AN ECONOMIC EVALUATION OF COTTON AND PEANUT RESEARCH IN SOUTHEASTERN UNITED STATES

has decreased consistently over the thirty-three year period with a small increase from 1989-
1995. During this time, total benefits for society have remained somewhat flat in comparison.
Although investment in cotton research has declined steadily, the benefits have remained
promising. Either the benefit of earlier research investments is being realized in later years (a
longer lag between project initiation and realized results) or the money is being utilized more
efficiently.

The internal rate of return for peanut research trended very differently from the returns on
cotton investment. Over the thirty-three year period, the IRR steadily decreased. This results
from the steady increase in expenditures for peanut research over the period. Total benefits to
society over this period gradually decrease causing the internal rate of return to shrink over time.
Given that investment decisions are made annually, shrinking annual benefits to society give no
economic justification for continuing increases in peanut investment in research over the period.
Research allocation decisions are vulnerable to political influence and the political interests of
those in decision-making positions. This may be one explanation for continuing to increase the
investment in peanut research despite the evidence of declining benefits to society.

Additionally, in a time when research initiatives in different commodities are competing for
limited funds, the allocation of funds to peanut research could be forcing a decrease in
allocations to cotton research. Although the estimated internal rate of return to research in cotton
exceeds the estimate for peanuts, politics not economics may be the deciding factor in the
respective trends in research funding.

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