Provided by Research Papers in Economics
A Theoretical Framework for
Evaluating Social Welfare Effects of
New Agricultural Technology
Douglas L. Young
In recent years economists have expressed grow-
ing concern over the potential adverse social
consequences of technical change in agriculture,
both in developed and developing countries
[Falcon;Gotsch;Hightower;Schmitz and Seckler].
These critics, while recognizing the great benefits
of new technology under appropriate circum-
stances, have focused attention on two important
problems. The first is that the welfare gains and
losses produced by efficient technological in-
novations have sometimes been distributed very
inequitably among different groups in society.
Second, technologies that are socially inefficient
for particular settings have sometimes been
introduced. The latter problem is especially
serious in developing countries which are con-
fronted by a tempting backlog of technology.
Factor price distortions and personal biases often
combine to raise the private financial return to
investment in capital-intensive technologies above
the social return in these labor-abundant economies.
Gotsch and Dorner, among others, have empha-
sized the need for evaluating distributional as well
as efficiency consequences of adopting new agri-
cultural technology. Regional linear programming
models, such as those used in studies by Wills and
Donovan, are useful for analyzing the micro-
economic consequences for employment and
income distribution of technology change in a
given region. But there is need for a theoretical
framework to guide such evaluations of distri-
butional changes. The purpose of this paper is to
describe a simple framework for evaluating short-
term benefits and costs of adopting new agricul-
tural technologies for specific agricultural opera-
Douglas L. Young is a research assistant, Department of
Agricultural and Resource Economics, Oregon State
University.
This paper was prepared with the support of the
United States Agency for International Development
Project Contract No. AID∕CM∕ta-C-73-23.
tions. The approach is not intended for aggregate
analysis of general technological change.
The Weed Control Example
The theoretical framework presented here was
originally developed to evaluate the welfare impli-
cations of adopting modern weed control tech-
niques in sugarcane plantations and other areas
in Northeast Brazil. Herbicides, in particular, are
potentially one of the most labor-saving innova-
tions developed by modern agricultural science,
and their premature adoption in Northeast Brazil,
in response to government incentives, could sub-
stantially increase rural unemployment in one of
the most impoverished areas of Latin America.
A regional linear programming model, with
farm-size decomposition, is being utilized in
work underway to analyze the process of weed
control technology adoption and to measure
associated benefits and costs. The programming
analysis takes into consideration farm-type hetero-
geneities, seasonal labor supply constraints, envi-
ronmental variations, and other factors not explic-
itly treated in this paper. The simplified theoretical
framework described here is used to identify, theo-
retically, the benefits and costs being evaluated.
Although the discussion in this paper utilizes the
context of the weed control problem, the proposed
framework should have applicability to certain sim-
ilar micro-level problems of technological change.
Classification of Effects of Technical Change
This framework classifies impacts of technologi-
cal change by origin and by type. Two principal
causes for adopting new technology are considered.
First, technological breakthroughs or exogenous
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