New Economics Papers
on Agricultural Economics
Issue of 2007‒02‒17
eighteen papers chosen by

  1. Changes in Rural Household Income Patterns in Mozambique, 1996-2002, and Implications for Agriculture’s Contribution to Poverty Reduction. By Duncan Boughton; David Mather; David Tschirley; Tom Walker; Benedito Cunguara; Ellen Payongayong
  2. Climate change, irrigation, and Israeli agriculture : will warming be harmful ? By Fleischer, Aliza; Lichtman, Ivgenia; Mendelsohn, Robert
  3. Assessment of the Farm Level Agronomic and Financial Benefits of the Magoye Ripper in Maize and Cotton Production in Southern and Eastern Provinces By Stephen Kabwe; Cynthia Donovan; David Samazaka
  4. Raising the Productivity of Public Investments in Zambia’s Agricultural Sector. By Jones Govereh; J.J. Shawa; E. Malawo; T.S. Jayne
  5. Optimal adjustment of environmental policy following agricultural trade liberalization By Thilo W. Glebe; Uwe Latacz-Lohmann
  6. Do positive agricultural externalities provide a justification against trade liberalisation? By Thilo W. Glebe
  7. Multi-Output Firm Under Price Uncertainty By Hennessy, David A.
  8. EU Agri-environmental Programs and the "Restaurant Table Effect" By Thilo W. Glebe; Klaus Salhofer
  9. Modelling agri-environmental policy in the context of international trade By Thilo W. Glebe; Uwe Latacz-Lohmann
  10. Cost-effectiveness of agri-environmental payment programs By Thilo W. Glebe
  11. The Economics of Fair Trade: For Whose Benefit? An Investigation into the Limits of Fair Trade as a Development Tool and the Risk of Clean-Washing. By Pierre Kohler
  12. Exposure to pesticides, ill-health and averting behaviour: Costs and determining the relationships By Clevo Wilson
  13. Why environmental regulation may lead to no-regret pollution abatement? By Thierry Bréchet; Pierre-André Jouvet
  14. What Role Does Knowledge of Wildlife Play in Providing Support for Species' Conservation? By Clevo Wilson; Clem Tisdell
  15. The Unresolved Land Reform Debate: Beyond State-Led or Market-Led Models By Saturnino M. Borras Jr; Terry McKinley
  16. Does a Food for Education Program Affect School Outcomes? The Bangladesh Case By Xin Meng; Jim Ryan
  17. Uncertainty in Environmental Economics By Robert S. Pindyck
  18. Minimum Safety Standard, Consumers’ Information, and Competition (The) By Marette, Stéphan

  1. By: Duncan Boughton (Department of Agricultural Economics, Michigan State University); David Mather; David Tschirley; Tom Walker; Benedito Cunguara; Ellen Payongayong
    Abstract: The challenge that faces Mozambique’s government is to design poverty reduction and rural development strategies that deliver three-dimensional growth: rapid growth to reduce poverty incidence quickly, sustainable growth to ensure that people permanently escape poverty, and broad-based growth to ensure that as many families as possible benefit from it. The specific objectives of this paper are: 1. To compare the level, sources, and distribution of rural household incomes in 1995-96 and 2001-02. To achieve this objective, the paper answers questions such as how have rural incomes changed over the six year period; how much have the poorest of the poor benefited; and have rural incomes grown evenly over the whole country or have some areas grown faster than others? 2. To compare the level and composition of agricultural income in 1995-96 and 2001-02. The paper considers the importance of agriculture relative to non-farm activities as a source of rural income, and the mix of agricultural activities, for different income groups. 3. To identify priorities for enhancing agriculture’s contribution to rural economic growth and poverty reduction in the medium term.
    Keywords: food security, food policy, Mozambique, household, income, poverty
    JEL: Q18
    Date: 2006
  2. By: Fleischer, Aliza; Lichtman, Ivgenia; Mendelsohn, Robert
    Abstract: The authors use a Ricardian model to test the relationship between annual net revenues and climate across Israeli farms. They find that it is important to include the amount of irrigation water available to each farm in order to measure the response of farms to climate. With irrigation water omitted, the model predicts that climate change is strictly beneficial. But with water included, the model predicts that only modest climate changes are beneficial, while drastic climate change in the long run will be harmful. Using the Atmospheric Oceanic Global Circulation Models scenarios, the authors show that farm net revenue is expected to increase by 16 percent in 2020, while in 2100 farm net revenue is expected to drop by 60-390 percent varying between the different scenarios. Although Israel has a relatively warm climate, a mild increase in temperature is beneficial due to the ability to supply international markets with farm products early in the season. The findings lead to the conclusion that securing water rights to the farmers and international trade agreements can be important policy measures to help farmers adapt to climate change.
    Keywords: Climate Change,Water Supply and Sanitation Governance and Institutions,Water Supply and Systems,Water and Industry,Common Property Resource Development
    Date: 2007–02–01
  3. By: Stephen Kabwe (Department of Agricultural Economics, Michigan State University); Cynthia Donovan; David Samazaka
    Abstract: This research focuses on the performance in the Magoye ripper in maize and cotton production in Eastern and Southern Provinces during the 2004/2005 productions year. Findings include the following: In maize production, the ripper enabled higher yields compared to traditional animal ploughing, by increasing the effectiveness of nitrogen fertilizer applications, resulting in net profits per hectare of ZK575,800 in Eastern Province and ZK93,800 in Southern Province; In cotton, the input applications and size of fields were the most important determinants of yield, and the ripper had no significant individual effect. Farmers using the ripper indicated that it helped conserve water, enabled early land preparation and early planting; and Farmers not using their rippers indicated lack of animals to pull it, lack of repair and spare parts, and a tine that wears down and needs frequent sharpening.
    Keywords: food security, food policy, Zambia, maize, cotton, inputs
    JEL: Q18
    Date: 2006
  4. By: Jones Govereh (Department of Agricultural Economics, Michigan State University); J.J. Shawa; E. Malawo; T.S. Jayne
    Abstract: Agriculture provides the main support for Zambia’s rural economy, and because of this, growth in the agricultural sector is the clearest avenue through which poverty reduction can be achieved in Zambia. Yet despite widespread recognition of the strong connection between agricultural development and poverty reduction, there is continuing under-provision of public goods investments for over a decade. Zambia’s primary policy objective of achieving accelerated growth and competitiveness in the agricultural sector cannot be achieved unless adequate public resources are committed towards catalyzing the desired growth. Strong evidence from southern Africa as well as throughout the world indicates that long–term public investment in research and development, extension services, rural infrastructure, and food safety and quality systems have high pay-offs and are among the most important drivers of agricultural growth and competitiveness. Agricultural-led development has been identified by African Heads of State and Governments as key to restoration of food security and rural development on our continent. Under the African Union’s Comprehensive Africa Agricultural Development Program (CAADP) framework, Zambia, like many other members of the union, has targeted to achieve a minimum of 6% annual agricultural growth by making available 10% of the national budget towards the sector. In Zambia, it is important not only to increase the resource allocation to the sector in accordance with the CAADP target of 10%, but to allocate these resources productively so as to make the maximum contribution to sustainable growth within the shortest possible time. This paper examines trends in Zambia’s public budgeting for agriculture and the composition of the budget. This report does not cover tax expenditures by the government, private sector expenditures, and support from donors. Support from development partners channeled through government programs is included in the report. The report covers approved budget allocations and compares approved expenditures with actual expenditures.
    Keywords: food security, food policy, Zambia, public investment
    JEL: Q18
    Date: 2006
  5. By: Thilo W. Glebe (Environmental Economics and Agricultural Policy Group, Technical University of Munich); Uwe Latacz-Lohmann (Department of Agricultural Economics, Christian-Albrechts University, Kiel)
    Abstract: We use an extended partial equilibrium trade model to derive optimal environmental policy responses to tariff reduction requirements and assess the impact of such policies on the welfare of trading partners. We find that countries which attribute preferential political weights to farmers’ welfare have an incentive to implement environmental policies that deviate from the Pigouvian solution – even if production is not de facto linked to environmental externalities. We clarify the conditions under which trading partners do not gain from unilateral trade liberalization if trade concessions are accompanied by strategic environmental policy changes. We postulate a role for the WTO in overseeing the process of formulating domestic policies to further the multifunctional role of agriculture.
    Date: 2005–08
  6. By: Thilo W. Glebe (Environmental Economics and Agricultural Policy Group, Technical University of Munich)
    Abstract: This paper analyses the welfare effects of agricultural trade liberalisation when taking into account the positive environmental externalities of European farming. We show that free trade is suboptimal, if no efficient environmental policy addressing the provision of multifunctional amenities is implemented. However, tariff reductions in a net-importing country will increase the incentive for introducing an environmental policy, though this policy will be strategically distorted. Despite its strategic character, introducing an optimal environmental policy, when simultaneously abolishing a tariff policy in an importing country, will unambiguously enhance global welfare.
    Keywords: Agricultural trade, agricultural multifunctionality, strategic environmental policy
    Date: 2005–06
  7. By: Hennessy, David A.
    Abstract: A closed-form dual representation of the multi-output production problem is developed under CARA and the large exponential family of multivariate price distributions. System-wide response analysis allows an understanding of second moment and risk tolerance effects, and provides insights on distorting subsidies admissible under World Trade Organization agreements. We demonstrate second-order flexibility in the sense that any empirical first and second moments can be imposed. Production complementarity results are identified for a special linearized version of the model. Incentives under the class of elliptically contoured distributions are studied, as are speculation decisions in the presence of futures markets.
    Keywords: Associated random variables; Exponential family; Hedging
    Date: 2005–08–18
  8. By: Thilo W. Glebe (Environmental Economics and Agricultural Policy Group, Technical University of Munich); Klaus Salhofer (Environmental Economics and Agricultural Policy Group, Technical University of Munich)
    Abstract: The share of agricultural area enrolled in EU agri-environmental programs varies significantly between EU member states. These national differences are explained, based on a model that reflects both, that these programs internalize externalities and the political decision making process. We identify six factors which affect the extent to which agri-environmental programs are implemented: environmental benefits, opportunity costs of participation, budgetary pressure, the share of program expenditures financed by the EU, the political weight attributed to farmers at the national, and the political influence of each country at the EU level. In addition, we demonstrate that if the policy decision making process is non-cooperatively at the EU level, countries which contribute less to the EU budget will ceteris paribus implement more programs. Using data for four years and feasible Generalised Least Square methods we are able to confirm our theoretical results and a non-cooperative behavior of EU member states.
    Keywords: agricultural policy, agri-environmental programs, European Union
    JEL: H23 Q18 C7
    Date: 2006–04
  9. By: Thilo W. Glebe (Environmental Economics and Agricultural Policy Group, Technical University of Munich); Uwe Latacz-Lohmann (Department of Agricultural Economics, Christian-Albrechts University, Kiel)
    Abstract: The paper develops a conceptual framework for the welfare analysis of agri-environmental policy within an international trade context. Based on a two-factor production model, we analyse the marginal social costs of agricultural production before and after the introduction of an efficient agri-environmental policy. The paper shows that an assessment of social external costs, which is predicated on the factor intensity prior to the implementation of an agri-environmental policy, underestimates the potential welfare improvements that can be achieved by introducing an efficient environmental policy. We further demonstrate that, even if the marginal environmental effect of farming is negative prior to introducing agri-environmental policy, the co-existence of positive and negative externalities might cause the production level to increase as a result of an optimal environmental policy.
    Date: 2006–01
  10. By: Thilo W. Glebe (Environmental Economics and Agricultural Policy Group, Technical University of Munich)
    Abstract: The cost-effectiveness of agri-environmental auctions soliciting two-dimensional bids consisting of conservation activity and compensation payment is analyzed. Taking a selfselecting contract schedule as a benchmark, an optimally designed auction has the potential to reduce government expenditures significantly. However, the relative cost-effectiveness of a bidding process is determined by the bid scoring system. If the government imposes stricter environmental restrictions to farmers with lower compliance costs, a bid ranking system adding scores for environmental performance and financial demands is more cost-effective than an index calculating the ratio between proposed compensation payments and environmental program benefits.
    Keywords: agri-environmental policy, auctions, conservation contracts, cost-effectiveness, information asymmetry, mechanism design
    Date: 2006–03
  11. By: Pierre Kohler (IUHEI, The Graduate Institute of International Studies, Geneva)
    Abstract: This paper considers the system of fair trade coffee. It first gives a short description of the coffee market and some of its major trends. The origin of the fair trade movement is then explained. The structure of FLO is examined and its pricing scheme compared to those of other private labeling initiatives. Benefits generated for participants on the supply and the demand side then come under scrutiny. To gauge its potential as a development tool, revenues to coffee producers are estimated on the basis of available information. Revenues to fair trade organizations in the Western world are also examined. Finally, two hypotheses are tested on data from 13 European countries to get a better picture of what is happening on the demand side. First, an OLS regression is tested to see if consumer awareness does Òmake a differenceÓ. Secondly, a treatment regression is used to correct for a sample self-selection bias and to check if there is some support for the claim that supermarkets that have started to sell fair trade coffee are clean-washing their reputation in the fair trade business.
    Keywords: Coffee, Fair Trade, Development, Clean-Washing, Treatment Regression
    JEL: C31 D83 H23 M39
    Date: 2006–08
  12. By: Clevo Wilson (School of Economics and Finance, Queensland University of Technology)
    Abstract: Farmers' exposure to pesticides is high in developing countries. As a result they suffer from ill-health, both short and long term. Deaths are not uncommon. The paper examines the cause of this high exposure by estimating farmers’ expenditure on precautions taken using the avertive behaviour approach. The data show that the expenditures on defensive behaviour are low. The paper then uses tobit regression analysis to determine factors that influence defensive behaviour. The results are useful, not only for Sri Lanka, but for many countries in South Asia, Africa and Latin America in reducing the current high levels of direct exposure to pesticides among farmers and farm workers using hand sprayers. Farmers' exposure to pesticides is a major occupational health hazard in these countries.
    Keywords: Exposure to pesticides, ill-health, defensive behaviour, influencing factors, developing countries
  13. By: Thierry Bréchet; Pierre-André Jouvet
    Abstract: Empirical evidence support the existence of pollution abatement possibilities at negative costs, the so-called 'no-regret options'. We provide a microeconomic rationale for the existence of such potential at the firm's level under environmental regulation. An econometric application confirms that marginal pollution abatement cost curves with no-regret options are compatible with a standard production function, as stated in our theoretical model.
    Keywords: No-regret options, pollution, regulation
    JEL: D20 Q50
    Date: 2006
  14. By: Clevo Wilson; Clem Tisdell (School of Economics and Finance, Queensland University of Technology)
    Abstract: Conservation of biodiversity is a complex issue. Apart from the creation of nature reserves, there is a plethora of other factors that are part of this complex web. One such factor is the public knowledge of species. Since public funding is imperative for the conservation of species and creation of reserves for them, it is important to determine the public’s awareness of species and their knowledge about them. In the absence of such awareness and knowledge, it is possible that the public will misallocate their support. In other words, resources may be provided for species that do not need support urgently. We show how availability of balanced information about species helps the public to make rational decisions and to allocate support (e.g. monetary) to species that need it most. Other implications of a ‘wildlife knowledgeable’ public are also discussed.
    Keywords: Biodiversity, conservation, Australia’s tropical wildlife, public knowledge, balanced information.
  15. By: Saturnino M. Borras Jr; Terry McKinley (International Poverty Centre)
    Keywords: Poverty, ECONOMIC, Macroeconomic, Land Reform
    JEL: B41 D11 D12 E31 I32 O54
    Date: 2006–11
  16. By: Xin Meng (Australian National University and IZA); Jim Ryan (Australian National University)
    Abstract: The Food for Education (FFE) program was introduced to Bangladesh in 1993. This paper evaluates the effect of this program on school participation and duration of schooling using a household survey data collected in 2000, after 7 years of operation of the program. Using propensity score matching combined with difference-in-differences methodologies we estimate the average effect of FFE eligibility on the schooling outcomes. We found that the program is successful in that the eligible children on average have 15 to 27 per cent higher school participation rates, relative to their counterfactuals who were not but would have been eligible for the program. Conditional on school participation, participants also stay at school 0.7 to 1.05 years longer than their counterfactuals.
    Keywords: education, program evaluation
    JEL: J38 I28
    Date: 2007–01
  17. By: Robert S. Pindyck
    Abstract: In a world of certainty, the design of environmental policy is relatively straightforward, and boils down to maximizing the present value of the flow of social benefits minus costs. But the real world is one of considerable uncertainty – over the physical and ecological impact of pollution, over the economic costs and benefits of reducing it, and over the discount rates that should be used to compute present values. The implications of uncertainty are complicated by the fact that most environmental policy problems involve highly nonlinear damage functions, important irreversibilities, and long time horizons. Correctly incorporating uncertainty in policy design is therefore one of the more interesting and important research areas in environmental economics. This paper offers no easy formulas or solutions for treating uncertainty – to my knowledge, none exist. Instead, I try to clarify the ways in which various kinds of uncertainties will affect optimal policy design, and summarize what we know and don’t know about the problem.
    Date: 2006–11
  18. By: Marette, Stéphan
    Abstract: This paper explores the effects of a standard influencing care choice. Firm(s) may increase the probability of offering safe products by incurring a cost. Under duopoly, they compete either in prices or in quantities. Under perfect information about safety for consumers, the selected standard that corrects a safety underinvestment is always compatible with competition. Safety overinvestment only emerges under competition in quantities and relatively low values of the cost. Under imperfect information about safety for consumers, the standard leads to a monopoly situation. However, for relatively large values of the cost, a standard cannot impede the market failure coming from the lack of information.
    Keywords: information, market structure, safety, standard.
    Date: 2007–02–12

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