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

In 1995, Julian Alston, George Norton, and Philip Pardey wrote Science Under Scarcity, a
book that “represents a culmination of a research agenda that extends all the way back to the late
1940’s” (Ruttan foreword). The authors offer that the issues and questions surrounding resource
evaluation and allocation are best answered when considered in their institutional setting, as well
as scientific and policy context. These topics are a useful introduction when looking more
closely at the factors affecting agricultural research benefits and measurement.

Between Griliches and Cochrane in 1958 and Science Under Scarcity in 1995, there has
been a range of economic issues in agricultural research and many journal articles published
debating these various issues. Many studies indicate that the land-grant system rates of return of
research are very high. The estimated rates of return on agricultural research are commonly in
the thirty to sixty percent range, as in the results of the studies outlined in Table 1.

Regardless of evaluation technique, time period, or database used, high rates of return to
investment in agricultural research have been steadily realized. Studies that have indicated high
rates of return to agricultural investments in research (Evenson, 1967; Cline 1975) were useful in
the justification for allocation of public funds to agricultural research. However, there have been
studies that indicate this rate declined over time (Peterson & Hayami, 1973; Davis 1979). This
indicates that the stock of knowledge increases with investment over time, but will depreciate
over time as well. According to them, this is why nearly half of all research conducted is
necessary for maintenance of current stock of knowledge or productivity (Adusei 1988, Adusei
& Norton, 1990). They recognize that different measures are appropriate for different types of
research. The type of research evaluated determines the timing and magnitude of depreciation
and obsolescence. The results of applied research are more susceptible to depreciation and

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