm Bill increased the value of crop base acreages on which decoupled payments are received. The bill also expanded the availability of key conservation programs. This paper compares the value of payments from commodity programs (along with continued crop production) to the easement payment (and recreational lease revenue) available under the Wetland Reserve Program. A net present value model using risk-adjusted returns is employed in the analysis for Mississippi delta cropland containing rice, cotton, and soybean base. Sensitivity analysis is conducted on some of the key variables affecting the decision.

Discrete-continuous project scheduling problems with positive discounted cash flows andthe maximization of the NPV are considered. We deal with a class of theseproblems with an arbitrary number of discrete resources and one continuous, renewableresource. Activities are nonpreemptable, and the processing rate of an activity is acontinuous, increasing function of the amount of the continuous resource allotted to theactivity at a time. Three common payment models – Lump Sum Payment, Payments at ActivityCompletion times, and payments in Equal Time Intervals are analyzed. Formulations ofmathematical programming problems for an optimal continuous resource allocation for eachpayment model are presented. Applications of two local search metaheuristics – Tabu Searchand Simulated Annealing are proposed. The algorithms are compared on a basis ofcomputational experiments. Some conclusions and directions for future research are pointedout.

The paper surveys the present state of knowledge about the appraisal and control of capital projects, and identifies the useful contribution which actuaries can make to the process.

Relevant theoretical considerations are discussed, including the choice of appropriate discount rates for use by companies when screening proposals. It is recommended that discount rates should be lower than those commonly used. Some practical working methods are summarised and examples are given of how risk analysis can be carried out, for both simple and complex appraisals. Attention is drawn to the special ‘social’ considerations which may apply in the case of Government projects. The opportunities now opening up for joint ventures between the UK Government and private sector partners are examined, and it is concluded that proper sharing of costs and risks can facilitate arrangements which are acceptable to both sides.

The paper concludes with a discussion of the procedures which companies can use to identify, appraise, control and monitor projects.