Monday, January 26, 2015

Mercatus Center's Data on Regulation in Agriculture

In a previous post, I summarized an article in Regulation about the long-term effects of regulation on the U.S. economy. The somewhat dramatic result of that study suggested that GDP per capita would be 3.6 times higher than it currently is if regulation had remained at late 1940s levels. The authors of that paper used annual page counts from the code of federal regulations as a measure of regulation. I provided a discussion of several measures of regulation in that post.

The newest measure of regulation I'm aware of comes from the Mercatus Center, a university-based research center at George Mason University. Their method of measuring regulatory burden is to count the number of restrictive words (e.g. "must" "shall") in the code of federal regulations. This allows them to calculate indices that measure the number of restrictions on individual U.S. industries by individual federal regulatory agencies. The data can be accessed using a convenient online tool and more thorough explanations of their methods can be found here and here. The only drawback of the Mercatus data is that it currently covers a relatively short time span: 1997-2012.

I'm currently working on a research paper that examines the effect of regulation by the EPA and USDA on U.S. agriculture. When I have a draft ready, I'll be sure to make a blog post about it, but in the mean time, I thought I'd provide a short discussion of the Mercatus Center data I'm using for the project.

It seems that nearly every week several articles are published online in major publications praising or decrying some new EPA restriction on pesticide use, wetlands, feedlots, and many other aspects of agriculture and the rural economy. It's no surprise then that the Mercatus data suggests that EPA regulation in agriculture has increased dramatically from 1997 to 2012. Overall, EPA regulation has increased 88.8% over the time period. The annual average increase over the period was 4.8%.

USDA regulation of agriculture is probably not as well-known as that of the EPA. The USDA regulates feedlots, imported food products, biotechnology in crops, and many other aspects of agricultural production. While the USDA focuses more heavily on agriculture, USDA regulation has increased less dramatically (only 26.7% or an average of 1.7% annually) than EPA regulation over the 1997-2012 time period.

It's certainly interesting to see how restrictions on agricultural producers and agribusinesses changes over time. Given the power regulatory bureaucrats are given to change the framework of regulation in the U.S., it's important to keep track of annual changes. There's likely an interesting story in every shift, whether up or down, in the regulatory burden experienced by producers and agribusinesses.

At another level, analysis of the impact these changes in regulations have had on productivity, profitability, and efficiency of ag producers is likely to be interesting to producer groups, lobbying organizations, and politicians. Data on regulatory restrictions provided by research organizations like the Mercatus Center are tremendous resources for these analyses.

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