New Economics Papers
on Agricultural Economics
Issue of 2007‒03‒10
twenty-six papers chosen by

  1. Changing farm types and irrigation as an adaptation to climate change in Latin American agriculture By Mendelsohn, Robert; Seo, Niggol
  2. An analysis of crop choice : adapting to climate change in Latin American farms By Seo, Niggol; Mendelsohn, Robert
  3. A Ricardian analysis of the impact of climate change on Latin American farms By Seo, Niggol; Mendelsohn, Robert
  4. Poverty and Productivity in Female-Headed Households in Zimbabwe By Sara Horrell; Pramila Krishnan
  5. Water use and salinity in the MurrayÐDarling Basin: a state-contingent model By David Adamson; Thilak Mallawaarachchi; John Quiggin
  6. An analysis of livestock choice : adapting to climate change in Latin American farms By Seo, Niggol; Mendelsohn, Robert
  7. Estimating Mexican Farmers’ Valuation of Milpa Diversity and Genetically Modified Maize: A Choice Experiment Approach By Ekin Birol; Eric Rayn Villalba
  8. Soil and Water Assessment Tool: Historical Development, Applications, and Future Research Directions, The By Gassman, Philip W.; Reyes, Manuel R.; Green, Colleen H.; Arnold, Jeffrey G.
  9. Water price and water reallocation in Andalusia. A computable general equilibrium approach By Esther Velázquez; M. Alejandro Cardenete; Geoffrey J.D. Hewings
  10. Productivity Growth in Thailand and Indonesia: How Agriculture Contributes to Economic Growth By Peter Warr
  11. The Metagovernance of Markets: The Politics of Water Management in Australia By Stephen Bell; John Quiggin
  12. Food subsidies and poverty in Egypt: Analysis of program reform using stochastic dominance By Paul Makdissi; Dorothée Boccanfuso; Mathieu Audet
  13. Payments for Environmental Services in Costa Rica By Pagiola, Stefano
  14. Lack of opportunities and persistent poverty:income diversification in rural Madagascar (In French) By Claire GONDARD-DELCROIX (GREThA-GRES)
  15. Resource curse in reverse: The coffee crisis and armed conflict in Colombia By OEINDRILA DUBE; JUAN FERNANDO VARGAS
  16. Environmental Protection, Consumer Awareness, Product Characteristics, and Market Power By Marcel Boyer; Philippe Mahenc; Michel Moreaux
  17. Conservation policies, environmental valuation and the optimal size of jurisdictions By Giovanni B. Concu
  18. Poverty in Rural India: Ethnicity and Caste By Ira N. Gang; Kunal Sen; Myeong-Su Yun
  19. Green management and green technology - exploring the causal relationship By Nogareda, Jazmin Seijas; Ziegler, Andreas
  20. On the re-assessment of inequality in Indonesia: household survey or national account? By Arief Anshory Yusuf
  21. Public Voluntary Programs Reconsidered By Thomas P. Lyon; John W. Maxwell
  22. Comment: Legal Liability as Climate Change Policy By Hilary Sigman
  23. Extending health insurance to the rural population : an impact evaluation of China ' s new cooperative medical scheme By Wagstaff, Adam; Lindelow, Magnus; Gao Jun; Xu Ling; Qian Juncheng
  24. Biotechnology as a Competitive Edge for the Finnish Forest Cluster By Terhi Hakala; Olli Haltia; Raine Hermans; Martti Kulvik; Hanna Nikinmaa; Albert Porcar-Castell; Tiina Pursula
  25. Income and Body Mass Index in Europe By Jaume Garcia Villar; Climent Quintana-Domeque
  26. GTAP-E: An Energy-Environmental Version of the GTAP Model with Emission Trading By Truong P. Truong; Claudia Kemfert; Jean-Marc Burniaux

  1. By: Mendelsohn, Robert; Seo, Niggol
    Abstract: This paper estimates a model of a farm that treats the choice of crops, livestock, and irrigation as endogenous. The model is composed of a multinomial choice of farm type, a binomial choice of irrigation, and a set of conditional land value function s. The model is estimated across over 2,000 farmers in seven Latin America countries. The results quantify how farmers adapt their choice of farm type and irrigation to their local climate. The results should help governments develop effective adaptation policies in response to climate change and improve the forecasting of climate effects. The paper compares the predicted effects of climate change using both endogenous and exogenous models of farm choice.
    Keywords: Climate Change,Crops & Crop Management Systems,Livestock & Animal Husbandry,Agriculture & Farming Systems,Rural Development Knowledge & Information Systems
    Date: 2007–03–01
  2. By: Seo, Niggol; Mendelsohn, Robert
    Abstract: The authors explore how Latin American farmers adapt to climate by changing crops. They develop a multinomial choice model of farmer ' s choice of crops. Estimating the mo del across over 2,000 farmers in seven countries, they find that both temperature and precipitation affects the crops that Latin American farmers choose. Farmers choose fruits and vegetables in warmer locations and wheat and potatoes in cooler locations. Farms in wetter locations are more likely to grow rice, fruits, and squash, and in dryer locations maize and potatoes. Global warming will cause Latin American farmers to switch away from wheat and potatoes toward fruits and vegetables. Predictions of the impact of climate change must reflect not only changes in yields or net revenues per crop but also crop switching.
    Keywords: Crops & Crop Management Systems,Climate Change,Rural Poverty Reduction,Agriculture & Farming Systems,Global Environment Facility
    Date: 2007–03–01
  3. By: Seo, Niggol; Mendelsohn, Robert
    Abstract: This study estimates the vulnerability of Latin American agriculture to climate change using a Ricardian analysis of both land values and net revenues. Examining a sample of over 2,500 farms in seven countries, the results indicate both land value and net revenue are sensitive to climate. Both small farms and large farms have a hill-shaped relationship with temperature. Estimating separate regr essions for dryland and irrigated farms reveals that dryland farms are more sensitive to temperature but irrigated farms are more sensitive to precipitation. Examining the effects from future climate change scenarios reveals that severe scenarios could reduce farm earnings by as much as 62 percent by 2100, whereas more moderate scenarios could reduce earnings by about 15 percent. Small and large farms are equally sensitive to global warming. Land value and net revenue analyses produce quite similar results.
    Keywords: Climate Change,Rural Development Knowledge & Information Systems,Agriculture & Farming Systems,Crops & Crop Management Systems,Common Property Resource Development
    Date: 2007–03–01
  4. By: Sara Horrell; Pramila Krishnan
    Abstract: A household survey conducted in rural Zimbabwe in 2001 is used to compare the position of de facto and de jure female-headed households to those with a male head. These households are characterised by different forms of poverty that impinge on their ability to improve agricultural productivity. However, once inputs are accounted for, it is only for growing cotton that female-headed households’ productivity is lower than that found for male-headed households. General poverty alleviation policies will benefit the female-headed household but specific interventions via extension services and access to marketing consortia are also indicated.
    Keywords: Africa, Zimbabwe, gender, poverty, female-headed households, agriculture
    JEL: O12
    Date: 2006–07
  5. By: David Adamson (Risk and Sustainable Management Group, University of Queensland); Thilak Mallawaarachchi (Risk and Sustainable Management Group, University of Queensland); John Quiggin (Risk & Sustainable Management Group, School of Economics, University of Queensland)
    Abstract: The MurrayÐDarling Basin comprises over 1 million square kilometres; it lies within four states and one territory; and over 12,800 gigalitres of irrigation water is used to produce over 40 per cent of the nation's gross value of agricultural production. The supply of water for irrigation is subject to climatic and policy uncertainty. The object of the present paper is to show how the linear and nonlinear programming models commonly used in modelling problems such as those arising in the MurrayÐDarling Basin may be adapted to incorporate a state-contingent representation of uncertainty.
    Keywords: Murray model state-contingent
    JEL: D81 Q25
    Date: 2006–06
  6. By: Seo, Niggol; Mendelsohn, Robert
    Abstract: The authors explore how Latin American livestock farmers adapt to climate by switching spe cies. They develop a multinomial choice model of farmer ' s choice of livestock species. Estimating the models across over 1,200 livestock farmers in seven countries, they find that both temperature and precipitation affect the species Latin American farmers choose. The authors then use this model to predict how future climate scenarios would affect species choice. Global warming will cause farmers to switch to beef cattle at the expense of dairy cattle.
    Keywords: Livestock & Animal Husbandry,Climate Change,Wildlife Resources,Peri-Urban Communities,Rural Urban Linkages
    Date: 2007–03–01
  7. By: Ekin Birol (Department of Land Economy, University of Cambridge, UK); Eric Rayn Villalba (Department of Geography, University College London, UK.)
    Abstract: The milpa is a traditional intercropping system of maize, bean, and squash. Milpas are repositories of agrobiodiversity in México, not only rich in inter- and infra-crop species diversity, but also in landraces of maize, which are building blocks for future improvements in this globally important staple crop. Even though they are still widely cultivated across México, sustainability of milpa cultivation is threatened by farmers’ integration into labour and output markets and recently, by the flow of transgenic constructs from genetically modified (GM) maize varieties to landraces in milpas. In this paper a choice experiment is employed to investigate farmer valuation of the agrobiodiversity found in traditional milpa systems and the option to cultivate GM maize varieties in milpas. Data are collected from 414 farm households across three states of México, and analysed using the random parameter logit model with interactions, which can detect for unobserved and observed sources of heterogeneity in the sample. The results reveal that there is considerable heterogeneity in farmers’ preferences for milpa diversity and GM maize across and within the three states. The location and characteristics of farmers who value milpa diversity the most, as well as those of farmers who value the option to cultivate GM maize the most are identified. These findings have policy implications in terms of designing least cost on farm conservation programmes for traditional milpas, as well as for understanding the potential in adoption of GM maize in México.
    Keywords: milpa; crop; species; diversity; landrace; GM; genetically; maize; logit; random; parameter; interactions; 2001
    Date: 2006
  8. By: Gassman, Philip W.; Reyes, Manuel R.; Green, Colleen H.; Arnold, Jeffrey G.
    Abstract: The Soil and Water Assessment Tool (SWAT) model is a continuation of nearly 30 years of modeling efforts conducted by the U.S. Department of Agriculture (USDA), Agricultural Research Service. SWAT has gained international acceptance as a robust interdisciplinary watershed modeling tool, as evidenced by international SWAT conferences, hundreds of SWAT-related papers presented at numerous scientific meetings, and dozens of articles published in peer-reviewed journals. The model has also been adopted as part of the U.S. Environmental Protection Agency’s BASINS (Better Assessment Science Integrating Point & Nonpoint Sources) software package and is being used by many U.S. federal and state agencies, including the USDA within the Conservation Effects Assessment Project. At present, over 250 peer-reviewed, published articles have been identified that report SWAT applications, reviews of SWAT components, or other research that includes SWAT. Many of these peer-reviewed articles are summarized here according to relevant application categories such as streamflow calibration and related hydrologic analyses, climate change impacts on hydrology, pollutant load assessments, comparisons with other models, and sensitivity analyses and calibration techniques. Strengths and weaknesses of the model are presented, and recommended research needs for SWAT are provided.
    Keywords: developmental history, flow analysis, modeling, SWAT, water quality.
    Date: 2007–02–28
  9. By: Esther Velázquez (Department of Economics, Universidad Pablo de Olavide); M. Alejandro Cardenete (Department of Economics, Universidad Pablo de Olavide); Geoffrey J.D. Hewings (Regional Economics Application Laboratory and University of Illinois)
    Abstract: The objective of this work is to analyze the effects that an increase in the price of the water delivered to the agriculture sector to promote the conservation of this resource would have on the efficiency of the consumption of water and the possible reallocation of water to the remaining productive sectors. The analysis is motivated by the fact that the agriculture consumes a disproportionately large amount of water at very low prices. The methodology that will be used to explore the implications on the economy will be a computable general equilibrium model (CGE), previously designed for an analysis of the direct taxes of the Andalusian economy (Cardenete and Sancho, 2003), but now enhanced and extended to include emissions of pollutants and the introduction of environmental taxes (André, Cardenete and Velázquez, 2005). This model has been further modified to introduce the variations in the water price that we will try to analyze by means of a tariff applied on the production structure. The main conclusion drawn indicates that, although the tax policy applied does not correspond to a significant water saving in the above-mentioned sector, a reallocation of this resource is achieved which seems to generate a more efficient and more rational behavior from a production point of view.
    Keywords: environmental tax reforms, computable general equilibrium, water price
    JEL: D58 H21 H22
    Date: 2007–03
  10. By: Peter Warr (Australian National University)
    Abstract: Total factor productivity growth in the agricultural, industry and services sectors is studied in this paper for two countries: Thailand and Indonesia, over the period 1981 to 2002. A feature of the analysis is the decomposition of aggregate total factor productivity growth into two components: productivity growth in individual sectors; and the reallocation of resources from low productivity to high productivity sectors. The results show that in both countries virtually all factor productivity growth at the sectoral level derives from agriculture, but the reallocation of resources away from agriculture was a much larger source of aggregate productivity growth.
    Keywords: total factor productivity growth, Thailand, Indonesia
    JEL: O47 Q10 O30
    Date: 2006–02
  11. By: Stephen Bell (University of Queensland); John Quiggin (Risk & Sustainable Management Group, School of Economics, University of Queensland)
  12. By: Paul Makdissi (GREDI, Département d'économique, Université de Sherbrooke); Dorothée Boccanfuso (GREDI, Faculte d'administration, Université de Sherbrooke); Mathieu Audet (GREDI, Faculte d'administration, Université de Sherbrooke)
    Abstract: Throughout this article, we utilize consumption dominance curves, a tool developed by Makdissi and Wodon (2002) to analyze the impacts on poverty brought on by changes in the food subsidy system in Egypt. The Egypt Integrated Household Survey (EIHS) of 1997 allows us to conclude that changes brought to these subsidies have not always worked towards alleviating poverty.
    Keywords: Subsidy, Marginal Tax Reforms, Egypt
    JEL: D12 D63 I21 I32
    Date: 2007
  13. By: Pagiola, Stefano
    Abstract: Costa Rica pioneered the use of the payments for environmental services (PES) approach in developing countries by establishing a formal, country-wide program of payments, the PSA program. The PSA program has worked hard to develop mechanisms to charge the users of environmental services for the services they receive. It has made substantial progress in charging water users, and more limited progress in charging biodiversity and carbon sequestration users. Because of the way it makes payments to service providers (using approaches largely inherited from earlier programs), however, the PSA program has considerable room for improvement in the efficiency with which it generates environmental services. With experience, many of these weaknesses are being gradually corrected as the PSA program evolves towards a much more targeted and differentiated program. An important lesson is the need to be flexible and to adapt to lessons learned and to changing circumstances.
    Keywords: Payments for Environmental Services; Costa Rica; FONAFIFO
    JEL: Q58 Q25 Q20 Q57 Q50 Q28 Q23
    Date: 2006–12–20
    Abstract: In Madagascar, the inequalities gap between urban and rural areas implies to draft rural specific policies. Nevertheless, the only focusing on growth might have a limited impact on persistent poverty. All households have not the same capacity to catch new opportunities generated by growth, and those with weakest resources could be durably excluded. Thanks to an applied study on income diversification in rural Madagascar, this paper shows these households are unable to carry out forms of income diversification that protect from poverty. On the contrary, they are forced to choice diversification forms associated with chronic poverty.
    Keywords: Income diversification, risk coping strategies, risk management strategies, persistent poverty, transitory poverty, Madagascar, Rural areas
    JEL: R2 I32
    Date: 2007
    Abstract: Between 1998 and 2003 production increases in Brazil and Vietnam drove down the price of coffee by 73 percent in global markets, triggering the “international coffee crisis”. We examine the effect of this exogenous price shock on Colombia’s civil war, exploring whether politically-motivated violence presented different dynamics in the coffee –growing regions relative to the non- coffee regions, during the pre-crisis and crisis periods. Using a difference-in-differences framework, we find causal evidence that the steep decline in coffee prices substantially increased both the incidence and intensity of Colombia’s civil war. We also propose a simple model linking the price shock to violence and empirically examine the relative importance of three potential mechanisms. While crop substitution from coffee to coca explains very little of the variation, a disproportionate increase in poverty in coffee areas is associated with greater violence, as is a lower state capacity.
    Date: 2006–12–10
  16. By: Marcel Boyer; Philippe Mahenc; Michel Moreaux
    Abstract: We investigate the behavior of a polluting monopolist whose production causes a global damage affecting consumers and non-consumers alike while consumption causes a specific damage affecting consumers only. The monopolist anticipates strategically how her decisions on product variant, price and pollution affect the purchasing decisions in a Hotelling market. We compare a standard unregulated monopolist and a monopolist subject to environmental regulation. We show that both monopolists choose the same product variant, that the regulated monopolist pollutes less, produces as much or more, and charges a higher price than the unregulated one. Hence, environmental regulation always lead to an increase in price but never to a reduction in production. <P>Nous étudions le comportement d'un monopole dont la production cause un dommage global de pollution pour les consommateurs et les non-consommateurs de son produit et un dommage spécifique additionnel pour les consommateurs. Le monopole anticipe de manière stratégique l'impact des caractéristiques et du prix du produit et celui du niveau de pollution sur les décisions d'achat des consommateurs. Nous comparons le monopole standard non réglementé et le monopole sujet à une réglementation environnementale. Nous montrons que les deux monopoles choisissent la même variété de produit, que le monopole réglementé pollue moins, produit autant sinon plus, et demande un prix plus élevé que le monopole non-réglementé. Ainsi, la réglementation environnementale dans ce contexte entraîne toujours une hausse de prix mais ne mène jamais à une baisse de production.
    Keywords: environmental protection, consumer awareness, product characteristics, market power, protection environnementale, consommateurs verts, caractéristiques des produits, pouvoir de marché
    Date: 2007–03–01
  17. By: Giovanni B. Concu (Risk and Sustainable Management Group, University of Queensland)
    Abstract: The size of a jurisdiction is crucial in determining the efficiency, equity or efficacy of environmental regulations. However, jurisdictions are usually taken to coincide with political boundaries even if environmental externalities may transcend them. This paper illustrates the design and implementation of a Choice Modelling experiment to determine the spatial distribution of environmental benefits of Kings Park (Western Australia). The objective is to understand if federal, state or local resources are the appropriate form of funding a conservation policy. Results indicate that there are interstate spillovers of benefits, hence justifying federal contributions to Kings Park. They also show that some benefits are homogeneously spread within Western Australia, and this is an indication that state funding is also appropriate. Other benefits are distance-dependent; some level of local/council funding is warranted
    Keywords: federal regulation, decentralised policies, benefits spillovers, environmental valuation, choice modelling, distance
    JEL: H77 Q51 Q58
    Date: 2006–11
  18. By: Ira N. Gang (Rutgers University); Kunal Sen (University of Manchester); Myeong-Su Yun (Tulane University)
    Abstract: This paper analyzes the determinants of rural poverty in India, contrasting the situation of scheduled caste (SC) and scheduled tribe (ST) households with the non-scheduled population. The incidence of poverty in SC and ST households is much higher than among non-scheduled households. By combining regression estimates for the ratio of per capita expenditure to the poverty line and an Oaxaca-type decomposition analysis, we study how these differences in the incidence of poverty arise. We find that for SC households, differences in characteristics explain the gaps in poverty incidence more than differences in transformed regression coefficients. In contrast, for ST households, the transformed regression coefficients play the more important role.
    Keywords: poverty, caste, ethnicity, decomposition
    JEL: I32 O12 J15
    Date: 2006–12–01
  19. By: Nogareda, Jazmin Seijas; Ziegler, Andreas
    Abstract: In this paper, we analyze potential endogeneity problems in former econometric studies which regress corporate environmental performance such as green technology activities on green management. Based on evolutionary theory and the resource-based view of the firm, we discuss in the first step that green technology could also influence green management and that unobserved firm characteristics could simultaneously influence green management and green technology. Contrary to existing studies, we empirically explore in the second step the structural reverse causality hypothesis with a unique crosssectional firm-level data set from the German manufacturing sector. Our econometric analyses with uni- and multivariate probit models imply a significantly positive effect of environmental process innovations on certified environmental management systems and a significantly positive impact of environmental product innovations on life cycle assessment activities. We interpret these empirical results as a further indicator that the causal relationship between green management and green technology is not clear. We conclude that panel data, which are not available for technological environmental innovations yet, are a necessary condition to solve these endogeneity problems. Such panel data studies could therefore be an appropriate basis for robust conclusions with regard to voluntary green management measures as a non-mandatory approach in environmental policy.
    Keywords: Non-mandatory environmental policy, green management, green technology, uni- and multivariate probit models, endogeneity
    Date: 2006
  20. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University)
    Abstract: This paper is motivated by the inconsistency between food and non-food expenditure estimated from household survey data (SUSENAS) and from nationalaccount (I-O table) and its connection on the issue of inequality in Indonesia.Since non-food expenditure tend to be under-estimated when compared withnational account data, it imply the under-representation of the rich in the cal-culation of inequality in Indonesia. This paper, then applies an approach toreconciling household survey and national accounts data, by re-estimating thesampling weight through minimization of entropy distance of information takinghousehold survey weight as prior, while satisfying some aggregation constraints.The estimated weight then is used to calculate standard indicator of inequalityin Indonesia. The results suggests that while inequality in rural Indonesia doesnot change much, due to possible under- representation of the rich in the survey, inequality in urban Indonesia is highly under-estimated. The "Jakarta factor"seems to account mostly to this discrepancy.
    Keywords: inequality, Indonesia, entropy
    JEL: C80 D63
    Date: 2006–08
  21. By: Thomas P. Lyon (Ross School of Business, University of Michigan); John W. Maxwell (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: “Public voluntary programs” (PVPs) involve government offers of positive publicity and technical assistance to firms that reach certain environmental goals. A growing body of empirical evidence suggests these programs often have little impact on the behavior of their participants. A natural policy conclusion would be to eliminate these programs, but this paper offers several reasons not to jump to such a conclusion. We first present a political-economic framework in which PVPs are viewed as modest subsidies used when political opposition makes stronger environmental regulation infeasible. We then explore the design of PVPs in detail, showing how PVPs can potentially enhance the diffusion of cost-effective techniques for pollution abatement, so long as the information involved is not competitively sensitive. Identifying the effects of PVPs econometrically is difficult because information is likely to diffuse to non-participants. Thus, after the early phases of even a successful PVP, it may well be impossible to detect a difference in performance between participants and non-participants.
    Date: 2007
  22. By: Hilary Sigman (Rutgers University)
    Abstract: Several U.S. states have attempted to use of legal liability imposed on greenhouse gas emitters as a public policy instrument for climate change. This brief comment considers the desirability of this approach, focusing on three possible roles for climate change liability: as a source of compensation, as a direct influence on greenhouse gas concentrations, and as a means to facilitate the adoption of ex ante public policies to control greenhouse gases. The strongest argument for liability may be that the threat of liability improves the chances that climate change policies will use more efficient, revenue-raising instruments.
    Keywords: Environmental policy, Law and economics, Revenue recycling
    JEL: K32 Q54
    Date: 2007–02–21
  23. By: Wagstaff, Adam; Lindelow, Magnus; Gao Jun; Xu Ling; Qian Juncheng
    Abstract: In 2003, after over 20 years of minimal health insurance coverage in rural areas, China launched a heavily subsidized voluntary health insurance program for rural residents. The authors use program and household survey data, as well as health facility census data, to analyze factors affecting enrollment into the program and to estimate its impact on households and health facilities. They obtain estimates by combining differences-in-differences with matching methods. The authors find some evidence of lower enrollment rates among poor households, holding other factors constant, and higher enrollment rates among households with chronically sick members. The household and facility data point to the scheme significantly increasing both outpatient and inpatient utilization (by 20-30 percent), but they find no impact on utilization in the poorest decile. For the sample as a whole, the authors find no statistically significant effects on average out-of-pocket spending, but they do find some-albeit weak-evidence of increased catastrophic health spending. For the poorest decile, by contrast, they find that the scheme increased average out-of-pocket spending but reduced the incidence of catastrophic health spending. They find evidence that the program has increased ownership of expensive equipment among central township health centers but had no impact on cost per case.
    Keywords: Health Monitoring & Evaluation,Housing & Human Habitats,Small Area Estimation Poverty Mapping,Regional Rural Development,Health Economics & Finance
    Date: 2007–03–01
  24. By: Terhi Hakala; Olli Haltia; Raine Hermans; Martti Kulvik; Hanna Nikinmaa; Albert Porcar-Castell; Tiina Pursula
    Abstract: In this study we have collected information by interviewing all identified parties within the Finnish forest sector who might have a potential biotechnology connection : university research groups, research institutions, small and medium-sized biotechnology-companies and up to the largest forest companies. The ultimate goal was to assess how resources have been allocated and biotechnologies utilized within the value chain of the entire forest sector. This study aimed at providing answers to the following questions : • What are the current Finnish academic resources and projects related to forest industry biotechnology? • How much does the Finnish forest cluster invest in biotechnology R&D activity, and what are the key application areas in the value chain? • How well do the academic resources, company R&D investments and research needs converge to help secure the future competitiveness of the Finnish forest industries? In order to answer the questions above, the study approached the matter in consecutive steps. First, the existing forest industry related biotechnological knowledge base within the academia on one hand, and the resource base among firms on the other hand, were mapped. Following up on that, we evaluated the sales expectations of forestry related biotechnological applications within the domestic forestry cluster itself, other potential domestic industries and global export markets. The third step assessed whether the development of forestry related biotechnological applications is justifiable in the framework of comparative advantage. This was accomplished by comparing the relevant existing knowledge and other resource bases to their sales expectations. In order to evaluate the potential of biotechnology in the entire forest industry value chain, the study assessed four value chain modules. Module 1 represents the beginning of the value chain : forestry applications. Module 2 consists of the development of wood products, module 3 is related to the pulp and paper industry, and module 4 to utilization side streams for bioenergy, biochemicals and other food or pharmaceutical applications. The assessment of module 1 implies that there is a constant lack of resources. Basic research conducts some relatively long projects, which often seem too time-consuming in applied research and corporate R&D. There seems to be only few active links between the academic research projects and companies. Many new technologies already exist but since the individual forest owners hardly have incentives to invest in R&D due to e.g. the long breeding cycle, collaboration with companies seems as the only potential pathway to commercialization of forestry related biotechnologies. There were few biotechnology-based projects within the module 2. The research and product development seems to focus on physical modifications, and composite research is based on chemistry. Module 3, paper, pulp and board industry, seems to be the most active in research and product development activity. Their products generate positive cash flows, and research projects are abundantly funded. The companies are closely involved in the research projects as financiers and collaborators. This involvement impacts on the nature of the research, which seems highly applicable and linked closely to industrial applications. Consequently, biotechnology applications are already used in the pulp and paper industry. Some biotechnology applications are adopted rapidly. They, such as enzymes in reducing paper machine runnability problems, do not affect the quality of the fibers, intermediate or end products and are thus easier to take into use in production scale. We observed the research and product development within module 4 as a high priority for both the academia and industry. The research is anticipated to grow strongly and even more than in other modules. Biotechnologies are applied as substitutes to chemical and thermal technologies. However, all of these fields of technology are developed and applied by the industry. This provides some important implications for technology development and innovation policy. Due to the fuzziness between technology border-lines, it seems misleading to prioritize biotechnologies over some other technology; in contrast, the most efficient technology should be preferred. Accordingly, technology subsidies might be most efficient if the public technology programmes would be based on application segments instead of a specific technology. Our assessment of international patenting activity raised some interesting notions. Finland seemed to be comparatively most specialized in plant genetic engineering, food and food additive, and waste disposal and the environment applications. However, biotechnology based biofuels are not included as a source of comparative advantage, which also stresses the importance of parallel development of biotechnologies and other technology fields. A potential source of value creation could be the utilization of process side streams more efficiently, including refinement of by-products such as tall oil, to products with higher value added in other application areas.The paper and board making might also be strongly influenced by new packaging solutions, materials and methods; these utilize, however, only rarely or never biotechnologies as such. Finland has a good overall and mainly publicly maintained infrastructure. If the raw material’s high quality and some special features can compensate the relatively low growth rates, Finland should be able to attract the multinational pulp and paper industry also in the long term. We conclude that the development of biotechnologies should not contain any intrinsic value per se. The commercial value of the biotechnology could be benchmarked with the value of alternative technologies; and consequently, biotechnology could become part of the technology options for companies active in established and conventional industries. The Finnish forest cluster has financial resources to commercialize any new technology that can increase the process efficiency or provide other economic benefits in new application areas. This is a reason why we see this area exceptionally promising compared to any other high technology field without such a financial backbone.
    JEL: L69 O32 O34
    Date: 2007–03–05
  25. By: Jaume Garcia Villar; Climent Quintana-Domeque
    Abstract: Obesity is alarming public health authorities around the world. Given this situation it is important to study its determinants. This paper focuses on the economic determinants of obesity. More specifically, we explore the empirical relationship between lifetime income and body mass index (BMI) in seven European Union countries in the short run. To study such a relationship, we make use of an accounting identity that relates current BMI to last year's BMI and current levels of both food consumption and physical activity. We estimate a reduced-form version of such an identity which relates current BMI to last year's BMI and lifetime income. Theoretically, lifetime income should affect contemporaneous BMI through its effect on both current consumption of food and current physical activity. Our results indicate that, once last year BMI's is taken into account, the relationship between lifetime income and BMI is at most weak. Such a finding suggests that income-based public policies are not likely to be effective in the fight against obesity in the short run.
    Keywords: Europe, obesity, permanent income, short run
    JEL: I12 I18
    Date: 2006–12
  26. By: Truong P. Truong; Claudia Kemfert; Jean-Marc Burniaux
    Abstract: Energy is an important commodity in many economic activities. Its usage affects the environment via CO2 emissions and the Greenhouse Effect. Modeling the energy-economy-environment-trade linkages is an important objective in applied economic policy analysis. Previously, however, the modeling of these linkages in GTAP has been incomplete. This is because energy substitution, a key factor in this chain of linkages, is absent from the standard model specification. This technical paper remedies this deficiency by incorporating energy substitution into the standard GTAP model. It begins by first reviewing some of the existing approaches to this problem in contemporary CGE models. It then suggests an approach for GTAP which incorporates some of these desirable features of energy substitution. The approach is implemented as an extended version of the GTAP model called GTAP-E. In addition, GTAP-E incorporates carbon emissions from the combustion of fossil fuels and this revised version of GTAP-E provides for a mechanism to trade these emissions internationally as well as domestically. The policy relevance of GTAP-E in the context of the existing debate about climate change is illustrated by some illustrative simulations of the implementation the European emissions trading scheme in 2005. It is hoped that the proposed model will be used by individuals in the GTAP network who may not be themselves energy modelers, but who require a better representation of the energy-economy-environmental linkages than is currently offered in the standard GTAP model.
    Date: 2007

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.