nep-agr New Economics Papers
on Agricultural Economics
Issue of 2006‒02‒19
seven papers chosen by
Angelo Zago
Universita degli Studi di Verona

  1. The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather By Michael Greenstone; Olivier Deschenes
  2. Differentiated management of GM diffusion in China: Further hampering the self-sufficiency in cereal production? By Michel Fok; Weili Liang; Guiyan Wang; Yuhong Wu
  3. Examining the Factors Influencing Environmental Innovations By Massimiliano Mazzanti; Roberto Zoboli
  4. Rural Credit in Vietnam By Mikkel Barslund; Finn Tarp
  6. On the Robustness of Robustness Checks of the Environmental Kuznets Curve By Marzio Galeotti; Matteo Manera; Alessandro Lanza
  7. Determinants of Environmental Innovation – New Evidence from German Panel Data Sources By Jens Horbach

  1. By: Michael Greenstone (MIT); Olivier Deschenes (University of California)
    Abstract: This paper measures the economic impact of climate change on US agricultural land by estimating the effect of the presumably random year-to-year variation in temperature and precipitation on agricultural profits. Using long-run climate change predictions from the Hadley 2 Model, the preferred estimates indicate that climate change will lead to a $1.1 billion (2002$) or 3.4% increase in annual profits. The 95% confidence interval ranges from -$1.8 billion to $4.0 billion and the impact is robust to a wide variety of specification checks, so large negative or positive effects are unlikely. There is considerable heterogeneity in the effect across the country with California’s predicted impact equal to -$2.4 billion (or nearly 50% of state agricultural profits). Further, the analysis indicates that the predicted increases in temperature and precipitation will have virtually no effect on yields among the most important crops. These crop yield findings suggest that the small effect on profits is not due to short-run price increases. The paper also implements the hedonic approach that is predominant in the previous literature. We conclude that this approach may be unreliable, because it produces estimates of the effect of climate change that are very sensitive to seemingly minor decisions about the appropriate control variables, sample and weighting. Overall, the findings contradict the popular view that climate change will have substantial negative welfare consequences for the US agricultural sector.
    Keywords: Cost of climate change, Hedonics, Agricultural profits, Agricultural production, Crop yields
    JEL: Q50 Q12 Q54 Q51
    Date: 2006–01
  2. By: Michel Fok (UPR10 - Systèmes cotonniers en petits paysannats - - CIRAD); Weili Liang (HEBAU-DA - Department of Agronomy of HEBAU - Hebei Agricultural University); Guiyan Wang (HEBAU-DA - Department of Agronomy of HEBAU - Hebei Agricultural University); Yuhong Wu (HEBAU-DA - Department of Agronomy of HEBAU - Hebei Agricultural University)
    Abstract: China is a big country in terms of biotech achievements. It is also a rare country demonstrating crop-differentiated policies in the dissemination of the GMOs. While the release of GMOs is authorized notably for cotton in 1998, it is still prohibited for food crops. In spite of the positive outcomes on cotton, at least in the short run, and of the persisting decrease of the cereal production, the hesitation to release GMO on food crops should keep on prevailing. This seems to be founded when the qualitative dimension of the food production is taken into consideration.
    Keywords: China; GMO; food security; cotton; foodcrops; productivity; biotechnology
    Date: 2006–02–08
  3. By: Massimiliano Mazzanti (University of Ferrara); Roberto Zoboli (CERIS-CNR)
    Abstract: Technological innovation is a key factor for achieving a better environmental performance of firms and the economy as a whole, to the extent that it helps to increase the material/energy efficiency of production processes and to reduce emission/effluents associated to outputs. Environmental innovation may spur from exogenous driving forces, like policy intervention, and/or from endogenous factors associated to firm market and management strategies. Despite the crucial importance of research in this field, empirical evidence at firm microeconomic level, for various reasons, is still scarce. Microeconomic-based analysis is needed in order to assess what forces are lying behind environmental innovation at the level of the firm, where innovative practices emerge and are adopted. The paper exploits information deriving from two surveys conducted on a sample of manufacturing firms in Emilia Romagna region -Northern Italy- in 2002 and 2004, located in a district-intense local production system. New evidence is provided by testing a set of hypotheses, concerning the influence of: (i) firm structural variables; (ii) environmental R&D; (iii) environmental policy pressure and regulatory costs; (iv) past firm performances; (v) networking activities, (vi) other non-environmental techno-organizational innovations and (vii) quality/nature of industrial relations. We estimate input and output-based environmental innovation reduced form specifications in order to test the set of hypotheses. The applied investigation shows that environmental innovation drivers, both at input and output level, are found within exogenous factors and endogenous elements concerning the firm and its activities/strategies within and outside its natural boundaries. In the present case study, the usual structural characteristics of the firm and performances appear to matter less than R&D, induced costs, networking, organisational flatness and innovative oriented industrial relations. Environmental Policies and environmental voluntary auditing schemes exert some relevant direct and indirect effects on innovation, although evidence is mixed and further research is particularly needed. Although this new empirical evidence is focussing on a specific industrial territory, we provide food for discussion on firm environmental innovation strategies, and research suggestions for further empirical work.
    Keywords: Environmental innovation, Environmental R&D, Manufacturing sector, Local system, Environmental policy, Networking
    JEL: C21 L60 O13 O30 Q20 Q58
    Date: 2006–01
  4. By: Mikkel Barslund (Department of Economics, University of Copenhagen); Finn Tarp (Department of Economics, University of Auckland)
    Abstract: This paper uses a survey of 932 rural households to uncover how the rural credit market operates in four provinces of Vietnam. Households obtain credit through formal and informal lenders, but formal loans are almost entirely for production and asset accumulation. Interest rates fell from 1997 to 2002, reflecting increased market integration; but the determinants of formal and informal credit demand are distinct. Credit rationing depends on education and credit history, but we find no evidence of a bias against women. Regional differences are striking, and a ‘one size fits all’ approach to credit policy is clearly inappropriate.
    Keywords: rural credit; household survey; Vietnam
    JEL: O12 O16 O17 O1
  5. By: Alistair Ulph (University of Manchester); Santiago J. Rubio (Universitat de València)
    Abstract: In Barrett's (1994) paper on transboundary pollution abatement is shown that if the signatories of an international environmental agreement act in a Stackelberg fashion, then, depending on parameter values, a self-enforcing IEA can have any number of signatories between two and the grand coalition. Barrett obtains this result using numerical simulations and also ignoring the fact that emissions must be non-negative. Recent attempts to use analytical approaches and to explicitly recognize the non-negativity constraints have suggested that the number of signatories of a stable IEA may be very small. The way such papers have dealt with non-negativity constraints is to restrict parameter values to ensure interior solutions for emissions. We argue that a more appropriate approach is to use Kuhn-Tucker conditions to derive the equilibrium of the emissions game. When this is done we show, analytically, that the key results from Barrett's paper go through. Finally, we explain why his main conclusion is correct although his analysis can implicitly imply negative emissions.
    Keywords: international externalities, self-enforcing environmental agreements, Stackelberg equilibrium, non-negative emissions constraints
    JEL: C72 D62 F02 Q20
    Date: 2004–06
  6. By: Marzio Galeotti (Fondazione Eni Enrico Mattei); Matteo Manera (University of Milan-Bicocca and Fondazione Eni Enrico Mattei); Alessandro Lanza (Eni S.p.A. and Fondazione Eni Enrico Mattei)
    Abstract: Since its first inception in the debate on the relationship between environment and growth in 1992, the Environmental Kuznets Curve has been subject to continuous and intense scrutiny. The literature can be roughly divided in two historical phases. Initially, after the seminal contributions, additional work aimed to extend the investigation to new pollutants and to verify the existence of an inverted-U shape as well as assessing the value of the turning point. The following phase focused instead on the robustness of the empirical relationship, particularly with respect to the omission of relevant explanatory variables other than GDP, alternative datasets, functional forms, and grouping of the countries examined. The most recent line of investigation criticizes the Environmental Kuznets Curve on more fundamental grounds, in that it stresses the lack of sufficient statistical testing of the empirical relationship and questions the very existence of the notion of Environmental Kuznets Curve. Attention is drawn in particular on the stationarity properties of the series involved – per capita emissions or concentrations and per capita GDP – and, in case of unit roots, on the cointegration property that must be present for the Environmental Kuznets Curve to be a well-defined concept. Only at that point can the researcher ask whether the long-run relationship exhibits an inverted-U pattern. On the basis of panel integration and cointegration tests for sulphur, Stern (2002, 2003) and Perman and Stern (1999, 2003) have presented evidence and forcefully stated that the Environmental Kuznets Curve does not exist. In this paper we ask whether similar strong conclusions can be arrived at when carrying out tests of fractional panel integration and cointegration. As an example we use the controversial case of carbon dioxide emissions. The results show that more EKCs come back into life relative to traditional integration/cointegration tests. However, we confirm that the EKC remains a fragile concept.
    Keywords: Environment, Growth, CO2 Emissions, Panel data, Fractional integration, Panel cointegration tests
    JEL: O13 Q30 Q32 C12 C23
    Date: 2006–02
  7. By: Jens Horbach (University of Applied Sciences Anhalt)
    Abstract: In most cases, empirical analyses of environmental innovations based on firm-level data relied on survey data for one point in time. These surveys, especially designed for the analysis of environmental innovations, are useful because they allow for the inclusion of many explanatory variables such as different policy instruments or the influence of stake-holders and pressure groups. On the other hand, it is not possible to address the dynamic character of the environmental innovation process. This paper uses two German panel data bases, the establishment panel of the Institute for Employment Research (IAB) and the Mannheim Innovation Panel (MIP) of the Centre for European Economic Research (ZEW), to explore the determinants of environmental innovations. These data bases were not specifically collected to analyze environmental issues, but they contain questions that allow the identification of environmental innovations. We use discrete choice models for each of the data bases to analyze hypotheses derived from the theoretical (environmental) innovation literature. The econometric estimations show that the improvement of the technological capabilities (“knowledge capital”) by R&D or further education measures triggers environmental innovations – this result is confirmed by both data bases and both methods to measure environmental innovation. The hypothesis that “Innovation breeds innovation” is confirmed by the analysis of the MIP data. General and environmental innovative firms in the past are more likely to innovate in the present. Environmental regulation, environmental management tools and general organizational changes and improvements trigger environmental innovation, a result that has also been postulated by the famous Porter-hypothesis. Environmental management tools especially help to detect cost-savings (specifically material and energy savings). Following our econometric results, cost-savings are an important driving force of environmental innovation.
    Keywords: Environmental innovation, Panel data analysis, Discrete choice models
    JEL: Q55 O33 O38 C25
    Date: 2006–01

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