2005-02-06 papers

on Agricultural Economics

Issue of 2005‒02‒06
two papers chosen by

Optimal location of new forests in a suburban area By Ellen Moons; Bert Saveyn; Stef Proost; Martin Hermy
Loan Deficiency Payments versus Countercyclical Payments: Do We Need Both for a Price Safety Net? By Hart, Chad E.; Babcock, Bruce A.

Optimal location of new forests in a suburban area

By:	Ellen Moons (K.U.Leuven-Center for Economic Studies); Bert Saveyn (K.U.Leuven-Center for Economic Studies); Stef Proost (K.U.Leuven-Center for Economic Studies); Martin Hermy (K.U.Leuven-Laboratory for Forest, Nature and Landscape Research)
Abstract:	This paper looks for the optimal location of new forests in a suburban area under area constraints. The GIS-based methodology takes into account timber, hunting, carbon sequestration, non-use and recreation benefits and opportunity costs of converting agricultural land, as well as planting and management costs of the new forest. The recreation benefits of new forest sites are estimated using function transfer techniques. We show that the net social benefit of new forest combinations respecting the area constraints may differ up to a factor 21. The substitution effect between forests, both new and existing, turned out to be the dominant factor in the benefit estimation.
Keywords:	Benefit transfer, travel cost analysis, cost-benefit analysis, forest recreation, Geographical Information Systems (GIS)
JEL:	Q23 Q24 Q26 R14
Date:	2005–01
URL:	http://d.repec.org/n?u=RePEc:ete:etewps:ete0502&r=agr

Loan Deficiency Payments versus Countercyclical Payments: Do We Need Both for a Price Safety Net?

By:	Hart, Chad E.; Babcock, Bruce A.
Abstract:	The federal government currently runs two major price support programs in agriculture, the marketing loan and countercyclical payment (CCP) programs. While these programs are both targeted at providing producer price protection, they have different political and financial costs associated with them. We outline these costs and project the effects of various loan rate changes on these programs for eight crops (barley, corn, cotton, oats, rice, sorghum, soybeans, and wheat) for 2005. Loan rate changes affect the price support programs by changing the payment rate producers receive when payments are triggered. We find that the crop’s relative price strength versus its loan rate and the relationship between CCP base production and 2005 expected production have the largest influence on how loan rate changes affect outlays from the price support programs for the various crops. Of these crops, cotton is the only one that would be relatively unaffected by loan rate shifts. Corn and soybeans would see the largest declines in overall expenditures from price support programs if loan rates were decreased. Oats and soybeans would experience the largest percentage losses. However, the results also show that the federal government could maintain an agricultural price support structure at a lower cost than it is currently paying. The reduction in cost often comes in situations where the current array of price support programs overcompensates producers for price shortfalls. This shift would also likely find greater acceptance under the World Trade Organization (WTO) agriculture guidelines than would the current structure. For an administration that is looking to rein in deficit spending while at the same time negotiating new WTO guidelines, moving to lower loan rates could be an answer.
Date:	2005–02–03
URL:	http://d.repec.org/n?u=RePEc:isu:genres:12240&r=agr

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