In Free Market Environmentalism, economists Terry Anderson and Donald Leal write, "Subsidized irrigation . . . encourages farmers to break prairie sod and plant crops in arid regions. Rather than choosing drought-resistant crops that might be more appropriate in an environment undergoing global warming, farmers intensify the use of pesticides and chemical fertilizers to increase their yields. . ." (pp. 163-164). Which of the following explains the deadweight loss from irrigation subsidies?

Question

Quizplus · Accepted Answer

Irrigation subsidies lead to deadweight loss because they encourage farmers to use methods that have a social cost that exceeds the social benefit. Specifically, farmers are breaking prairie sod and planting crops in arid regions that require large quantities of pesticides and fertilizers, which can negatively impact the environment and public health. If farmers were not subsidized to use these methods, they would likely choose drought-resistant crops that are more appropriate for their environment and require fewer chemical inputs.

In Free Market Environmentalism, Economists Terry Anderson and Donald Leal