New Economics Papers
on Agricultural Economics
Issue of 2006‒07‒09
fourteen papers chosen by

  1. The Impacts of WTO Export Subsidy Abolition on the Agri-food Industry in the EU: A Preliminary Assessment By Leena Kerkelä; Heikki Lehtonen; Jyrki Niemi
  2. Institutional Bottlenecks for Agricultural Development: A Stock-Taking Exercise Based on Evidence from Sub-Saharan Africa By Juan R. de Laiglesia
  3. Trade Preferences in the EU Sugar Sector: Winners and Losers By Leena Kerkelä; Ellen Huan-Niemi
  4. The price of residential land in large U.S. cities By Morris A. Davis; Michael G. Palumbo
  5. Finland's First 10 Years in the European Union - Economic Consequences By Jaakko Kiander; Antti Romppanen
  6. Economic Values of Saginaw Bay Coastal Marshes By John C. Whitehead; Peter A. Groothuis; Rob Southwick; Pat Foster-Turley
  7. Optimal Control of Externalities in the Presence of Income Taxation By Louis Kaplow
  8. Potential Cost-Effectiveness of Incentive Payment Programs for Biological Conservation By Siikamäki, Juha; Layton, David F.
  9. Simple Rules for Targeting CO2 Allowance Allocations to Compensate Firms By Palmer, Karen; Butraw, Dallas; Kahn, Danny
  10. On the Consumer Value of Environmental Diversity By Michele Baggio; Jean-Paul Chavas
  11. The Economics of Climate Change By Goulder, Lawrence H.; Pizer, William A.
  12. A General Equilibrium Analysis of Emission Allowances By Alexandrine Jamin; Antoine Mandel
  13. The tariff-only import regime for bananas in the European Union: Is setting the tariff at right level an impossible mission? By Hervé Guyomard; Chantal Le Mouël; Fabrice Levert; J. Lambana
  14. The Catastrophic Effects of Natural Disasters on Insurance Markets By W. Kip Viscusi; Patricia Born

  1. By: Leena Kerkelä; Heikki Lehtonen; Jyrki Niemi
    Abstract: As a part of agricultural negotiations, the WTO members have agreed to phase out all forms of export subsidies. This study evaluates the current level and commitments of subsidised export quantities and subsidy expenditures of the EU, which is by far the largest user of export subsidies. The effects of removing subsidies are studied by a multi-region general equilibrium model GTAP on world-wide, EU wide and on the level of the Finnish agriculture. The results show decreasing prices and production in the EU for subsidised products especially in dairy, grain and meat production and slight increases in their world market prices. The effects for Finland are magnified compared to the rest of the EU and are seen especially in grains production.
    Keywords: Export subsidies, WTO Negotations, CGE Analysis
    Date: 2005–12–08
  2. By: Juan R. de Laiglesia
    Abstract: High quality institutions lower transaction costs, encourage trust, reinforce property rights and avoid the exclusion of sections of the population. Overcoming institutional bottlenecks that constrain entrepreneurial activities and the development of the private sector is a prerequisite for achieving pro-poor growth, in particular in Africa. As part of the Development Centre’s Work Programme 2005/2006 on institutional requirements for advancing peace and development in sub-Saharan-Africa, this explorative study sets the stage for forthcoming indepth case studies in Ghana and Cameroon. <BR>La médiocre performance de l’agriculture africaine est à mettre au compte non seulement d’une donnée naturelle difficile et d’une histoire de politiques extractives, mais aussi de goulots d’étranglement institutionnels fondamentaux. Ce document de travail présente un cadre pour l’analyse des goulots d’étranglement empêchant le développement agricole en Afrique sub- Saharienne. Il passe en revue la littérature au sujet des institutions et du développement agricole afin d’identifier les principaux obstacles institutionnels auxquels l’agriculture africaine fait face.
    Date: 2006–03
  3. By: Leena Kerkelä; Ellen Huan-Niemi
    Abstract: The ongoing trade negotiations, unilateral trade concessions and obligations under the WTO are pushing the EU sugar regime to undertake reforms. These reforms will alter the positions of developing countries in the global sugar markets. This paper will describe the trade preferences granted to developing countries under the EU sugar regime. Sugar imports into the EU from the Least Developed Countries (LDCs) are expected to be totally liberalised from year 2009 onwards because of the ?Everything But Arms? (EBA) concession. During the transition period until year 2009, the EBA concession is gradually granting quota preferences and partial duty-free access to sugar imports from the LDCs. Simultaneously, the temporary import quotas (Special Preferential Sugar) given to the African, Caribbean and Pacific (ACP) countries are assumed to be decreasing during the transition period. Within this background, a complete unilateral liberalisation of the EU sugar sector is simulated to depict the winners and losers in the global sugar markets if no preferences are governing the imports of sugar into the EU. The supply responses, which strongly affect the outcomes, are dependent on both the nature of substitution for sugar as well as on the efficiency of sugar production in different countries. The multi-region general equilibrium framework (GTAP) is used for this analysis. The results show that small concessions will not threaten the EU internal market, but total liberalisation of sugar imports from the LDCs will be a major threat to the EU sugar regime. The current regime limits sugar imports from all developing countries or some efficient producers, if the cost data is a right estimate of the potential supply response from developing countries. The LDCs will be the winners under the EBA concession supported by the current regime, but a few efficient sugar producers will be the winners if the current regime is entirely liberalised.
    Keywords: EU sugar regime, WTO, market access, tariffs, preferential, regional, multilateral, trade agreements, ACP countries, least developed countries.
    JEL: F40 F02 C68 Q17
    Date: 2005–01–25
  4. By: Morris A. Davis; Michael G. Palumbo
    Abstract: Combining data from several sources, we build a database of home values, the cost of housing structures, and residential land values for 46 large U.S. metropolitan areas from 1984 to 2004. Our analysis of these new data reveal that since the mid-1980s residential land values have appreciated over a much wider range of cities than is commonly believed. And, since 1998, almost all large U.S. cities have seen significant increases in real residential land prices. Averaging across the cities in our sample, by year-end 2004, the value of residential land accounted for about 50 percent of the total market value of housing, up from 32 percent in 1984. An implication of our results is that the future course of home prices--their average rate of appreciation and their volatility--is likely to be determined even more by the course of land prices than used to be the case.
    Date: 2006
  5. By: Jaakko Kiander; Antti Romppanen
    Abstract: This paper summarizes the economic performance of Finland in 1995?2004 and compares the actual developments to the projections made prior to the EU membership. The paper also assesses the impacts of the structural changes induced by the membership. The most pronounced impact of EU membership was on Finland?s agriculture and food industry. Joining the Common Agriculture meant a total change in the subsidy system and a sharp drop in producer prices. At the same time, agriculture and the food industry became part of the European internal market and the competition that goes with it. In sectors outside of the food chain, the impact of the EU is more difficult to ascertain. It was thought that integration would lead to increased trade in the internal market area. But this has not happened; rather the EU?s share of Finland?s foreign trade has decreased since membership.
    Keywords: Finnish economy, EU membership, integration
    Date: 2006–01–13
  6. By: John C. Whitehead; Peter A. Groothuis; Rob Southwick; Pat Foster-Turley
    Abstract: We estimate the economic values of Saginaw Bay coastal marshes with multiple methods. First we estimate the value of coastal marsh recreation with two variations of the travel cost method: the single-site recreation demand model and the recreation site selection or random utility model. Using the single site model the current level of day trip recreation in the Saginaw Bay coastal marsh area is valued at almost $16 million each year. The present value is $239 million. Using the site selection travel cost model, an increase in 1125 acres of coastal marsh is valued at about $94,000 annually. The present value is $1.83 million. Willingness to pay for recreation and other values of coastal marsh protection is estimated using the contingent valuation method. The annual value of protection of 1125 acres of coastal marsh is $113,000. The present value is $2.2 million.
    Keywords: Q51
    Date: 2006
  7. By: Louis Kaplow
    Abstract: A substantial literature examines second-best environmental policy, focusing particularly on how the Pigouvian directive that marginal taxes should equal marginal external harms needs to be modified in light of the preexisting distortion due to labor income taxation. Additional literature is motivated by the possibility that distributive concerns should amend the internalization prescription. It is demonstrated, however, that simple first-best rules – unmodified for labor supply distortion or distribution – are correct in a natural, basic formulation of the problem. Specifically, setting all commodity taxes equal to marginal harms (and subsidies equal to marginal benefits) can generate a Pareto improvement. Likewise, a marginal reform in the direction of the first-best can yield a Pareto improvement. For other reforms, a simple efficiency test characterizing when a Pareto improvement is possible is offered. Qualifications and explanations for the substantial departure from results in previous work are also elaborated.
    JEL: D61 D62 D63 H21 H23 K32
    Date: 2006–06
  8. By: Siikamäki, Juha (Resources for the Future); Layton, David F.
    Abstract: This study assesses the potential cost-effectiveness of incentive payment programs relative to traditional top-down regulatory programs for biological conservation. We develop site-level estimates of the opportunity cost and the nonmonetized biological benefits of protecting biodiversity hotspots in Finnish nonindustrial private forests. We then use these estimates to compare and contrast the cost-effectiveness of alternative conservation programs. Our results suggest that incentive payment programs, which tacitly capitalize on landowners’ private knowledge about the opportunity costs of conservation, may be considerably more cost-effective than traditional top-down regulatory programs.
    Keywords: biodiversity conservation, incentive payments, cost-effectiveness, opportunity cost, biological benefits, non-industrial private forests
    JEL: C42 Q15 Q20 Q21 Q23 Q57
    Date: 2006–06–13
  9. By: Palmer, Karen (Resources for the Future); Butraw, Dallas (Resources for the Future); Kahn, Danny (Resources for the Future)
    Abstract: Policies to cap emissions of carbon dioxide (CO2), such as the recently announced agreement among seven northeastern states, are expected to have important effects on the electricity industry and on the market value of firms that own electricity generation assets. The economics literature finds large efficiency advantages for initial distribution of tradable emissions allowances through an auction so as to direct revenues to tax relief or other public investments. However, an auction raises the costs for the regulated firms. This paper identifies rules for an initial distribution that satisfy a compensation goal for firms that is achieved through free distribution of a portion of the allowances, while maximizing the value of allowances that can be directed to public purposes. The paper employs a detailed simulation model to calculate numerical results for the market value of generation assets under the CO2 cap-and-trade program in the northeastern United States.
    Keywords: emissions trading, allowance allocations, electricity, air pollution, auction, grandfathering, output-based allocation, cost-effectiveness, greenhouse gases, climate change, global warming, carbon dioxide, asset value
    JEL: Q2 Q25 Q4 L94
    Date: 2006–06–06
  10. By: Michele Baggio (Dipartimento di Scienze economiche (Università di Verona)); Jean-Paul Chavas (Research Assistant,Department of Agricultural and Resource Economics, University of Maryland)
    Abstract: This paper develops a methodology for the valuation of the taste for diversity. The concerns about the contribution of diversity in the valuation of consumer goods typically arise when it is believed that the total value is The methodology we propose infers the economic value of diversity through fish market price by using a system of inverse demands to model the nature of this particular commodity. We develop our analysis of the consumer value of diversity using Luenberger’s benefit function (Luenberger, 1992). In this context, we show that the benefit function provides a conceptual framework to conduct a welfare analysis of the value of diversity in a system framework.
    Date: 2006–06
  11. By: Goulder, Lawrence H.; Pizer, William A. (Resources for the Future)
    Abstract: Global climate change poses a threat to the well-being of humans and other living things through impacts on ecosystem functioning, biodiversity, capital productivity, and human health. Climate change economics attends to this issue by offering theoretical insights and empirical findings relevant to the design of policies to reduce, avoid, or adapt to climate change. This economic analysis has yielded new estimates of mitigation benefits, improved understanding of costs in the presence of various market distortions or imperfections, better tools for making policy choices under uncertainty, and alternate mechanisms for allowing flexibility in policy responses. These contributions have influenced the formulation and implementation of a range of climate change policies at the domestic and international levels.
    Keywords: climate change, global warming, energy
    JEL: Q40 Q50 Q54
    Date: 2006–06–21
  12. By: Alexandrine Jamin (CES - Centre d'Economie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Antoine Mandel (CES - Centre d'Economie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: Each Party of the Kyoto Protocol on Climate Change must achieve quantified green-house gases emission reduction. one of the major policy instrument to be used to comply with these commitments is the opening of an emission allowances market. This paper analyzes, in the general equilibrium framework, the effects of the opening of such a market on the economic equilibrium.
    Keywords: General Equilibrium Theory ; emission allowances ; general pricing rules ; sensitivity.
    Date: 2006–07–05
  13. By: Hervé Guyomard (INRA-Unité d'économie - [INRA]); Chantal Le Mouël (INRA-Unité d'économie - [INRA]); Fabrice Levert (INRA-Unité d'économie - [INRA]); J. Lambana
    Abstract: The European Union is bound by World Trade organisation agreements to move to a tariff-only import system for bananas no later than 1 january 2006. From that date, imports from non-ACP countries will be subject to a single tariff while ACP country bananas will continue to enter the EU market duty free. This regime will replace the highly contested tariff-rate quota policy in place since 1993. This paper shows that setting the tariff at a level that maintain tha status quo is an impossible mission given uncertainties on quota rates estimates and quota rent distribution
    Keywords: Politique Agricole Commune - PAC - Pays ACP - Banane -
    Date: 2006–07–03
  14. By: W. Kip Viscusi; Patricia Born
    Abstract: Natural catastrophes often have catastrophic risks on insurance companies as well as on the insured. Using a very large dataset on homeowners’ insurance coverage by state, by firm, and by year for the 1984 to 2004 period, this paper documents the positive effect on losses and loss ratios of both unexpected catastrophes as well as large events that the authors term “blockbuster catastrophes.” Insurers adapt to these catastrophic risks by raising insurance rates, leading to lower loss ratios after the catastrophic event. There is a widespread event of unexpected catastrophes and blockbuster catastrophes that reduces total premiums earned in the state, reduces the total number writing insurance coverage in the state, and leads to the exit of firms from the state. Firms with low levels of homeowners’ premiums are most adversely affected by the catastrophes.
    JEL: D8 G22 K13
    Date: 2006–07

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