nep-agr New Economics Papers
on Agricultural Economics
Issue of 2007‒01‒02
twelve papers chosen by
Angelo Zago
Universita degli Studi di Verona

  1. Determinants of Land Use and Land Access in Post-War Northern Mozambique By Tilman Brück; Kati Schindler
  2. Current WTO Negotiations on Domestic Subsidies in Agriculture: Implications for India By Parthapratim Pal
  3. Structural Shift in Demand for Food: Projections for 2020 By Surabhi Mittal
  4. Optimal Incentives under Moral Hazard and Heterogeneous Agents: Evidence from Production Contracts Data By Dubois, Pierre; Vukina, Tomislav
  5. Measurement and Sources of Income Inequality among Rural and Urban Households in Nigeria By Abayomi Samuel Oyekale; Adetola Ibidunni Adeoti; Tolulope Olayemi Oyekale
  6. Heterogeneity of Preferences, Limited Commitment and Coalitions: Empirical Evidence on the Limits to Risk Sharing in Rural Pakistan By Dubois, Pierre
  7. Is the Endangered Species Act Endangering Species? By John A. List; Michael Margolis; Daniel E. Osgood
  8. A New-Growth Perspective on Non-Renewable Resources By Christian Groth
  9. Rural People’s Perception of Poverty in China By Bjorn Gustafsson; Ximing Yue
  10. Subjective Welfare, Isolation and Relative Consumption By Fafchamps, Marcel; Shilpi, Forhad
  11. The Impact of Intra-State Conflict on Economic Welfare and Consumption Smoothing: Empirical Evidence for the Displaced Population in Colombia By Ana María Ibáñez; Andrés Moya
  12. Rural Income Volatility and Inequality in China By John Whalley; Ximing Yue

  1. By: Tilman Brück (German Institute for Economic Research (DIW Berlin)); Kati Schindler (German Institute for Economic Research (DIW Berlin))
    Abstract: This paper analyzes how land access and land use are regulated in an environment characterized by apparent land abundance, weak institutions and a changing regulatory framework for land tenure. Using household survey evidence from post-war northern Mozambique, this paper demonstrates the diversity and inequality surrounding land. A formal test of land abundance reveals that northern Mozambique is quite land constrained at the household-level. While some households voluntarily restrain from expanding their land, others are involuntarily constrained in their land access. Overcoming such a land-related development trap hence requires a refined land legislation and targeted rural development policies.
    Keywords: land access, farm households, institutions, inequality, Africa, Mozambique
    Date: 2006–12
  2. By: Parthapratim Pal (Indian Council for Research on International Economic Relations)
    Date: 2005–12
  3. By: Surabhi Mittal (Indian Council for Research on International Economic Relations)
    Abstract: Knowledge of demand structure and consumer behaviour is essential for a wide range of development policy questions like improvement in nutritional status, food subsidy, sectoral and macroeconomic policy analysis, etc. An analysis of food consumption patterns and how they are likely to shift with changes in income and relative price is required to assess the food security-related policy issues in the agricultural sector. With high growth rates in the agricultural sector, the average per capita income in the country shows an increase, accompanied by a fall in the per capita consumption of staple food. In this background the present study diagnoses the food basket of households in rural and urban areas under different expenditure groups in the last two decades and tries to investigate the driving force for these changes by computing the demand elasticities that explain the level of demand for the commodities by an individual consumer given the structure of relative prices faced, real income and a set of individual characteristics such as age, type of household [expenditure groups] and geographical environment [rural or urban]. The study projects the prospects of the food demand scenario in the country in 2020. And, finally, aims at finding answers to some of the most debatable issues relating to the country's food security, decline in cereal consumption and implications on poverty. The study uses data from the consumer expenditure survey of the National Sample Survey [NSS] rounds number 38, 43, 50 and 55
    Keywords: Household Food Consumption, Demand Elasticity, Decomposition, Demand Projections, Quadratic AIDS Model
    JEL: Q11 Q18
    Date: 2006–08
  4. By: Dubois, Pierre; Vukina, Tomislav
    Abstract: The objective of this paper is to develop an analytical framework for estimation of the parameters of a structural model of an incentive contract under moral hazard, taking into account agents heterogeneity in preferences. We show that allowing the principal to strategically distribute the production inputs across heterogenous agents as part of the contract design, the principal is able to change what appears to be a uniform contract into individualized contracts tailored to fit agents' preferences or characteristics. Using micro level data on swine production contract settlements, we find that contracting farmers are heterogenous with respect to their risk aversion and that this heterogeneity affects the principal's allocation of production inputs across farmers. Relying on the identifying assumption that contracts are optimal, we obtain the estimates of a lower and an upper bound of agents' reservation utilities. We show that farmers with higher risk aversion have lower outside opportunities because of lower reservation utilities.
    Keywords: agency contracts; heterogeneity; moral hazard; optimal incentives; risk aversion
    JEL: D82 K32 L24
    Date: 2006–12
  5. By: Abayomi Samuel Oyekale; Adetola Ibidunni Adeoti; Tolulope Olayemi Oyekale
    Abstract: Income inequality and poverty are closely related. This study decomposed income inequality in Nigeria using the Gini-decomposition, regression-based and Shapley approaches. Results show that in 2004, income inequality is higher in rural areas than in urban areas. The study also noted that employment income increases inequality while agricultural income decreases inequality. Factors suchs as urbanization, residence in the southwest zone, household size, the house head's formal education, number of time suffered from illness, engagement in a paid job, involvement in a non-farm business, formal credit and informal credit contributed to the increased income inequality. Between 1998 and 2004, income redistribution and income growth increased poverty. The study recommended that welfare enhancing programs that will benefit urban/rural poor should be identified, while better economic opportunities should be created for those in rural areas.
    Keywords: Income inequality, poverty, decomposition, economic opportunities, Nigeria
    JEL: D3 O15 O55
    Date: 2006
  6. By: Dubois, Pierre
    Abstract: In this paper, we study the determinants of the value of informal risk sharing groups. In particular, we look at the effects of heterogeneity of preferences and of limited commitment constraints that restrict feasible allocations differently if individuals can deviate form risk sharing agreements in coalitions or not. We test empirically several predictable implications in rural Pakistan taking into account the heterogeneity of households' preferences. Our results show that exogenous size of risk sharing groups can be rejected or that only imperfect risk sharing is obtained within the village because of limited commitment and because of the risk of coalition formation that needs to be deterred.
    Keywords: coalitions; insurance; limited commitment; Pakistan; risk; risk aversion
    Date: 2006–12
  7. By: John A. List; Michael Margolis; Daniel E. Osgood
    Abstract: We develop theory and present a suite of theoretically consistent empirical measures to explore the extent to which market intervention inadvertently alters resource allocation in a sequentialmove principal/agent game. We showcase our approach empirically by exploring the extent to which the U.S. Endangered Species Act has altered land development patterns. We report evidence indicating significant acceleration of development directly after each of several events deemed likely to raise fears among owners of habitat land. Our preferred estimate suggests an overall acceleration of land development by roughly one year. We also find from complementary hedonic regression models that habitat parcels declined in value when the habitat map was published, which is consistent with our estimates of the degree of preemption. These results have clear implications for policymakers, who continue to discuss alternative regulatory frameworks for species preservation. More generally, our modeling strategies can be widely applied -- from any particular economic environment that has a sequential-move nature to the narrower case of the political economy of regulation.
    JEL: H23 H41
    Date: 2006–12
  8. By: Christian Groth (Department of Economics, University of Copenhagen)
    Abstract: This article reviews issues related to the incorporation of non-renewable resources in the theory of economic growth and development. As an offshoot of the new growth theory of the last two decades a series of contributions have studied endogenous technical change in relation to resource scarcity. We discuss the main approaches within this literature and consider questions like: How is the new literature related to the wave of resource economics of the 1970s? What light is thrown on the limits-to-growth issue? Does the existence of non-renewable resources have implications for the controversies within new growth theory?
    Keywords: endogenous growth; innovation; non-renewable resources; knife-edge conditions; robustness; limits to growth
    JEL: O4 Q3
    Date: 2006–10
  9. By: Bjorn Gustafsson (University of Göteborg and IZA Bonn); Ximing Yue (Renmin University of China)
    Abstract: Subjective Poverty Line methodology is applied to rural China 2002 using a sample from 22 provinces. Respondents were asked two questions: one on amount of food necessary and another on amount of cash necessary for their households. The respondent’s perception of how much cash is needed varies profoundly and positively by income in the county where the respondent lives. The findings provide an argument for increasing the official poverty line for China as average household income increases. Poverty in rural China is disproportionally concentrated to the western regions and to poor counties. Most of rural China’s poverty can be attributed to households living outside classified poor areas. People living in a household with many members, those with a household head with a short education, and children face higher poverty risks than other persons.
    Keywords: China, poverty, poverty line
    JEL: I32 O15 P36
    Date: 2006–12
  10. By: Fafchamps, Marcel; Shilpi, Forhad
    Abstract: The recent literature has shown that subjective welfare depends on relative income. Attempts to test this relationship in poor countries have yielded conflicting results, suggesting that the relationship is not universal or only applies above a certain income level. We revisit the issue using data from Nepal. We find a relative consumption effect that is robust, strong in magnitude, and consistent across consumption expenditure categories. We find no evidence that poor households -- in a relative or absolute sense -- care less about relative consumption than more fortunate ones. Households residing far from markets care more -- not less -- about the consumption level of their neighbors, suggesting that market interaction is not what makes people care about relative consumption. Household heads having migrated out of their birth district still judge the adequacy of their consumption in comparison with households in their district of origin.
    Keywords: relative deprivation; rivalry; subjective well-being
    JEL: I31 O12
    Date: 2006–12
  11. By: Ana María Ibáñez (Universidad de los Andes); Andrés Moya (Universidad de los Andes)
    Abstract: Intra-state conflicts and forced displacement impose a heavy burden upon the civil population, and produce severe welfare losses. Using a household level data administered to 2.322 Colombian displaced households, we estimate welfare losses for displaced households, as well as the determinants of labor income and aggregate consumption in reception sites. We also asses whether households are able to smooth consumption, and analyze the strategies they are compelled to adopt. Our results indicate that forced displacement entails a significant asset loss, limits the ability of household to generate income, disrupts risk-sharing mechanisms, and obliges households to rely on costly strategies in order to smooth consumption. Thus, the short and long-term consequences of forced displacement are large, and the need to design and implement specific policies for victims of internal conflict is evident. These policies, in particular, should provide mechanisms to prevent substantial welfare losses and to create conditions for sustainable income generation processes.
    Date: 2006
  12. By: John Whalley; Ximing Yue
    Abstract: Available data indicates a growing urban-rural income gap (the ratio of mean urban to rural incomes) with a significant increase from around 1.8 in the late 1980's to over 3 today. These estimates do not take into account the higher volatility of rural incomes in China. Current literature based on analyses of rural income volatility in China decomposes poverty into chronic and transient components using longitudinal survey data and assesses the fraction of the Foster, Greer and Thorbecke poverty gap attributable to mean income over time being below the poverty line. Resulting estimates of 40-50 % transient poverty point to the policy conclusion that poverty may be a less serious social problem than it appears in annual data due to rural income volatility. Here we use a direct method instead to adjust rural income for volatility using a certainty equivalent income measure and recompute summary statistics for the distribution of volatility corrected incomes, including the urban-rural income gap on which much of current poverty debate in China focuses. Since an uncertain income stream is worth less in utility terms than a certain income stream we argue that heightened rural volatility increases the effective urban-rural income gap and intensifies not weakens poverty concerns. Using Chinese longitudinal rural survey data for which current decompositions can be replicated, we make adjustments for certainty equivalence of rural household income streams which not only widen the urban-rural income gap in China but also increases other distributional summary statistics. Depending upon values used for the coefficient of relative risk aversion, the measured urban-rural income gap increases by 20-30% using a certainty equivalent measure to adjust rural incomes for volatility. We also conduct similar analyses using consumption data, for which slightly larger increases occur.
    JEL: O15 O20 O53
    Date: 2006–12

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