nep-agr New Economics Papers
on Agricultural Economics
Issue of 2005‒04‒24
twenty papers chosen by
Angelo Zago
Universita degli Studi di Verona

  1. The Effect of Pollution Permit Allocations on Firm-Level Emissions By Meredith Fowlie; Jeffrey Perloff
  2. We Should Drink No Wine Before Its Time By Rachel Goodhue; Jeffrey LaFrance; Leo Simon
  3. Measuring Transactions Costs from Observed Behavior: Market Choices in Peru By Renos Vakis; Elisabeth Sadoulet; Alain de Janvry
  4. A Tale of Two Communities: Explaining Deforestation in Mexico By Jennifer Alix-Garcia; Alain de Janvry; Elisabeth Sadoulet
  5. The Impact of Farmer-Field-Schools on Knowledge and Productivity: A Study of Potato Farmers in the Peruvian Andes By Erin Godtland; Elisabeth Sadoulet; Alain de Janvry; Rinku Murgai; Oscar Ortiz
  6. Government Policy Effects on Urban and Rural Income Inequality By Ximing Wu; Jeffrey Perloff; Amos Golan
  7. Creating Incentives for Micro-Credit Agents to Lend to the Poor By Cecile Aubert; Alain de Janvry; Elisabeth Sadoulet
  8. Testing for Separability in Household Models with Heterogeneous Behavior: A Mixture Model Approach By Renos Vakis; Elisabeth Sadoulet; Alain de Janvry; Carlo Cafiero
  9. Peer Effects in Employment: Results from Mexico's Poor Rural Communities By Caridad Araujo; Alain de Janvry; Elisabeth Sadoulet
  10. The GMO Dispute before the WTO: Legal Implications for the Trade and Environment Debate By Francesco Sindico
  11. Use of Ecolabels in Promoting Exports from Developing Countries to Developed Countries: Lessons from the Indian LeatherFootwear Industry By Parashar Kulkarni
  12. Decentralization and Environment: An Application to Water Policies By Maria Angeles Garcia-Valiñas
  13. Combining Actual and Contingent Behavior to Estimate the Value of Sports Fishing in the Lagoon of Venice By Anna Alberini; Valentina Zanatta; Paolo Rosato
  14. Environmental Regulationand the Eco-Industry By Bernard Sinclair-Desgagné; Maia David
  15. Household Access to Microcredit and Child Work in Rural Malawi By Gautam Hazarika; Sudipta Sarangi
  16. Poverty Nutrition Trap in Rural India By Raghbendra Jha; Raghav Gaiha; Anurag Sharma
  18. Roads and Poverty in Rural Laos By Peter Warr
  19. UK Sugar Beet Farm Productivity under Different Reform Scenarios: A Farm Level Analysis By Alan W. Renwick; Cesar L. Revoredo Giha; Mark A. Reader
  20. Analysis of the Impact on UK Sugar Production Efficiency of Reforming the EU Sugar Regime By Alan W. Renwick; Cesar L. Revoredo Giha

  1. By: Meredith Fowlie (University of California, Berkeley); Jeffrey Perloff (University of California, Berkeley, and Giannini Foundation)
    Abstract: According to the Coase theorem, if property rights to pollute are clearly established and emissions markets nearly eliminate transaction costs, the market equilibrium will be independent of how the permits are initially allocated across firms. Using panel data from Southern California's RECLAIM program, we find that initial allocations are a statistically significant determinant of firm-level emissions. This relationship between allocation and emissions is stronger among firms with relatively high transaction costs. Thus, care must be exercised in the initial allocation of permits to ensure efficiency.
    Keywords: emissions trading, transaction costs,
    Date: 2004–02–01
  2. By: Rachel Goodhue (University of California, Davis); Jeffrey LaFrance (University of California, Berkeley); Leo Simon (University of California, Berkeley)
    Abstract: We consider the impact of taxes on the quantity and quality produced of goods whose market values accrue with age. The analysis is motivated by the high and increasing taxation rates in the wine industry across the globe. If society values both quality and quantity as goods, an optimal tax system would never reduce the quality marketed, though it necessarily reduces quantity. Any two-tax system that includes a volumetric sales tax and any one of three other types of tax - an ad valorem sales tax, an ad valorem storage tax, or a volumetric storage tax - spans the quality/revenue space and can support an optimal tax system. Any tax system that reduces quality relative to the market equilibrium with no taxes could increase tax revenues and reduce the quality distortion without increasing the quantity distortion. Given this, the only explanation for taxation schemes that reduce both the quantity and quality of goods like wine must be a Calvinistic social welfare function.
    Keywords: stochastic models, taxation, wine industry, wines,
    Date: 2004–02–01
  3. By: Renos Vakis (World Bank); Elisabeth Sadoulet (University of California, Berkeley); Alain de Janvry (University of California, Berkeley)
    Abstract: Farmers incur proportional and fixed transactions costs in selling their crops on markets. Using data for Peruvian potato farmers, we propose a method to measure these transactions costs. When opportunities exist to sell a crop on alternative markets, the observed choice of market can be used to infer a monetary measure of transactions costs in market participation. The market choice model is first estimated at the reduced form level with a conditional logit, as a function of variables that explain transactions costs. We then use these market choice equations to control for selection in predicting the idiosyncratic prices that would be received on all markets and the idiosyncratic proportional transactions costs that would be incurred to reach all markets. The net between the two gives us a measure of effective farm-level prices. This allows us to estimate a semi-structural conditional logit of the market choice model. In this model, the choice of market is a function of predicted effective farm-level prices, and of market information that accounts for fixed transactions costs. We can use the estimated coefficients to derive the price equivalence of the fixed cost due to information. We find that the information on market price that farmers receive from their neighbors reduces fixed transactions costs by the equivalent of doubling the price received, and is equal to four times the average transportation cost.
    Keywords: transactions costs, market choice, information,
    Date: 2003–10–01
  4. By: Jennifer Alix-Garcia (University of California, Berkeley); Alain de Janvry (University of California, Berkeley); Elisabeth Sadoulet (University of California, Berkeley)
    Abstract: Explaining land use change in Mexico requires understanding the behavior of the local institutions involved. We develop two theories to explain deforestation in communities with and without forestry projects, where the former involves a process of side payments to non-members of the community and the latter of partial cooperation among community members. Data collected in 2002 combined with satellite imagery are used to test these theories. For the forestry villages, we establish a positive relationship between the distribution of profits as dividends instead of public goods and forest loss. For communities not engaged in forestry projects, deforestation is largely related to the ability of the community to induce the formation of a coalition of members that cooperates in not encroaching. This happens more easily in smaller communities with experienced leaders. A disturbing result of the analysis is that deforestation is higher when a community engages in forestry projects, even after properly accounting for self-selection into this activity. This suggests that forestry projects as they now exist in Mexico are not sustainable and contribute to the deforestation problem.
    Keywords: deforestation, common property, partial cooperation,
    Date: 2003–11–07
  5. By: Erin Godtland (U.S. General Accounting Office); Elisabeth Sadoulet (University of California, Berkeley); Alain de Janvry (University of California, Berkeley); Rinku Murgai (Development Economics Research Group, The World Bank); Oscar Ortiz (International Potato Center, Consultative Group on Agricultural Research)
    Abstract: Using survey-data from Peru, this paper evaluates the impact of a pilot farmer-field-school (FFS) program on farmers' knowledge of integrated pest management(IPM) practices related to potato cultivation. We use both regression analysis controlling for participation and a propensity score matching approach to create a comparison group similar to the FFS participants in observable characteristics. Results are robust across the two approaches as well as with different matching methods. We find that farmers who participate in the program have significantly more knowledge about IPM practices than those in the non-participant comparison group. We also find that improved knowledge about IPM practices has a significant impact on productivity in potato production.
    Keywords: agricultural innovations, agricultural productivity, integrated pest management, potato cultivation,
    Date: 2003–11–01
  6. By: Ximing Wu (University of Guelph); Jeffrey Perloff (University of California, Berkeley, and Giannini Foundation); Amos Golan (American University)
    Keywords: income distribution, inequality, public policy, welfare,
    Date: 2004–02–01
  7. By: Cecile Aubert (Universite Paris Dauphine); Alain de Janvry (University of California, Berkeley); Elisabeth Sadoulet (University of California, Berkeley)
    Abstract: Microfinance institutions (MFIs) have introduced incentive pay schemes for their credit agents to induce information acquisition on borrowers. Bonuses linked to repayment are efficient for profit-oriented MFIs but insufficient for non-profit MFIs trying to reach very poor borrowers, when repayment and wealth are positively correlated. We show that no incentive scheme is consistent with this (non-verifiable) objective: Random audits on the share of very poor borrowers selected by the agent become necessary. Under the optimal contract, non-profit MFIs generally maximize the number of poor borrowers it services by cross-subsidization between very poor and less poor borrowers.
    Keywords: micro-credit, pro-poor objectives, incentives,
    Date: 2004–06–01
  8. By: Renos Vakis (World Bank); Elisabeth Sadoulet (University of California, Berkeley); Alain de Janvry (University of California, Berkeley); Carlo Cafiero (Universita degli Studi di Napoli Federico II)
    Abstract: Knowing whether a household behaves according to separability or non-separability is needed for the correct modeling of production decisions. We propose a superior test to those found in the literature on separability by using a mixture distribution approach to estimate the probability that a farm household behaves according to non-separability, and test that the determinants of consumption affect production decisions for households categorized as non-separable. With non-separability attributed to labor market constraints, the switcher equation shows that Peruvian farm households that are indigenous and young, with low levels of education, and lack of local employment opportunities are more likely to be constrained on the labor market.
    Keywords: labor, separability, mixture distributions, Peru,
    Date: 2004–08–01
  9. By: Caridad Araujo (The World Bank and Georgetown University); Alain de Janvry (University of California, Berkeley); Elisabeth Sadoulet (University of California, Berkeley)
    Abstract: Empirical evidence has shown that off-farm non-agricultural (OFNA) employment offers a major pathway from poverty for rural populations. However, the pattern of participation in these activities is heterogeneous across categories of individuals and poorly understood. We explore the role of spillovers from peers on an individual's participation in formal and informal OFNA employment using village census data for rural Mexico. We test and reject the possibility that peers' decisions could be proxying for unobserved individual, village-level, or individual-type effects. We find that peers' participation in OFNA employment has a large impact on an individual's ability to engage in this type of employment, both formal and informal, even after controlling for individual attributes and village characteristics. Peer effects are structured by similarities in gender, ethnicity, educational level, and land endowment. We find that marginal peer effects tend to be stronger for categories of individuals that are already more engaged in OFNA employment, such as men, non-indigenous people, the more educated, and the landless, contributing to reinforcing inequalities in accessing these jobs. However, the role of peer effects relative to that of education in obtaining formal OFNA employment is more important for members of groups that are less engaged in these jobs, such as women, indigenous people, the less educated, and smallholders.
    Keywords: off-farm employment, rural poverty, social aspects,
    Date: 2004–08–01
  10. By: Francesco Sindico (Universitat Jaume I)
    Abstract: USA, Canada and Argentina have challenged before the World Trade Organisation the European Communities’ (EC) denial of Genetically Modified (GM) product imports, which took place from 1998 to 2004 . Against this background, the goal of this paper is twofold. Firstly, we will determine which WTO provisions would have been violated by the EC. Secondly, we will highlight the dispute’s most important legal issues in order to see to what extent the dispute might influence the ongoing trade and environment debate. The paper concludes that the role of the precautionary principle in the application of the EC legislation is one of the dispute’s main issues. Furthermore, the Panel findings on the legal nature of the precautionary principle, and on its relevance for the interpretation of WTO provisions, will finally determine the influence of the GMO dispute on the trade and environment debate.
    Keywords: GMO, WTO, Trade, Environment
    JEL: Q00 F10
    Date: 2005–01
  11. By: Parashar Kulkarni (CUTS Centre for International Trade, Economics & Environment)
    Abstract: This paper tries to understand whether importers in the North are able to push exporters in the South towards sustainable production, with the help of a case study of the Indian leather industry. After providing a short description of the global leather footwear industry, the first section provides insights into the competitive advantages of different countries, characteristics of developing country exporters and the difference between large and small European buyers of Indian leather footwear. The subsequent section provides an insight into the different chains of influence that exist in trying to make international trade more sustainable with the help of a broad understanding of the means, their effectiveness, their constraints and a few examples of such chains of influence. Section four studies whether ecolabels are in a position to be suitable indicators of sustainability. Further it delves into understanding the perspectives of consumers, producers and regulators on whether ecolabels are useful in promoting sustainable exports. The explanation of how ecolabels conflict with brand dynamics is quite interesting. The policy measures provide clear options for targeting sustainable production. Suggestions include use of eco-elasticity indicator, toolbox approach to environment policy, introducing comprehensive sustainability labels, maintaining a level of mandatory legislations as well as a constructive effort to increase transparency in supply chains. The annexure include the research methodology adopted for the paper, the reason for choosing Europe as destination for the research, a brief overview about types of ecolabels and a small description of integrated product policies.
    Keywords: Ecolabels, Export promotion, Leather footwear, Market access
    JEL: F18
    Date: 2005–01
  12. By: Maria Angeles Garcia-Valiñas (University of Oviedo)
    Abstract: By means of a two-jurisdictional model, this paper analyses the optimal division of environmental policymaking functions among the different government levels, identifying the most appropriate level of decentralization in each case. The paper focuses on water resources policies, with an application to Spanish regions during the 1996-2001 period. The estimation of an environmental quality-consumption transformation function allows the implementation of a simulation to find the most efficient policies in the context of water resources.
    Keywords: Fiscal federalism, Environmental policies, Water resources
    JEL: H77 Q25 Q28
    Date: 2005–02
  13. By: Anna Alberini (University of Maryland); Valentina Zanatta (DICAS, Politecnico di Torino and Fondazione Eni Enrico Mattei); Paolo Rosato (DIC, Università di Trieste and Fondazione Eni Enrico Mattei)
    Abstract: This paper reports the results of a Travel Cost Method (TCM) study about the recreational use of the Lagoon of Venice for sports fishing. In April-July 2002, we conducted a mail survey of anglers with valid licenses fishing on the Lagoon of Venice to gather data on their fishing trips, behaviors and expenditures over the previous year. We also asked questions about trips that would be undertaken under hypothetical changes in the price of a trip and/or in the catch rate. Actual and hypothetical trips are combined to estimate single-site TCM demand function for trips. We propose several models to test whether it is acceptable to pool hypothetical and actual trip data, focusing on the respondent heterogeneity in the contingent behavior questions. Our models suggest actual and contingent behavior are driven by the same demand function, and can be pooled for estimation purposes. We use this estimated demand function, and its shift when the catch rate is improved, to compute angler surplus at the current catch rate and the change in surplus accruing from a 50% improvement in the catch rate. For the average angler in our sample, the former is about €1,700 a year, while the latter is about €2,800.
    Keywords: Sports fishing value, Travel cost method, Environmental improvement
    JEL: Q26 Q51
    Date: 2005–03
  14. By: Bernard Sinclair-Desgagné (HEC Montréal); Maia David (UMR INRA-INAPG Économie publique)
    Abstract: This paper re-examines environmental regulation, under the assumption that pollution abatement technologies and services are provided by an imperfectly competitive environment industry. It is shown that each regulatory instrument (emission taxes and quotas; design standards; and voluntary agreements) has a specific impact on the price-elasticity of the polluters’ demand for abatement services, hence on the market power of the eco-industry and the resulting cost of abatement. This implies that the optimal pollution tax will be higher than the marginal social cost of pollution, while a voluntary approach to pollution abatement may fail unless the eco-industry itself is willing to participate.
    Keywords: Pollution regulation, End-of-pipe pollution abatement, Environment industry
    JEL: H23 L13 Q58
    Date: 2005–04
  15. By: Gautam Hazarika (University of Texas at Brownsville and IZA Bonn); Sudipta Sarangi (Louisiana State University)
    Abstract: This paper examines the effect of household access to microcredit upon work by seven to eleven year old children in rural Malawi. Given that microcredit organizations foster household enterprises wherein much child labor is engaged, this paper aims to discover whether access to microcredit might increase work by children. It is found that household access to microcredit, measured in a novel manner as self-assessed credit limits at microcredit organizations, raises the probability of child work in households with sample mean values of land ownership and number of retail sales enterprises. It appears this is due to children having to take up more domestic chores as adults are busied in household enterprises following improved access to microcredit.
    Keywords: child labor, microcredit
    JEL: J22
    Date: 2005–04
  16. By: Raghbendra Jha; Raghav Gaiha; Anurag Sharma
    Abstract: The contribution of the present paper is threefold. First, we formally test whether the effect of calorie deprivation on wages is more significant/higher for the lower quantiles of workers. In the extant literature this is established through non-linear terms in the wage equation. A more satisfactory method of doing this is through quantile regressions. Second, the quantile regression approach helps us identify the exact group for which the poverty-nutrition trap holds. The extant literature is unable to establish whether there are systematic differences across different quintiles in the response of productivity/wages to nutrition. The present paper addresses this lacuna. Third, we are able to establish a critical wage level for which the PNT trap hypothesis holds. For wages higher than this the hypothesis does not hold. We then argue that this value of the wage rate should set a floor for any minimum wage for agricultural labourers.
    Keywords: nutrition, calories, wages, poverty trap, labourers Length (pages): 33
    JEL: I I I J
    Date: 2005–02
  17. By: Peter Warr
    Abstract: Indonesia is the world’s largest importer of its staple food, rice. Since the economic crisis of 1998, rice import policy has become increasingly protectionist and since early 2004, imports have been banned. This paper uses a general equilibrium model of the Indonesian economy to analyze the effects of an import ban on rice, including its effects on poverty. The analysis recognizes 1,000 individual households. The results indicate that the rice import ban raises poverty incidence by a little less than one per cent of the population. Poverty rises in both rural and urban areas. Among farmers, only the richest gain.
    Keywords: poverty; general equilibrium; rice imports; trade policy. Length (pages): 36
    JEL: Q18 F13 C68 O53
    Date: 2005–03
  18. By: Peter Warr
    Abstract: The relationship between poverty incidence and road development is analyzed in this paper, in the context of rural Laos. The results indicate that improving road access is an effective way of reducing rural poverty. Between 1997-98 and 2002-03, rural poverty incidence in Laos declined by 9.5 per cent. The results suggest that about 13 per cent of this decline can be attributed to improved road access to areas already having dry season access. There is now a high return to providing dry weather access to the most isolated households of Laos – those with no road access at all.
    Keywords: poverty incidence; rural roads; Lao PDR. Length (pages): 34
    JEL: H53 I32 O53 R41
    Date: 2005–04
  19. By: Alan W. Renwick (Land Economy Research Group, Scottish Agricultural College, UK); Cesar L. Revoredo Giha (Department of Land Economy, University of Cambridge); Mark A. Reader (Department of Land Economy, University of Cambridge)
    Abstract: The purpose of this paper is to study the effect that the imminent reform in the European Union (EU) sugar regime may have on farm productivity in the United Kingdom (UK). We perform the analysis on a sample of sugar beet farms representative of all the UK sugar beet regions. To estimate the changes in productivity, we estimate a multi-output cost function representing the cropping part of the farm, which is the component that would be mostly affected by the sugar beet reform. We use this cost function to compute the new allocation of outputs and inputs after the changes in the sugar beet quota and price support. This are subsequently used to compute measures of total factor productivity. Our results show slight decreases in the productivity at the individual farm level under both quota and price support reduction. However, when considering the aggregate level, the reduction in the price support shows significant increases in productivity, in contrast to the results obtained from a reduction in quota.
    Keywords: EU sugar reform; UK agriculture; UK sugar beet production; Multi-output cost function; Total factor productivity
    Date: 2005–02
  20. By: Alan W. Renwick (Land Economy Research Group, Scottish Agricultural College, UK); Cesar L. Revoredo Giha (Department of Land Economy, University of Cambridge)
    Abstract: The purpose of the paper is examining the potential implications for the UK sugar beet sector of the EU sugar regime reform. Although the reform has yet to be formalised, the initial proposals centre on price and quota cuts. Using panel data from the Farm Business Survey for England, the paper estimates two cost functions: one for the sugar enterprise and another for the cropping part of the farm (i.e., excludes any livestock enterprise) and use them to analyse the impacts on profitability and costs of three possible reform scenarios: a 25 per cent cut in UK quota, a 25 per cent cut in price, a 40 per cent cut in price. The results show that the largest gains in terms of economic efficiency would be achieved under the 40 per cent price cut; however, the models suggest that this would also lead to the greatest reduction in production if the fixed costs of producing sugar were not adjusted.
    Keywords: EU sugar reform; UK agriculture; UK sugar beet production; Multi-output cost function.
    Date: 2005–02

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