New Economics Papers
on Agricultural Economics
Issue of 2006‒01‒24
forty-five papers chosen by

  1. Risk Assessment for National Natural Resource Conservation Programs By Powell, Mark; Wilson, James
  2. 05-07 "Identifying the Real Winners from U.S. Agricultural Policies" By Timothy A. Wise
  3. Impediments to Employment and Enterprise Diversification: evidence from small-scale farms in Poland By Hannah Chaplin; Sophia Davidova; Matthew Gorton
  4. Reform of the EU Sugar Regime: Impacts on Sugar Production in Ireland By Alan Matthews; Hannah Chaplin
  5. From Uruguay to Doha: Agricultural Trade Negotiations at the World Trade Organization By Beierle, Thomas
  6. The Effects of Potential Land Development on Agricultural Land Prices By Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
  7. Obstacles to a Doubly Green Revolution By Blackman, Allen
  8. The Alberta Dilemma: Optimal Sharing of a Water Resource by an Agricultural and an Oil Sector By GAUDET, Gérard; MOREAUX, Michel; WITHAGEN, Cees
  9. Impacts of Federal Policies and Programs on Wetlands By Crosson, Pierre; Frederick, Kenneth
  10. EU Agricultural Policy: What Developing Countries Need to Know By Alan Matthews; Jean-Christophe Bureau
  11. Modelling the Impact of 2003 CAP Reform on Crop Production. The Case of Durum Wheat in Italy By Roberto ESPOSTI; Antonello LOBIANCO
  12. Global and EU Agricultural Trade Reform: What is in it for Tanzania, Uganda and Sub-Saharan Africia? By Thomas Giblin; Alan Matthews
  13. Incentive-Based Land Use Policies and Water Quality in the Chesapeake Bay By Walls, Margaret; McConnell, Virginia
  14. Technologies for Meeting Future Global Demands for Food By Crosson, Pierre; Anderson, Jock
  15. Implications of Domestic Support Disciplines for Further Agricultural Trade Liberalization By Keith Walsh; Martina Brockmeier; Alan Matthews
  16. Biological Limits on Agricultural Intensification: An Example from Resistance Management By Simpson, R. David; Laxminarayan, Ramanan
  17. Price, Private Demand and Optimal Provision of Public R&D in Italian Agriculture By Roberto ESPOSTI; Pierpaolo PIERANI
  18. Tariff Liberalization, Wood Trade Flows, and Global Forests By Sedjo, Roger; Simpson, R. David
  19. Transgenic Trees: Implementation and Outcomes of the Plant Protection Act By Sedjo, Roger
  20. How Well Can Markets for Development Rights Work? Evaluating a Farmland Preservation Program By Walls, Margaret; McConnell, Virginia; Kopits, Elizabeth
  21. Deforestation and Shade Coffee in Oaxaca, Mexico By Blackman, Allen; Albers, Heidi; Crooks, Lisa; Ávalos-Sartorio, Beatriz
  22. 'Direct and Indirect Shadow Price Estimates of Nitrate Pollution Treated as an Undesirable Output and Input', Journal of Agricultural and Resource Economics Vol. 27, No. 2 (December 2002) pp: 420-432. By Saleem Shaik; Glenn A Helmers; Michael Langemeier
  23. How Costly is it for Poor Farmers to Lift Themselves out of Subsistence? By Cadot, Olivier; Dutoit, Laure; Olarreaga, Marcelo
  24. Determinants of Land-Use Change In the United States 1982-1997 By Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
  25. Bioeconomic Model of Community Incentives for Wildlife Management Before and After CAMPFIRE By Fischer, Carolyn; Sterner, Thomas; Muchapondwa, Edwin
  26. Assessing Global CGE Model Validity Using Agricultural Price Volatility By Valenzuela, Ernesto; Hertel, Thomas; Keeney, Roman; Reimer, Jeff
  27. The StarLink Case: Issues for the Future By Taylor, Michael; Tick, Jody
  28. Biotechnology and Planted Forests: Assessment of Potential and Possibilities By Sedjo, Roger
  29. Land Use and Remedy Selection: Experience from the Field — The Abex Site By Mazurek, Janice; Hersh, Robert
  30. Agricultural Policies in the Presence of Distorting Taxes By Parry, Ian
  31. Land Cover in a Managed Forest Ecosystem: Mexican Shade Coffee By Blackman, Allen; Albers, Heidi; Sartorio, Beatriz; Crooks, Lisa
  32. Why Don't Lenders Finance High-Return Technological Change in Developing-Country Agriculture? By Blackman, Allen
  33. Time and the Valuation of Environmental Resources By Smith, V. Kerry
  34. The Roles of the Environment and Natural Resources in Economic Growth Analysis By Toman, Michael
  35. Land-Use Change and Carbon Sinks By Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
  36. Environmental Implications of the Foodservice and Food Retail Industries By Davies, J. Clarence; Konisky, David
  37. Economics of Natural Resource Scarcity: The State of the Debate By Krautkraemer, Jeffrey
  38. Bacterial Resistance and the Optimal Use of Antibiotics By Laxminarayan, Ramanan
  39. The Cost of Environmental Protection By Pizer, William; Morgenstern, Richard; Shih, Jhih-Shyang
  40. Does Nature Limit Environmental Federalism? By Smith, V. Kerry; Mansfield, Carol; Schwabe, Kurt
  41. Forestry Sequestration of CO2 and Markets for Timber By Sedjo, Roger; Sohngen, Brent
  42. Redesigning Food Safety: Using Risk Analysis to Build a Better Food Safety System By Taylor, Michael; Hoffmann, Sandra
  43. Environmental Economics By Stavins, Robert
  44. Was the NOAA Panel Correct About Contingent Valuation? By Kopp, Raymond; Smith, V. Kerry; Mitchell, Robert; Presser, Stanley; Ruud, Paul; Hanemann, W. Michael; Krosnick, Jon; Conaway, Michael; Martin, Kerry; Carson, Richard
  45. Nutrition Labels and Obesity By Jayachandran N. Variyam; John Cawley

  1. By: Powell, Mark; Wilson, James
    Abstract: This paper reviews the risk assessments prepared by the U.S. Department of Agriculture (USDA) in support of regulations implementing the Conservation Reserve Program (CRP) and Environmental Quality Incentives Program (EQIP). These two natural resource conservation programs were authorized as part of the 1996 Farm Bill. The risk assessments were required under the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994. The framework used for the assessments was appropriate, but the assessments could be improved in the areas of assessments endpoint selection, definition, and estimation. Many of the assessment endpoints were too diffuse or ill-defined to provide an adequate characterization of the program benefits. Two reasons for this lack of clarity were apparent- 1) the large, unprioritized set of natural resource conservation objectives for the two programs and 2) there is little agreement about what changes in environmental attributes caused by agriculture should be considered adverse and which may be considered negligible. There is also some "double counting" of program benefits. Although the CRP and EQIP are, in part, intended to assist agricultural producers with regulatory compliance, the resultant environmental benefits would occur absent the programs. The paper concludes with a set of recommendations for continuing efforts to conduct regulatory analyses of these major conservation programs. The central recommendation is that future risk assessments go beyond efforts to identify the natural resources at greatest risk due to agricultural production activities and instead provide scientific input for analyses of the cost-effectiveness of the conservation programs.
  2. By: Timothy A. Wise
    Abstract: In this paper, we argue that advocates for new U.S. agricultural trade policies should consider refocusing their campaigns on the corporate livestock sector rather than farmers. There is little evidence that farmers as a group are reaping significant gains from current U.S. agricultural subsidy programs, even though they are the direct recipients. Low prices and high costs have left farmers with stagnant or declining net farm incomes. Furthermore, there is little conclusive evidence that the removal of U.S. subsidy payments would significantly reduce production or raise prices, though there is significant disagreement on this point. There is wider agreement that U.S. farm policies contribute significantly to depressed prices for agricultural commodities. Among the beneficiaries of those low prices are the consumers of U.S. grains and oilseeds, notably the concentrated animal feeding operations that now dominate the U.S. livestock industry. These industrial operations get feed that is generally sold at below farmers’ costs of production. We raise two questions for future research, and provide tentative answers. First, would U.S. policies that ensure higher feed prices reduce the incentives toward concentrated feeding operations and tip the economic balance back toward diversified family farmers? Initial research suggests that the economic benefits of current policies to corporate livestock operators are significant and that their reform could contribute to structural change in the farm sector in favor of family farmers. Second, since subsidies to feed are not now treated as highly disciplined input subsidies for livestock operations under World Trade Organization rules, would a more accurate accounting bring U.S. subsidies above the maximum levels allowed in the prevailing Agreement on Agriculture? We present initial calculations that suggest such an accounting change would put the United States over is limit for 2000 and nearly over for 2001.
  3. By: Hannah Chaplin; Sophia Davidova; Matthew Gorton
    Abstract: In an environment of low returns to agricultural activities and slow structural change, both employment and enterprise diversification have been presented as possible strategies for raising the incomes of farm households. This paper focuses on the barriers to taking up off-farm employment and establishing new non-agricultural enterprises. Factor and cluster analysis are applied to a data-set of individual farms in Poland in order to identify groups of households facing similar constraints and profile policy measures that are most likely to assist diversification. The majority of non-diversifiers are unlikely to become pluriactive in the near future due to a combination of age, a desire to concentrate on farming and remoteness. Farm households that are willing to diversify are characterised by the lowest agricultural incomes. For these households, a poor endowment of human and physical capital is a major constraint.
    Keywords: Poland, diversification, off-farm employment, non-agricultural enterprises, cluster analysis
    JEL: R0 Q12
    Date: 2005–12–15
  4. By: Alan Matthews; Hannah Chaplin
    Abstract: The EU Common Market Organisation has remained largely unchanged since its inception nearly 40 years ago. Reform has become inevitable due to changes to other sectors in the Common Agriculture Policy and pressure arising from international commitments. The current system provides sufficient support for all Member States to produce sugar, regardless of their efficiency. The proposed reform will therefore affect the least efficient producing regions most strongly. This paper examines the case of Ireland in light of the competitive position of its sugar sector in the EU context. Calculation of the likely impact on sugar beet gross margins and farm income suggest that many producers will want to exit sugar beet production. In light of this, the implications and possible strategies for growers and Irish Sugar are discussed.
    Keywords: EU sugar policy, Irish agriculture, farm income
    JEL: Q18 Q12
    Date: 2005–12–15
  5. By: Beierle, Thomas
    Abstract: This paper examines current agricultural trade negotiations at the World Trade Organization, with particular attention to the relationship between liberalization and developing countries’ economic growth and food security. Agriculture remains one of the most highly protected arenas of international trade. The cost of such protection falls particularly hard on developing countries, where agriculture typically accounts for a much higher share of economic output, exports, and employment than in developed countries. Although the 1994 Uruguay Round of trade talks succeeded in bringing agriculture into the rules-based trading system, it did little to actually reduce agricultural trade protection. This paper describes how three important actors in the agricultural trading system—the United States, the European Union, and developing countries—are positioning themselves in the current talks to deal with the unfinished business from the Uruguay Round.
    Keywords: trade, agriculture, World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT)
    JEL: F13
  6. By: Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
    Abstract: We conduct a national-scale study of the determinants of agricultural land values to better understand how current farmland prices are influenced by the potential for future land development. The theoretical basis for the empirical analysis is a spatial city model with stochastic returns to future land development. From the theoretical model, we derive an expression for the current price of agricultural land in terms of annual returns to agricultural production, the price of recently developed land parcels, and expressions involving model parameters that are represented in the empirical model by nonlinear functions of observed variables and parameters to be estimated. We estimate the model of agricultural land values with a cross-section on approximately three thousand counties in the contiguous U.S. The results provide strong support for the model, and provide the first evidence that option values associated with irreversible and uncertain land development are capitalized into current farmland values. The empirical model is specified in a way that allows us to identify the contributions to land values of rents from near-term agricultural use and rents from potential development in the future. For each county in the contiguous U.S., we estimate the share of the current land value attributable to future development rents. These results give a clearer indication of the magnitude of land development pressures and yield insights into policies to preserve farmland and associated environmental benefits.
  7. By: Blackman, Allen (Resources For the Future)
    Abstract: Increasingly, conventional wisdom dictates that agrarian policy in developing countries should foster a "doubly green revolution" that both protects the environment and boosts output. Like the first green revolution, such a transformation will entail convincing millions of farmers to adopt new practices and, as a result, will confront well-documented barriers to technological change in developing-country agriculture. It will also face a number of new obstacles, including a divergence between the interests of policymakers and farmers, a policy environment biased in favor of input-intensive agriculture, and the fact that many environmentally friendly technologies entail relatively high set-up costs. At least in the short run, institutional constraints will limit the contribution of agricultural biotechnology to overcoming these obstacles. Hence, the first green revolution may serve as an overly optimistic model for a shift to a more sustainable agriculture.
  8. By: GAUDET, Gérard; MOREAUX, Michel; WITHAGEN, Cees
    Abstract: The purpose of this paper is to characterize the optimal time paths of production and water usage by an agricultural and an oil sector that have to share a limited water resource. We show that for any given water stock, if the oil stock is sufficiently large, it will become optimal to have a phase during which the agricultural sector is inactive. This may mean having an initial phase during which the two sectors are active, then a phase during which the water is reserved for the oil sector and the agricultural sector is inactive, followed by a phase during which both sectors are active again. The agricultural sector will always be active in the end as the oil stock is depleted and the demand for water from the oil sector decreases. In the case where agriculture is not constrained by the given natural inflow of water once there is no more oil, we show that oil extraction will always end with a phase during which oil production follows a pure Hotelling path, with the implicit price of oil net of extraction cost growing at the rate of interest. If the natural inflow of water does constitute a constraint for agriculture, then oil production never follows a pure Hotelling path, because its full marginal cost must always reflect not only the imputed rent on the finite oil stock, but also the positive opportunity cost of water.
    Keywords: nonrenewable natural resources, renewable natural resources, order of use, water resource, oil
    JEL: Q1 Q2 Q3
    Date: 2005
  9. By: Crosson, Pierre; Frederick, Kenneth
    Abstract: Human activities have resulted in the loss of about half of the original 221 million acres of wetlands in the conterminous 48 states. Federal laws, policies, and programs have had major impacts on the nation's wetland resources. Initially, they encouraged and subsidized the draining and filling of wetlands, the flooding of wetlands behind dams, and the diversion and alteration of streamflows to riparian wetlands. More recently, federal policies have been directed to conserving and preventing further net losses. The focus of this study is on the impacts of federal policies on riparian wetlands, i.e., those formed at the interface of rivers and streams and uplands and that require occasional flooding to maintain the health of their ecosystems. The study identifies the trends in wetland acreage, describes the principal federal policies and programs impacting riparian wetlands, summarizes what is currently known or can be deduced from existing research about the impacts of these policies and programs on riparian wetlands, identifies key knowledge gaps, and suggests priorities for additional research. The policies that once directly and indirectly encouraged drainage of wetlands as well as water use and development practices harmful to wetlands have for the most part been abandoned. In some cases they have been replaced by new policies designed to protect the remaining wetlands and to encourage wetland restoration and creation. From the mid-1950s to the early 1990s conversion of wetlands to agriculture accounted for some 70 percent of total conversions. From 1982 to 1992, however, agriculture actually contributed a small net increase in the number of wetland acres. Changes in federal agricultural policies played a major role in this turn around. Overall, net wetland losses have been slowed but not ended since a "no net loss" policy was established in 1989. Several lines of research could contribute to the design and implementation of policies to achieve the "no net loss" goal. Research is needed to understand how farmers' incentives to convert wetlands to agricultural uses would be affected should Swampbuster become toothless as farm subsidies are eliminated or agricultural prices rise. And, if this analysis suggests wetland losses to agriculture would likely accelerate, alternative market-based and regulatory strategies for curbing these losses should be examined. As wetlands are lost to development and other pressures, achieving the no net loss goal requires that these losses be compensated. Research on the physical characteristics and the ability of different wetlands to provide social values such as fish and wildlife habitat, retention of flood waters, and water quality improvements would provide a better basis for determining how much society should invest in protecting, enhancing, restoring, or creating wetlands and whether these investments adequately compensate for the functions of lost wetlands. Research also is needed to determine how mitigation banking might be made more efficient and effective in ensuring social values are adequately compensated when wetlands are lost.
  10. By: Alan Matthews; Jean-Christophe Bureau
    Abstract: This paper provides a consolidated, up-to-date overview of the changes to the CAP and the factors making for further reform from the particular perspective of decision-makers in developing countries. It discusses the principles and mechanisms by which EU farmers are supported under the CAP, and the way in which these mechanisms have been changing since the first major reform of the CAP was adopted in 1992. The main pressures for further reform of the CAP are identified, emphasising the political economy of further reform to provide some sense to developing country policy-makers of how these pressures for reform might play out in the future. Taking a horizontal approach, the impact of reform on developing countries of the three main policy instruments – domestic support, border protection and export subsidies – are then discussed, followed by a focus on a few commodities of particular interest to developing countries. The conclusion develops a checklist of factors which developing country policymakers can use to help track the evolution of the debate on CAP reform and its impact on developing countries.
    Keywords: Common Agricultural Policy, Agricultural trade, WTO, developing countries.
    JEL: F13 Q17 Q18
    Date: 2005–12–15
  11. By: Roberto ESPOSTI (Universita' Politecnica delle Marche, Dipartimento di Economia); Antonello LOBIANCO
    Abstract: This paper aims to summarize some of the major results emerging from simulating the impact of the CAP reform (the so-called Fischler Reform or Luxembourg Agreement, LA) within the AG-MEMOD model of the agri-food sector in Italy. The paper shows in detail how the model generates impacts when alternative policy scenarios (Agenda 2000 vs. LA) are specified. As major evidence of this impact in the Italian case, the crop sector is dealt with in detail. In particular, the case of supplementary payments for durum wheat clarifies how the reform may specifically affect Mediterranean agriculture and how alternative specifications of the regime change in durum wheat support may relevantly affect the impact.
    Keywords: commodity market models, common agricultural policy, italian agriculture
    JEL: Q11 Q18
    Date: 2005–04
  12. By: Thomas Giblin; Alan Matthews
    Abstract: This paper uses the ATPSM partial equilibrium trade model (developed by UNCTAD and the FAO) to examine the impact of various agricultural trade liberalisation scenarios on the countries of Sub-Saharan Africa. The model is presented in some detail along with an assessment of some of its strengths and limitations. Two types of trade policy liberalisation scenario are simulated. The first is a set of benchmark total unilateral agricultural trade liberalisation scenarios - by the EU, other regions of the world, Sub-Saharan Africa and our two individual case study countries Tanzania and Uganda. These benchmark simulations give an idea of the potential welfare effects from trade reform. The second set of simulations covers different trade reform proposals that have been put forward in the context of the Doha Development Round. The paper focuses in particular on the Harbinson proposal. Results are reported for total welfare changes as well as more disaggregated welfare impacts on producers, consumers, and government revenue. Changes in export volume and value, and changes in quota rent from preferential trade agreements are also reported. The findings for Tanzania and Uganda are that the welfare effects of rich-country agricultural trade reform are small and typically modestly negative. This reflects both their trade balance in agricultural goods and the erosion in the value of some preferences in the case of Tanzania. Liberalisation by the countries themselves generates the biggest, albeit still small, total welfare gains but at the cost of lost government revenue and significant losses in welfare for net-agricultural producers in rural areas where most of the poor live. The paper is an important contribution in moving beyond the aggregate results for Sub-Saharan Africa that are typically presented in trade simulation papers on agricultural liberalisation, aggregates which include a significant diversity of contrasting individual country impacts.
    Keywords: agriculture, trade, modelling, sub-Saharan Africa
    Date: 2005–12–15
  13. By: Walls, Margaret (Resources For the Future); McConnell, Virginia (Resources For the Future)
    Abstract: Abstract The activities conducted on land surrounding the Chesapeake Bay directly affect pollution levels in the Bay, and they do so in complex and varied ways. Policy attention has been focused, for the most part, on modifying these activities within a particular land use category but not on wholesale changes in land use. For example, farmers are encouraged to use “best management practices” (BMPs) that focus on fertilizer use, crop covers, and the like; residential and commercial developers are encouraged to manage stormwater runoff; and wastewater treatment plants are required to meet technology-based standards. But the amount of land in urbanized uses relative to the amount in farming, forestry, and open space has not been given the attention it deserves. In this paper, we discuss the ways that land use affects pollution in the Bay. We then analyze three economic incentive-based policies that could be used to alter land use patterns—purchase of development rights (PDRs), transferable development rights (TDRs), and development impact fees. The strengths and weaknesses of each policy are discussed. Finally, we discuss the issue of policy coordination, i.e., synchronizing policies focused directly on land use, such as TDRs, with input-based taxes. More research on this important policy issue is needed.
    Keywords: development impact fees, nonpoint source pollution, purchase of development rights, transferable development rights
    JEL: Q53 Q58 R14
  14. By: Crosson, Pierre; Anderson, Jock
    Abstract: Food can be produced under a number of technological conditions. Some observers hold that modern crop production technologies, typified by those embodied in the Green Revolution, are so intensive in the use of external inputs that they damage the environment and so are not sustainable. Those observers argue that “alternative” technologies that use fewer, safer external inputs mark the path toward agricultural sustainability. But the question arises- will those alternative technologies permit increases in global food production on the required scale? In this paper, we address this question and the conflicting arguments regarding the answer.
    Keywords: agriculture, environment, green revolution, research and development, technology
  15. By: Keith Walsh; Martina Brockmeier; Alan Matthews
    Abstract: This paper employs the GTAP computable general equilibrium model and dataset to analyse the implications of domestic support reductions in the context of agricultural trade liberalisation. Three specific issues are addressed: overhang in domestic support, the accurate distinction of the boxes in the GTAP dataset and the treatment of market price support in the amber box. An extensive domestic support database is used to calculate the change in applied domestic support rates from a specified cut in bound rates, and to identify the impact on the different domestic support boxes and the required reductions in each support category. The GTAP model is extended to incorporate an explicit representation of the market price support element of the AMS. The results from these extensions of the standard database and model support the view that the impact of an agreement to reduce domestic support will be limited and lower than conventionally estimated. Results of simulations combining domestic support cuts with market access and export competition disciplines show that the effect of import tariff reductions dominate the gains from domestic support cuts once full account is taken of the issues addressed in this paper.
    Keywords: WTO agricultural negotiations, domestic support, agricultural protection, Aggregate Measure of Support
    JEL: C68 F13 Q17 Q18
    Date: 2005–12–15
  16. By: Simpson, R. David; Laxminarayan, Ramanan (Resources For the Future)
    Abstract: When the application of pesticides places selective evolutionary pressure on pest populations, it can be useful to plant refuge areas—crop areas intended to encourage the breeding of pests that are susceptible to the pesticide. Renewed interest in refuge areas has arisen with recent advances in biotechnology and genetically modified (GM) crops. In this paper, we use a simple model of the evolution of pest resistance to characterize the socially optimal refuge strategy for managing pest resistance. We demonstrate some interesting analogies with other models of renewable resource management, such as those of fisheries. Among the analogous results are findings that maintaining what we might call "maximal sustainable susceptibility" is typically not economically optimal and that the stock of pesticide effectiveness maintained is a declining function of the discount rate. The former result is in contrast to some existing studies based solely on biological considerations. We also examine the land use consequences of the enhanced agricultural productivity that results from the use of GM crops. Arguments are frequently encountered to the effect that GM crops could reduce the total area required for agriculture and thereby increase the quantity of land conserved for natural habitat. We show that the situation may not be as simple as standard arguments portray it. If refuge areas are used to manage resistance, then more land will be devoted to agriculture than would be the case were it simply a matter of adopting a technology that offered the same yield per hectare without requiring the management of a biological stock such as pest susceptibility.
  17. By: Roberto ESPOSTI (Universita' Politecnica delle Marche, Dipartimento di Economia); Pierpaolo PIERANI
    Abstract: The current paper presents a model in which public R&D stock is included as a quasi-fixed input in a variable cost function. Its price affects the long run desired level, while its shadow price indicates whether under (over) investment occurs in the short run. Two alternative R&D prices and - thus - two different long-run desired levels, are defined. One concerns the private (farmer) perspective, in which farmers express demand under the assumption of costless R&D. The other considers the societal point of view, in which the objective is the optimal public R&D supply conditioned on its cost. Application of the above model to the Italian agricultural context (1960-1995) suggests a significant difference between these private and social desired R&D levels. The latter are, on average, closer to the observed values, though over-investment has emerged since the mid-eighties.
    Keywords: R&D price, public agricultural R&D, variable cost function
    JEL: O30 Q16
    Date: 2005–06
  18. By: Sedjo, Roger (Resources For the Future); Simpson, R. David
    Abstract: This paper examines the question of the likely effects on global forests of a further reduction in wood products tariffs including both solid wood products and pulp and paper, as has been proposed to the World Trade Organization (WTO) by the Asia Pacific Economic Community (APEC). The tariff reductions would be an extension of the tariff reductions associated with the Uruguay Round (Federal Register 1999). The questions include both how international trade is likely to change in response to further tariff reduction and also the implications for timber harvests and forests generally of such trade liberalization in the various forest regions. The paper finds that the evidence suggests further reductions in tariffs on forest products are likely to generate only very modest increases in worldwide trade and production, and the increased harvest pressures on forests due to tariff reduction should be quite modest. The major countries likely to experience export and production increases are found largely in the northern hemisphere and are likely to be able to facilitate additional harvests with minimal effects on the forests due to the modest nature of the impact, new forest practices laws, new forest set-asides, and movement toward improved practices designed to achieve multifaceted sustainable forestry. Furthermore, there is little reason to expect that tariff reductions will significantly increase harvests from tropical forests. Earlier tariff reductions appear to have had minimal impacts on tropical harvests or exports. Nevertheless, tropical forests will remain under deforestation pressure due to land conversion objectives, commonly to provide additional agricultural lands.
  19. By: Sedjo, Roger (Resources For the Future)
    Abstract: The responsibility for protecting U.S. agriculture from pests and diseases is assigned by the Federal Plant Pest Act (FPPA) to the Animal and Plant Health Inspection Service (APHIS) of the Department of Agriculture. The Plant Protection Act (Title 7 U.S.C. Sections 7701 et seq.) gives Aphis statutory authority over genetically modified organisms (GMO), in effect assigning to APHIS a related responsibility of determining whether a genetically altered plant, crop, or tree is likely to pose unacceptable risks to the environment. Although APHIS has considerable experience with crop plants, it has only limited experience with trees. Yet the possible benefits of applying genetic engineering to trees are substantial and include industrial wood production and environmental uses, such as toxic remediation and species restoration. This report focuses on the Plant Protection Act (PPA) and related regulations as they have been applied to timber transgenic trees.
    Keywords: Forestry, biotechnology, transgenic, tree plantations, timber supply, genes, GMOs, industrial wood, economics, regulations, costs, benefits, conservation
    JEL: Q21 Q23 Q16 O32 L73
  20. By: Walls, Margaret (Resources For the Future); McConnell, Virginia (Resources For the Future); Kopits, Elizabeth
    Abstract: Transferable development rights (TDRs) can be used as a local planning tool to preserve land for particular uses. TDRs separate ownership of the right to develop land from ownership of the land itself, creating a market in which the development rights can be bought and sold. Landowners who sell TDRs permanently preserve their land in an undeveloped state; those TDRs are then used to increase the density of development elsewhere. In this paper, we evaluate a TDR program for preserving farmland in Calvert County, Maryland. We evaluate the performance of the TDR market over the 23-year life of the program by looking at the number of transactions and TDRs sold and the level and dispersion of prices over time. We also look closely at the influence of the county government as a participant in the market. We locate the properties that have been preserved in the county as well as the subdivisions that have used TDRs to increase the density of development. We find that the program is achieving Calvert’s farmland preservation goals and the TDR market appears to have operated efficiently, at least since 1993 when the county increased its role in the TDR market. At that time, the county began purchasing a small number of development rights each year at a fixed and known price and also began publishing a newsletter providing information about the program. These actions stabilized prices and appear to have bolstered participants’ faith in the longevity of the program. Most of the agricultural properties preserved in the program are in areas less profitable for development. The demand for TDRs to increase density is greatest in subdivisions in the northern part of the county, closer to the major urban cities, and interestingly, in relatively rural areas with lowdensity zoning. There appears to be little demand for TDRs and the associated higher density in town centers or areas zoned with residential zoning.
    Keywords: land use, farmland preservation, development rights
    JEL: Q15 Q24 R14
  21. By: Blackman, Allen (Resources For the Future); Albers, Heidi; Crooks, Lisa; Ávalos-Sartorio, Beatriz
    Abstract: More than three-quarters of Mexico’s coffee is grown on small plots shaded by the existing forest. Because they preserve forest cover, shade coffee farms provide vital ecological services including harboring biodiversity and preventing soil erosion. Unfortunately, tree cover in Mexico’s shade coffee areas is increasingly being cleared to make way for subsistence agriculture, a direct result of the unprecedented decline of international coffee prices over the past decade. This paper summarizes the key findings of a three-year study of deforestation in Oaxaca, one of Mexico’s prime regions for growing shade coffee. First, we find that deforestation during the 1990s was significant. Second, the loss of tree cover can likely be slowed by promoting coffee-marketing cooperatives and “green” certification, providing coffee price supports, and specifically targeting areas populated by small, indigenous farmers for assistance. Finally, to be effective, such policies must be implemented quickly after price shocks occur.
    Keywords: deforestation, agroforestry, shade-grown coffee, Mexico, land cover
    JEL: O13 Q15 Q23
  22. By: Saleem Shaik (Mississippi State University); Glenn A Helmers (University of Nebraska); Michael Langemeier (Kansas State University)
    Abstract: The implication of treating environmental pollution as an undesirable output (weak disposability) as well as a normal input (strong disposability) on the direct and indirect shadow price and cost estimates of nitrogen pollution abatement is analyzed using Nebraska agriculture sector data. The shadow price of nitrogen pollution abatement treated as an undesirable output represents the reduced revenue from reducing nitrogen pollution. In contrast, the shadow price of nitrogen pollution abatement treated as an input reflects the increased cost of reducing nitrogen pollution. For the 1936-97 period, the estimated shadow price and cost of nitrogen pollution abatement for Nebraska ranges from $0.91 to $2.21 per pound and from $300 to $729 million, respectively.
    Keywords: Direct and indirect approaches, disposability, nitrogen pollution, nonparametric programming, shadow price
    JEL: O P
    Date: 2005–12–25
  23. By: Cadot, Olivier; Dutoit, Laure; Olarreaga, Marcelo
    Abstract: The main objective of this paper is to provide estimates of the cost of moving out of subsistence for Madagascar's farmers. The analysis is based on a simple asset-return model of occupational choice. Estimates suggest that the entry (sunk) cost associated with moving out of subsistence can be quite large somewhere between 124 and 153 percent of a subsistence farmer's annual production. Our results make it possible to identify farm characteristics likely to generate large gains if moved out of subsistence, yielding useful information for the targeting of trade-adjustment assistance programs.
    Keywords: entry costs; Madagascar; subsistence; switching regression; threshold regression; unknown sample separation
    JEL: F10 O12 O19
    Date: 2005–12
  24. By: Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
    Abstract: Changes in the use of land in the United States produce significant economic and environmental effects with important implications for a wide variety of policy issues, including protection of wildlife habitat, management of urban growth, and mitigation of global climate change. In contrast to previous descriptive and qualitative analyses of the trends in national land use, this paper uses an econometric approach to isolate the importance of historical changes in land-use profits and key government policies in determining national land-use changes from 1982 to 1997. The policies we examine are the Conservation Reserve Program (CRP) and total government payments to crop producers. We estimate a national-level discrete choice model of changes among the major land-use categories (crops, pasture, forest, urban, range, and CRP) with parcel-level observations of land use and land quality from the U.S.D.A. National Resources Inventory NRI) and measures of countylevel land-use net returns from a variety of sources. We then use fitted values from the econometric model to simulate land-use change from 1982 to 1997 under a series of factual and counterfactual scenarios that isolate the effects of different economic and policy factors. The simulations suggest how changes in economic returns and government policies have driven land-use changes in the past and will continue to affect nationwide land-use changes in the future. For example, we find that the introduction of the CRP and the decline in crop profits were the most significant explanatory factors driving the decline in cropland. Our results highlight some “unintended consequences” of government policies and the importance of net returns to a range of alternative land uses as determinants of land area change for each particular use.
    Keywords: land use; econometric model; counterfactual simulation; Conservation Reserve Program (CRP)
    JEL: C53 Q1 Q24 R14 R15
  25. By: Fischer, Carolyn (Resources For the Future); Sterner, Thomas; Muchapondwa, Edwin
    Abstract: This paper formulates a bioeconomic model to analyze community incentives for wildlife management under benefit-sharing programs like the Communal Areas Management Programme for Indigenous Resources (CAMPFIRE) in Zimbabwe. Two agents influence the wildlife stock- a parks agency determines hunting quotas, and a local community chooses to either aid or discourage outside poachers. Wildlife generates revenues from hunting licenses and tourism; it also intrudes on local agriculture. We consider two benefit-sharing regimes- shares of wildlife tourism rents and shares of hunting licenses. Resource sharing does not necessarily improve community welfare or incentives for wildlife conservation. Results depend on the exact design of the benefit shares, the size of the benefits compared with agricultural losses, and the way in which the parks agency sets hunting licenses.
    Keywords: bioeconomic, CAMPFIRE, community, poaching, wildlife, benefit sharing
    JEL: H41 Q20
  26. By: Valenzuela, Ernesto; Hertel, Thomas; Keeney, Roman; Reimer, Jeff
    Abstract: Computable General Equilibrium (CGE) models are commonly used for global agricultural market analysis. However, concerns are sometimes raised about the quality of their output since key parameters may not be econometrically estimated and little emphasis is generally given to model assessment. This article addresses the latter issue by developing an approach to validating CGE models based on the ability to reproduce observed price volatility in agricultural markets. We show how patterns in the deviations between model predictions and validation criteria can be used to identify the weak points of a model and guide development of improved specifications with firmer empirical foundations.
    Date: 2005
  27. By: Taylor, Michael; Tick, Jody
    Abstract: The disclosure in September 2000 that StarLink corn had been found in the human food supply putfood biotechnology in the public spotlight and caused concern among consumers and food systemstakeholders alike that a product approved only for animal use could find its way to grocery shelves. TheStarLink experience raises a number of issues that deserve study concerning the current regulatory systemand public policies affecting genetically modified foods. The issues include how to manage allergenicityissues posed by biotech foods at the approval stage. Most of the issues, however, involve post-approvalcontrol of staple food crops that have been genetically modified. It may be increasingly important in thefuture to maintain the identity of genetically modified crops and segregate them from conventional ones,yet neither the grain trading system nor the government regulatory system were designed to ensure this.This paper is the first step in a case study that Resources for the Future is conducting for the PewInitiative on Food and Biotechnology to identify and analyze the regulatory and public policy issuesraised by the StarLink episode. In this paper, we pose questions concerning the adequacy of curent legalauthority, regulatory procedures, and institutional arrangements for post-approval control of biotech foodsthat we intend to analyze in depth during the balance of the study based on interviews and other research.We welcome comment on this paper and the planned study.
    Keywords: agricultural biotechnology, food allergens, food regulation, food safety, genetically modified food, grain trading system, StarLinkTM corn
  28. By: Sedjo, Roger (Resources For the Future)
    Abstract: This paper addresses the potential impact of the introduction and development of biotechnology on planted forests. It includes a description of some recent innovations in forestry including the use of traditional breeding, and also more recent innovations involving biotechnology, including the development of clonal propagation and the use of modern molecular biology techniques. In addition to describing these innovations, the paper undertakes an assessment of their probable impact on future production of the forest industry, on the global timber supply, and on future markets for timber and wood products. The paper offers a description of recent innovations in tree breeding and biotechnology, including a discussion of innovations in agriculture that have promise for forestry. This is followed by a discussion of the current role of biotechnology in forestry and an assessment of the various types of biotechnological innovations that could be forthcoming in the next decade and beyond. Additionally, the paper examines the likely effects of biotechnology on the economics of forestry. An estimate is provided for the potential cost savings and/or value increases expected from the various innovations. Using these estimates, a quantitative assessment is made of global potential economic returns to the most immediate and major innovation, the herbicide tolerant trait. Additionally, estimates are made of the potential impact of cost savings realized from this type of biotechnology on future timber supplies in the global timber market.
  29. By: Mazurek, Janice; Hersh, Robert
    Abstract: As the United States Congress debates revisions to the federal Superfund law, one of the most important topics of discussion is the degree to which cleanups at Superfund sites should be based on their expected future land use. This discussion has engaged the Superfund community for several years. Despite this apparent interest in linking cleanup with land use, however, surprisingly little analysis has been done on what role land use already plays in selecting remedies. RFF researchers have addressed the shortfall with case studies at three Superfund sites—Abex Corporation in Portsmouth, Virginia, Industri-Plex in Woburn, Massachusetts, and Fort Ord near Monterey, California—where land use has played a prominent role in the remedy selection process. Each of the case studies includes a description of- the contamination at the site; the different stakeholders involved in the remedy selection process; and the influence that land use considerations have had on this process. The three case studies are part of a larger RFF research project on land use and remedy selection that was funded in part under a grant from the U.S. Environmental Protection Agency.
  30. By: Parry, Ian (Resources For the Future)
    Abstract: This paper uses analytical and numerical general equilibrium models to assess the efficiency impacts of agricultural policies in a second-best setting with pre-existing distortionary taxes. We analyze production subsidies, production quotas, acreage controls, subsidies for acreage reductions and lump sum transfers to agricultural producers. We find that pre-existing taxes raise the cost of all these policies and by a substantial amount. Under our central estimates this increase in cost is typically at least 100-200 percent. Two effects underlie these results. First, raising the rates of distortionary taxes to finance subsidy policies leads to additional efficiency losses. Second, policies that raise (lower) the costs of producing agricultural output lead to a reduction (increase) in the economy-wide level of employment. This implies an efficiency loss (gain) in the labor market, which is distorted by taxes. The latter effect is not incorporated in earlier studies. Consequently, previous studies have significantly overstated the costs of production subsidies and understated the costs of production quotas, acreage controls and subsidies for acreage reductions.
  31. By: Blackman, Allen (Resources For the Future); Albers, Heidi; Sartorio, Beatriz; Crooks, Lisa
    Abstract: Managed forest ecosystems—agroforestry systems in which crops such as coffee and bananas are planted side-by-side with woody perennials—are being touted as a means of safeguarding forests along with the ecological services they provide. Yet we know little about the determinants of land cover in such systems, information needed to design effective forest conservation policies. This paper presents a firstever spatial regression analysis of land cover in a managed forest ecosystem—a shade coffee region of coastal Mexico. Using high-resolution land cover data derived from aerial photographs, along with data on the institutional, geophysical, socioeconomic, and agronomic characteristics of the study area, we find that plots in close proximity to urban centers are less likely to be cleared, all other things equal. This finding contrasts sharply with the literature on natural forests. In addition, we find that membership in coffee marketing cooperatives, farm size, and certain soil types are associated with forest cover, while common property, proximity to small town centers, and the prevalence of indigenous peoples are associated with forest clearing.
    Keywords: deforestation, managed forest ecosystem, agroforestry, shade-grown coffee, Mexico, spatial econometrics, land cover.
    JEL: O13 Q15 Q23
  32. By: Blackman, Allen (Resources For the Future)
    Abstract: Most of the literature attributes credit constraints in small-farm developing-country agriculture to the variability of returns to investment in this sector. But the literature does not fully explain lenders’ reluctance to finance investments in technologies that provide both higher average and less variable returns. To fill this gap, this article develops an information-theoretic credit market model with endogenous technology choice. The model demonstrates that lenders may refuse to finance any investment in a riskless high-return technology— regardless of the interest rate they are offered—when they are imperfectly informed about loan applicants’ time preferences and, therefore, about their propensities to default intentionally in order to finance current consumption.
    Keywords: : agriculture, asymmetric information, credit, developing country, technology adoption.
    JEL: O12 O16 O33 Q14 D82
  33. By: Smith, V. Kerry
    Abstract: This paper considers the modeling strategies that have been used to incorporate time in revealed and stated preference methods for valuing environmental resources. After reviewing a subset of the economic models for describing time as an input to household production; time in creating habits and persistence in demand for particular services of environmental resources, and time as offering an opportunity for future consumption, the overview suggests that time has been used as a complement in production or consumption to marketed goods in each of these frameworks. The paper suggests two possible alternatives. This structure along with further restrictions to preferences or technology implies that there are other strategies for using revealed preference data to measure the economic value of changes in environmental quality.
  34. By: Toman, Michael
    Abstract: The primary aim of this paper is pedagogical. We first present and discuss a “wiring diagram” framework in order to elucidate the general links between economic growth and "natural capital." After developing the general framework, we develop parallel frameworks applicable to several specific sectors of the economy (agriculture, forestry, and manufacturing). Two appendices provide a mathematical formulation of the economy-wide framework and a brief historical review of the role of natural resources and the environment in economic growth theory.
    Keywords: economic growth, natural resources, sustainable development
    JEL: Q00 O1
  35. By: Stavins, Robert; Plantinga, Andrew; Lubowski, Ruben
    Abstract: When and if the United States chooses to implement a greenhouse gas reduction program, it will be necessary to decide whether carbon sequestration policies — such as those that promote forestation and discourage deforestation — should be part of the domestic portfolio of compliance activities. We investigate the cost of forest-based carbon sequestration. In contrast with previous approaches, we econometrically examine micro-data on revealed landowner preferences, modeling six major private land uses in a comprehensive analysis of the contiguous United States. The econometric estimates are used to simulate landowner responses to sequestration policies. Key commodity prices are treated as endogenous and a carbon sink model is used to predict changes in carbon storage. Our estimated marginal costs of carbon sequestration are greater than those from previous engineering cost analyses and sectoral optimization models. Our estimated sequestration supply function is similar to the carbon abatement supply function from energy-based analyses, suggesting that forest-based carbon sequestration merits inclusion in a cost-effective portfolio of domestic U.S. climate change strategies.
    Keywords: abatement; carbon; climate change; costs; forestry; greenhouse gases; land use; landuse change; sequestration
    JEL: Q54 Q23 Q24 Q15
  36. By: Davies, J. Clarence (Resources For the Future); Konisky, David
    Abstract: The growing size and importance of service sector industries in the U.S. economy raises questions about the suitability of the current environmental management system to deal with perhaps a changing set of environmental concerns. This paper analyzes the environmental impacts associated with the activities undertaken and influenced by two service sector industries—foodservice (e.g., restaurants) and food retail (e.g., grocery stores). This paper is not a definitive analysis of the magnitude of the environmental effects of these industries, but is intended to be a comprehensive survey of the types of environmental implications—positive and negative—of these two service sectors. The foodservice and food retail industries are components of a larger industrial system, the food marketing system, that extends from the production of food to the marketing of food products to consumers. The U.S. foodservice industry comprises an estimated 831,000 individual establishments, employs an estimated 11 million people (about 8.6% of the U.S. workforce), and is expected to have total sales of $376 billion in 2000. The U.S. food retail industry encompasses approximately 126,000 grocery stores, employs approximately 3.5 million people (about 2.7% of the U.S. workforce), and had sales totaling $449 billion in 1998. For this analysis, we use a simple conceptual framework that segregates the environmental impacts of these industries into three categories- direct, upstream, and downstream. We conclude that, while the direct environmental impacts (e.g., energy use, solid waste generation; air and water emissions; food safety concerns; refrigerants) of these industries are important to recognize and address, opportunities also exist for these industries to address their upstream and downstream environmental impacts.
  37. By: Krautkraemer, Jeffrey
    Abstract: Whether economic growth can be sustained in a finite natural world is one of the earliest and most enduring questions in economic literature. Even with unprecedented growth in human population and resource consumption, humans have been quite adept at finding solutions to the problem of scarce natural resources, particularly in response to signals of increased scarcity. Because environmental resources generally are not generally traded on markets, however, scarcity signals for these resources may be inadequate, and appropriate policy responses are difficult to implement and manage. In the debate over the economic scarcity of natural resources, one significant change in recent years has been a greater focus on the ecosystem services and the resource amenities yielded by natural environments. The general conclusion of this paper is that technological progress has ameliorated the scarcity of natural resource commodities; but resource amenities have become more scarce, and it is unlikely that technology alone can remedy that.
    Keywords: natural resource scarcity. environmental amenities. resource substitution.
    JEL: Q01 Q10 Q20 Q30 Q40 Q50
  38. By: Laxminarayan, Ramanan (Resources For the Future)
    Abstract: The increasing resistance of harmful biological organisms (bacteria, parasites, and pests) to selection pressure from the widespread use of control agents such as antibiotics, antimalarials, and pesticides is a serious problem in both medicine and agriculture. Modeling resistance —or, conversely, the effectiveness of these control agents as a biological resource—yields insights into how these agents should be optimally managed to maximize their economic benefit to society. This paper uses a model of evolution of bacterial resistance to antibiotics—in which resistance places an evolutionary disadvantage on the resistant organism—to develop a simple sequential algorithm of optimal antibiotic use. Although the solution to this problem follows the well-recognized rule of using resources in the order of increasing marginal cost, the unique ways in which these economic costs arise from differing biological traits distinguishes this problem from others in the natural resources arena. This paper also examines the option of periodically rotating between two or more antibiotics and characterizes the economic and biological criteria under which a cycling strategy is superior to simultaneous use of two or more antibiotics.
    Keywords: antibiotic resistance, natural resource, optimization.
    JEL: I0 Q0
  39. By: Pizer, William (Resources For the Future); Morgenstern, Richard (Resources For the Future); Shih, Jhih-Shyang (Resources For the Future)
    Abstract: Expenditures for environmental protection in the U.S. are estimated to exceed $150 billion annually or about 2% of GDP. This estimate, based on largely self-reported information, is often cited as an assessment of the burden of current regulatory efforts and a standard against which the associated benefits are measured. Little is known, however, about how well reported expenditures relate to true costs. The potential for both incidental savings and uncounted burdens means that actual costs could be either higher or lower than reported expenditures. A significant literature supports the notion that increases in reported environmental expenditures probably understate actual economic costs. Estimates of the true cost of a dollar increase in reported environmental spending range from $1.50 to $12. This paper explores the relationship between reported expenditures and economic cost in the manufacturing sector in the context of a large plant-level data set at the four-digit SIC level. We use a cost function modeling approach which treats both environmental and non-environmental production activities as distinct, unrelated cost minimization problems for each plant. We then explore the possibility that these activities are, in fact, related by including reported regulatory expenditures in the cost function for non-environmental output. Under the null hypothesis that reported regulatory expenditures accurately measure the cost of regulation, the coefficient on this term should be zero. In ten of eleven industries studied, including all of the heavily regulated industries, this null hypothesis is accepted using our preferred fixed-effects model. Our best estimate, based on an expenditure weighted average of the four most heavily regulated industries, indicates that an incremental dollar of reported environmental expenditure reduces non-environmental production costs by eighteen cents with a standard error of forty-two cents. This is equivalent to saying that total costs rise by eighty-two cents for every dollar increase in reported environmental expenditures. Using an alternative pooled model we find uniformly higher estimates. Although consistent with previous results, we believe these higher estimates are biased by omitted variables characterizing differences among plants. Summarizing, our results enable us to reject claims that environmental spending imposes large hidden costs on manufacturing plants. In fact, our best estimate indicates a modest though statistically insignificant overstatement of regulatory costs.
  40. By: Smith, V. Kerry; Mansfield, Carol; Schwabe, Kurt
    Abstract: This research considers whether the principles developed to analyze the optimal jurisdiction for producing public goods can be applied in cases where regulations of private activities provide the primary means to deliver different amounts of public and quasi-public goods. The analysis evaluates how devolution affects the development of benefit cost analyses for regulations and the role of economic versus environmental factors in defining the extent of the regulatory market. Using a study of nutrient control for the Neuse River in North Carolina, the analysis develops area specific measures of the benefits and costs of regulations and illustrates how changes in the composition of the areas allowed to "count" for policy design can affect decisions about the levels of control judged to meet the net benefit test.
  41. By: Sedjo, Roger (Resources For the Future); Sohngen, Brent
    Abstract: Forestry has been considered to have potential in reducing the atmospheric concentration of carbon dioxide by sequestrating carbon in above-ground timber and below-ground roots and soil. This potential has been noted in the Kyoto Protocol, which identified specific forestry activities for which carbon sequestration credits could be obtained. To date, a few forestry efforts have been undertaken for carbon purposes, but most of these efforts have been on a small scale. Proposals have been under discussion, however, that would result in the creation of very large areas of new forest for the purpose of offsetting some of the additional carbon that is being released into the atmosphere. Concerns are expressed, however, that large-scale sequestration operations might have impacts on the world timber market, affecting timber prices and thereby reducing the incentives of traditional suppliers to invest in forest management and new timber production. Such a "crowding out" or "leakage" effect, as it is called in the literature, could negate much or all of the sequestered carbon by the newly created sequestration forests. Accordingly, the purpose of this study is to examine and assess the interactions between carbon sequestration forestry, particularly, newly created carbon forests, and the markets for timber. The approach of this study involves utilizing an existing Dynamic Timber Supply Model (DTSM) to examine the interactions between newly created sequestration forests and the markets for timber. This model has been used to examine global timber supply and, more recently, has been modified to include carbon considerations. This study suggests that even without any specific sequestration efforts, commercial forestry offers the potential to sequester substantial volumes of carbon, approaching ten gigatons (Gt) (or petagrams (Pg)), in vegetation, soils and market products over the next century. At current rates of atmospheric carbon build up this is equal to about three years of net carbon releases into the atmosphere. This volume of carbon sequestration could be increased 50–100% by 50 million hectares (ha) of rapidly growing carbon-sequestering plantation forests, even given the anticipated leakages due to market price effects. Finally, the projections suggest that the amount of crowding out and carbon leakages are likely to be very modest. The 50 million ha of carbon plantations are projected to reduce land areas in industrial plantations, that is, crowd out, only from 0.2 to 7.8 million ha over the 100-year period. The addition of carbon sequestration forests offers the potential to increase the carbon sequestration of the forest system more than 50%, up to 5.7 Gts, above that already captured from market activity. This estimate assumes that crowding out and associated projected leakages will occur. At current rates of atmospheric carbon buildup, about 2.8% of the expected total buildup in atmospheric carbon over the next century could be offset by 50 million ha of carbon plantations.
  42. By: Taylor, Michael; Hoffmann, Sandra (Resources For the Future)
  43. By: Stavins, Robert
    Abstract: This article, prepared for the forthcoming second edition of the New Palgrave Dictionary of Economics, provides an overview of the economics of environmental policy. Included are the setting of goals and targets, notably the Kaldor-Hicks criterion, and the related method of assessment known as benefit-cost analysis. Also reviewed are the means of environmental policy, that is, the choice of specific policy instruments, featuring an examination of potential criteria for assessing alternative instruments, with focus on cost-effectiveness. The theoretical foundations and experiential highlights of individual instruments are reviewed, including conventional command-and-control mechanisms and market-based instruments.
    Keywords: environmental economics, efficiency, cost-effectiveness, benefit-cost analysis, market-based instruments, tradeable permits, pollution taxes
    JEL: K32 Q28 Q38 Q48
  44. By: Kopp, Raymond (Resources For the Future); Smith, V. Kerry; Mitchell, Robert; Presser, Stanley; Ruud, Paul; Hanemann, W. Michael; Krosnick, Jon; Conaway, Michael; Martin, Kerry; Carson, Richard
    Abstract: The past few years have seen a highly charged debate about whether contingent valuation (CV) surveys can provide valid economic measures of people's values for environmental resources. In an effort to appraise the validity of CV measures of economic value, a distinguished panel of social scientists, chaired by two Nobel laureates, was established by NOAA, to critically evaluate the validity of CV measures of nonuse value. The Panel provided an extensive set of guidelines for CV survey construction, administration, and analysis, and distinguished a subset of items from their guidelines for special emphasis and described them as burden of proof requirements. Of particular interest was the Panel's requirement that CV surveys demonstrate "responsiveness to the scope of the environmental insult." That demonstration has come to be called a scope test. The paper reports the findings from the first CV study that adheres to the NOAA Panel's guidelines and includes a formal scope test.
  45. By: Jayachandran N. Variyam; John Cawley
    Abstract: The Nutrition Labeling and Education Act (NLEA) imposed significant changes in the information about calories and nutrients that manufacturers of packaged foods must provide to consumers. This paper tests whether the release of this information impacted body weight and obesity among American adults. We estimate the effect of the new label using a difference-in-differences method. We compare the change before and after the implementation of NLEA in body weight among those who use labels when food shopping to that among those who do not use labels. In National Health Interview Survey data we find, among non-Hispanic white women, that the implementation of the new labels was associated with a decrease in body weight and the probability of obesity. Using NLEA regulatory impact analysis benchmarks, we estimate that the total monetary benefit of this decrease in body weight was $63 to $166 billion over a 20-year period, far in excess of the costs of the NLEA.
    JEL: I18
    Date: 2006–01

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.