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Abstract
Nutrient management and air emissions continue to be an area of increased management
control on all livestock operations as environmental regulations become more stringent.
Agricultural producers must consider uncertainty surrounding the timing of and potential
increases of environmental policy controls, such as emission taxes, when making future
investment decisions. An optimal control theory framework was applied to a dairy farm
facing an uncertain increase in emission taxes and an unknown date at which emission
taxes will take effect. The optimal investment path considering these uncertainties was
solved implicitly and compared to a full certainty case.