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Abstract
Issues of long term soil fertility decline and sustainability are becoming more
important for cropping industries in Australia. Helping to manage the level of soil
fertility in this context is an aim of economic response analysis. This paper reviews
the theory and methods used by economists to derive the optimal level of an input to
be used in a production process. In particular, response functions generated by a crop
simulation model are used as a basis for the analysis. The use of such models is
becoming widespread in the research and extension community. A variety of
methods are presented, in increasing order of complexity, to account for the real
world characteristics of the production environment in this context.