The total economic loss of rice production includes three factors. First, a reduction in cropquantity assumes that water pollution decreases rice yield. Second, a reduction in rice quality,which is measured as price, assumes that the lower price of rice in a particular region couldreflect reduced rice quality due to water pollution. Third, an increase in input costs assumesthat farms may attempt to compensate for the possible productivity losses by implementingactivities that are capable of offsetting this possible loss but are more costly to implement. Theexpectation of the profit loss is summarized by the following formula:
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