Highlights of Excellence

Agricultural Economics: Cost, Value, and Sustainability

The 1920s provided a prime stage for the emergence of a world-class academic focus on agricultural economics at the College of Agriculture. The post-war economyled farmers nationwide to recognize the need to understand the economic side of agriculture. The 1925 Purnell Act allocated federal funds for the studyof agricultural economics and rural sociologyat the land-grant universities. And the Berkeleycampus gained a significant benefactor in Amadeo Peter Giannini, founder of the Bank of America.

Economist HenryErdman joined the Division of Rural Institutions in 1922. He studied the operation of various kinds of cooperative organizations in the state. Within a couple of years, he produced the first in what was to become a long historyof seminal contributions for agricultural economics in the College: a model constitution for organizing a cooperative. Companies like Sunkist and Sun Diamond originallyformed using this model.

By1926, the unit had been renamed twice, finallybecoming the Division of Agricultural Economics. HarryWellman joined the College as the first economics specialist in the Cooperative Extension Service. He and another College economist, E.C. Voorhies, produced the first series of crop and price outlook studies of crops and the poultryindustryover the next three years.

During this same period, Amadeo Giannini, the son of immigrant vegetable growers in the Santa Clara Valley, had established a verysuccessful, farmer-friendlybank. The Bank of Italy, later known as the Bank of America, was the first to pioneer branch banking and to expand into rural California. To honor Giannini on his 60th birthday, the bankís directors offered him a bonus of $1.5 million. In 1928 he donated the entire sum to the University. One-third of the moneywas earmarked for building Giannini Hall, and the rest to establish the Giannini Foundation of Agricultural Economics to support research bearing on the economic status of California agriculturalists. Giannini Hall was completed in 1930.

Today, the foundation continues to serve researchers at the three landgrant campuses, and its libraryboasts the worldís finest collection of publications and data related to agricultural economics.

The Collegeís economists have long contributed to national and international economic planning, and manyof the current facultycontinue to provide research support and analysis of state and federal legislation. Earlyon, facultyparticipated in the NewDeal and several took leaves of absence from campus to serve in temporaryfederal positions. In the 1960s, Professor Emeritus Irma Adelman was a senior advisor to the government of South Korea and designed that countryís second five-year plan, which launched it on a strategyof export-led growth. The concepts for designing reforms of agricultural and food policies developed at the UruguayRound of the General Agreement on Tariffs and Trade (GATT) originated here.

The arrival of computers at the Universityin the 1960s transformed the field of agricultural economics from a descriptive to a quantitative science. Working with a refrigerator-sized, vacuum tube, magnetic drum computer, teaching assistant James Boles helped researchers link economic modes with machine computations. Boles later worked as both professor and chair of the department.

Other keyconcepts in agricultural and resource economics that originated with the Collegeís agricultural economists or that were developed based on work done here include:

■ Econometrics, or using statistical and mathematical methods to define numerical relationships between keyeconomic forces

■ Contingent valuation, a measurement vehicle for determining the value to societyof natural resources

■ Option value, an analytical concept that incorporates relevant uncertainties in the measurement of the gains and losses from environmental and resource projects, used to analyze sustainable natural resources, especiallybiodiversity

■ Economies of Scope, an economic theorystating that the average total cost of production decreases as a result of increasing the number of different goods produced.

In 1978, the growing importance of natural and environmental resources both in policydebates and in academic economic research led the department to change its name to Agriculture and Resource Economics (ARE).

Facultyin the department also direct and participate in the Collegeís Center for Sustainable Resource Development. The center facilitates the global interaction of natural resource professionals and researchers who work on common problems.

G ordon Rausser, former Dean of the College and two-time former chair of the department, sees agricultural economists as playing a key role in achieving natural resource sustainability. ìHowdo we design effective institutions and governance that balance economic growth and environmental quality?î

As the nationís top-rated program in agricultural economics, facultyand alumni from ARE are sure to help answer this question.

Society and Environment: Starting Rural, Going Global

As societyís approach to resource and environmental issues has changed and understanding of the natural world has grown more complex, UC Berkeleyhas innovated and led the development of social sciences in the natural resources field.

The College of Agricultureís first real advocate of social sciences was a civil engineer and irrigation expert. In an assessment prepared in 1911, Dean Thomas Hunt noted that the College needed to develop strong courses in rural economics and sociology. In 1913, he hired Elwood Mead to head the newDivision of Rural Institutions.

Mead was internationallyknown as a manager of irrigation projects, but he had a strong social vision. His experiences using irrigation plans to help with colonization efforts in Australia led him to believe that state-sponsored land settlement colonies could increase the economic and social value of small farms in California, and he convinced influential state leaders of this principle. So, while he developed academic coursework, his most notable contribution was the unprecedented integration of the Universityof Californiaís land development projects. Just as the land settlement program reached fruition, the United States joined World War I. A short agricultural boom was followed bya steep crash after the war ended.

Mead effectivelyleft the College in 1923 and Dean Hunt stepped down that same year. The Division of Rural Institutions was renamed the Division of Agricultural Economics in 1924 (see Agricultural Economics).

For the next decade, the College largelyavoided non-economic work on labor and social issues of agriculture, with one exception. Dean Claude Hutchinson served on a governorís select committee to investigate strike-breaking activityamong farm labor in the Imperial Valley. The committee concluded that worker agitation had been fostered byCommunists and Hutchinsonís zeal in this regard brought criticism and led the Universityand the Experiment Station to keep a lowprofile on labor matters for manyyears.

That changed in 1937 when Carl Alsberg, director of the Giannini Foundation, hired Dorothy Swane Thomas to join the facultyas a professor of rural sociology. In 1942, Thomas researched wartime relocation of Californiaís Japanese population to internment camps.

After WW II, social science at the College was largelyrestricted to economics. Within the School of Forestry, a newsubfield, forestryeconomics was launched (see Forestry). As the forestryprogram broadened, Berkeleywas the first to include a full-fledged social science program as a central element of its forestryprogram, including researchers in rural sociology, forest policy, and environmental history.

Social science was formalized as its own divisionóResource Institutions, Policy, and Management (RIPM)ówhen the Department of Environmental Science, Policy, and Management was created in 1992. In 2002, the name was changed to Societyand Environment in order to better reflect the nature of the research in the division. The division continues to grow, with a programmatic emphasis on equitable access to resources and environmental justice. Facultyare also stronglyinvolved in the globalization of resource issues and the division has just hired the first bioethicist on the Berkeleycampus.

Societyand Environment is in the Department of Environmental Science, Policy, and Management.