Induced agricultural innovation and environmental quality: the case of groundwater regulation

Environmental quality is a bundle of characteristics that is more highly valued as incomes increase. This suggests that in high-income countries, institutional innovations (such as the Clean Air and Clean Water Acts) will impinge on factor prices and, thus, on technical choice to a greater extent than in poor countries. The tendency of high-income groups to attach more value to environmental quality and less to agricultural production, has domestic and international policy implications. These issues are analyzed using groundwater regulation as an example. -from Author