New Economics Papers
on Agricultural Economics
Issue of 2007‒03‒17
fifteen papers chosen by

  1. Social Accounting Matrix for Pakistan, 2001-02: Methodology and Results By Dorosh, Paul; Niazi, Muhammad Khan
  2. KLUM@LPJ: Integrating dynamic land-use decisions into a dynamic global vegetation and crop growth model to assess the impacts of a changing climate. A feasibility study for Europe By Kerstin Ronneberger; Luca Criscuolo; Wolfgang Knorr; Richard S.J. Tol
  3. Optimal Conjunctive Use of Surface and Groundwater with Recharge and Return Flows: Dynamic and Spatial Patterns By Sittidaj Pongkijvorasin; James Roumasset
  4. Population and Agricultural Development By James Roumasset
  5. KLUM@GTAP: Introducing biophysical aspects of land-use decisions into a general equilibrium model: A coupling experiment By Kerstin Ronneberger; Maria Berrittella; Francesco Bosello; Richard S.J. Tol
  6. Losing the Plot: The Strategic Dismantling of White Farming in Zimbabwe 2000-2005 By Angus Selby (QEH)
  7. Potential synergies between existing multilateral environmental agreements in the implementation of Land Use, Land Use Change and Forestry activities By Annette Cowie; Uwe A. Schneider; Luca Montanarella
  8. Formal and Informal Rural Credit in Four Provinces of Vietnam By Mikkel Barslund; Finn Tarp
  10. Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options By Dorosh, Paul; Salam, Abdul
  11. Climate Change and the Stability of Water Allocation Agreements By Erik Ansink; Arjan Ruijs
  12. THE VALUE OF THE HIGH ASWAN DAM TO THE EGYPTIAN ECONOMY By Kenneth M. Strzepek; Gary W. Yohe; Richard S.J. Tol; Mark Rosegrant
  13. Radical Realignments: The Collapse of the Alliance between White Farmers and the State in Zimbabwe 1995-2000 By Angus Selby (QEH)
  14. Why Is The Developed World Obese? By Sara Bleich; David Cutler; Christopher Murray; Alyce Adams
  15. Do Loyalty Programs Really Enhance Behavioral Loyalty? An Empirical Analysis Accounting for Self-Selecting Members By Leenheer, J.; Heerde, H.J. van; Bijmolt, T.H.A.; Smidts, A.

  1. By: Dorosh, Paul; Niazi, Muhammad Khan
    Abstract: This paper describes the structure and construction of a social accounting matrix (SAM) for Pakistan for 2001-02. A SAM is an internally consistent extended set of national accounts that disaggregates value-added in each production activity into payments to various factors (e.g., land, labour, capital), and disaggregates household incomes and expenditures according to various household types. Because this Pakistan SAM is designed for analysis of the links between growth and rural poverty, agricultural activities, agricultural factors of production, and rural household accounts are more disaggregated than are those for urban activities and households. Rural household groups in the SAM are split according to three regions (Punjab, Sindh, and Other Pakistan) to capture the large differences in the structure of agricultural production and incomes across Pakistan. On average, household incomes in the SAM are 2.1 times greater than household expenditures in the HIES Survey, reflecting the apparent substantial under-reporting of expenditures (particularly on services)and informal sector incomes in the HIES and other household surveys. Agricultural factor incomes as calculated in the SAM account for only 23 percent of total factor incomes in Pakistan, but 60 percent of total factor incomes for agricultural households. 91 percent of agricultural incomes derive from land, water, own-farm labour, or livestock; earnings of hired labour and (nonlivestock)agricultural capital account for only 9 percent of agricultural incomes. Incomes of large- and medium-farm rural households, calculated using land area cultivated, data from the Agricultural Census, and other data, are significantly higher than indicated in household surveys.
    Keywords: National accounts; Social accounting matrix
    JEL: E01
    Date: 2006
  2. By: Kerstin Ronneberger; Luca Criscuolo; Wolfgang Knorr; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: We test the hypothesis that models should be coupled to accurately project the impacts of climate change on the agro-economic and agro-environmental system. We couple the LPJ-C global dynamic vegetation model for crops to the global agricultural land-use model KLUM. Potential crop yields, from LPJ-C, and crop prices drive the land-use decisions; cropland allocation from KLUM scale the carbon entering the soil litter pool in LPJ-C. Through the crop prices, economic effects are projected directly on the carbon cycle. Global change impacts are projected on the agricultural sector and can be economically assessed. The coupled model performs reasonably well for the observed climate and prices for 6 crops in Europe on a 0.5x0.5 longitude-latitude grid. We estimate the impact of climate change on agriculture in Europe for A1 and B2 scenarios of the IPCC. The coupled model reproduces the essential processes and interactions of the modeled system. Simulations with the uncoupled models are used to estimate the accuracy added by the model coupling. Sign and size of the biases from ignoring the feedbacks are substantial for some parameters, and particularly their spatial pattern, while for other parameters (e.g., the European total of soil organic carbon) biases are negligible. The answer to the question “Should models be coupled?” is “It depends on what you’re interested in”.
    Keywords: Climate change, land use, soil carbon, model coupling
    JEL: Q54
    Date: 2006–06
  3. By: Sittidaj Pongkijvorasin (Department of Economics, University of Hawaii at Manoa); James Roumasset (Department of Economics, University of Hawaii at Manoa)
    Abstract: This paper derives the efficiency price patterns for a comprehensive spatial and dynamic model of conjunctive water use incorporating conveyance losses, canal return flows, and groundwater recharge. The first-best shadow price of surface water is composed of a charge for water that flows into the farm and differential credits for water that flows to other uses. The shadow prices can be used as the basis of water pricing schemes or for exchange rates to facilitate water trading. We show that farmers near the headworks use irrigation water in the optimal program, and only farmers more distant from the headworks extract groundwater. We also illustrate the possibility of reswitching in the sequence of resource use. It may be efficient for some farms to switch from one source to another and then switch back again, e.g. groundwater to surface water to groundwater.
    Keywords: water management, conjunctive use, irrigation, return flows, conveyance loss, consumptive use, sequence of resource use
    JEL: Q15 Q25 Q28
    Date: 2007–03–05
  4. By: James Roumasset (Department of Economics, University of Hawaii at Manoa)
    Abstract: Thinking about population as a driver of agricultural development provides insights into induced technical and institutional change, whether it be Esther Boserup's declining fallow period, modern crop varieties, or the specialization pyramid that arises in labor-intensive agriculture. The non-convexities of research and development, infrastructure investments, and specialization imply that modest population pressure does not necessarily exert downward pressure on wages. As agricultural growth stimulates industrialization, the non-convexities of specialization become ever more compact. The combination of these and the increased demand for human capital, if not inhibited by policy failures, tends to promote a virtuous circle of human progress.
    Keywords: population, agricultural development, Boserup, non-convexities, specialization, institutional change
    JEL: J10 O12 O43 P23 Q01
    Date: 2007–03–03
  5. By: Kerstin Ronneberger; Maria Berrittella; Francesco Bosello; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: In this paper the global agricultural land use model KLUM is coupled to an extended version of the computable general equilibrium model (CGE) GTAP in order to consistently assess the integrated impacts of climate change on global cropland allocation and its implication for economic development. The methodology is innovative as it introduces dynamic economic land-use decisions based also on the biophysical aspects of land into a state-ofthe- art CGE; it further allows the projection of resulting changes in cropland patterns on a spatially more explicit level. A convergence test and illustrative future simulations underpin the robustness and potentials of the coupled system. Reference simulations with the uncoupled models emphasize the impact and relevance of the coupling; the results of coupled and uncoupled simulations can differ by several hundred percent.
    Keywords: Land-use change, computable general equilibrium modeling, integrated assessment, climate change
    JEL: C68 R14 Q17 Q24
    Date: 2006–05
  6. By: Angus Selby (QEH)
    Abstract: This paper examines the dismantling of the white farming sector in Zimbabwe after 2000. It argues that although ZANU PF portrayed farm invasions as a demonstrable effort towards populist land reforms, the 'fast-track' strategy was primarily one of political survival, and that this is evident in the pattern of land invasions and land allocations. Farm invasions quickly evolved into a systematic and methodical purge of commercial farms, to undermine support for the MDC from farmers and farm workers. Local contexts and local politics shaped the nature of local invasions, but the overall program was centrally endorsed and centrally co-ordinated. The reallocation of farms and assets were strategically geared towards placating key groups and key individuals within ZANU PF's increasingly militarised patronage system. Finally, this paper explores the reactions, counter strategies and patterns of collapse within the white farming sector. It illustrates how the community and its institutions fragmented along established planes of historical division, re-emphasising the significance of differentiation among farmers, throughout their history.
  7. By: Annette Cowie; Uwe A. Schneider (Research unit Sustainability and Global Change, Hamburg); Luca Montanarella
    Abstract: There is potential for synergy between the global environmental conventions on climate change, biodiversity and desertification: changes in land management and land use undertaken to reduce net greenhouse gas emissions can simultaneously deliver positive outcomes for conservation of biodiversity, and mitigation of desertification and land degradation. However, while there can be complementarities between the three environmental goals, there are often tradeoffs. Thus, the challenge lies in developing land use policies that promote optimal environmental outcomes, and in implementing these locally to promote sustainable development. The paper considers synergies and tradeoffs in implementing land use measures to address the objectives of the three global environmental conventions, both from an environmental and economic perspective. The intention is to provide environmental scientists and policy makers with a broad overview of these considerations, and the benefits of addressing the conventions simultaneously.
    Keywords: Climate change, LULUCF, Biodiversity, Desertification, Sustainable development.
    JEL: Q54
    Date: 2007–01
  8. By: Mikkel Barslund (Department of Economics, University of Copenhagen); Finn Tarp (Department of Economics, University of Copenhagen)
    Abstract: This paper uses a survey of 932 rural households to uncover how the rural credit market operates in four provinces of Vietnam. Households obtain credit through formal and informal lenders. Formal loans are almost entirely for production and asset accumulation, while informal loans are used for consumption smoothening. Interest rates fell from 1997 to 2002, reflecting increased market integration. Moreover, the determinants of formal and informal credit demand are distinct. While credit rationing depends on education and credit history, in particular, regional differences in the demand for credit are striking. A ‘one size fits all’ approach to credit policy in Vietnam would be inappropriate.
    Keywords: rural credit; household survey; Vietnam
    JEL: O12 O16 O17 O18
    Date: 2007–03
  9. By: Maria Berrittella; Katrin Rehdanz; Richard S.J. Tol (Economic and Social Research Institute, Dublin)
    Abstract: Water resources are unevenly spread in China. Especially the basins of the Yellow, Hui and Hai rivers in the North are rather dry. To increase the supply of water in these basins, the South-to-North Water Transfer project (SNWT) was launched. Using a computable general equilibrium model this study estimates the impact of the project on the economy of China and the rest of the world. We contrast three alternative groups of scenarios. All are directly concerned with the South-to-North water transfer project to increase water supply. In the first group of scenarios additional supply implies productivity gains. We call it the “non-market” solution. The second group of scenarios is called “market solution”. The market price for water adjusts such that supply and demand are equated again. In the third group of simulations the economic implications of China’s capital investment in infrastructure for the water South-North water transfer project is analyzed. Finally, the investment is combined with the increased capacity of water. If an increase in water supply in China leads to an increase in productivity of their water-intensive goods and services (non-market solution) this would result in a huge positive welfare effect from increased production and export. The effect on China’s welfare would still be positive, if a market for water would exist (market solution), but the world as a whole would lose. The negative effect for the rest of the world is largely explained by a deterioration of its terms-of-trade. Well functioning water markets in China are unlikely to exist.
    Keywords: Computable General Equilibrium, South-North Water Transfer Project, Water Policy, Water Scarcity
    JEL: D58 R13 Q25 Q28
    Date: 2006–09
  10. By: Dorosh, Paul; Salam, Abdul
    Abstract: This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on overall price levels. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costs.
    Keywords: Wheat; Agricultural prices; Pakistan
    JEL: Q11 Q13
    Date: 2006
  11. By: Erik Ansink (Wageningen University); Arjan Ruijs (Wageningen University)
    Abstract: We analyse agreements on river water allocation between riparian countries. Besides being efficient, water allocation agreements need to be stable in order to be effective in increasing the efficiency of water use. In this paper, we assess the stability of water allocation agreements, using a game theoretic model. We consider the effects of climate change and the choice of a sharing rule on stability. Our results show that both a decrease in mean river flow and an increase in the variance of river flow decrease the stability of an agreement. An agreement where the downstream country is allocated a fixed amount of water has the lowest stability compared to other sharing rules.
    Keywords: Water Allocation, Stability, Climate Change, Game Theory
    JEL: C7 Q25
    Date: 2007–02
  12. By: Kenneth M. Strzepek; Gary W. Yohe; Richard S.J. Tol (Economic and Social Research Institute, Dublin); Mark Rosegrant
    Abstract: The High Aswan Dam converted a variable and uncertain flow of river water into a predictable and controllable flow. We use a computable general equilibrium model of the Egyptian economy to estimate the economic impact of the High Aswan Dam. We compare the 1997 economy as it was to the 1997 economy as it would have been for 72 historical, pre-dam water flows. The steady water flow increased transport productivity, while the seasonal shift in water supply allowed for a shift towards more valuable summer crops. These static effects are worth LE 4.9 billion. Investments in transport and agriculture increased as a consequence. Assuming that Egypt is a small open economy, this is worth another LE 1.1 billion. The risk premium on the reduced variability is estimated to be LE 1.1 billion for a modest risk aversion, and perhaps LE 4.4 billion for a high risk aversion. The total gain of LE 7.1 billion equals 2.7% of GDP.
    Keywords: Egypt, High Aswan Dam, computable general equilibrium model, risk premium, water supply
    JEL: C68 O13 Q25
    Date: 2006–06
  13. By: Angus Selby (QEH)
    Abstract: This paper explores the collapse of the alliance between commercial farmers and the state in Zimbabwe. It argues that relations had deteriorated irrevocably by the late 1990s, precluding opportunities for compromise, and concludes that farmer opposition to the constitutional referendum in 2000 was symptomatic of deteriorating relations, rather than the catalyst. These assertions are based on interpretation of several key interacting issues: the reconstitution and politicisation of land demand within Zimbabwe's deteriorating socio-economic climate; the internal reconfiguration of the ruling party under pressure from black empowerment interests and war veterans,; the radicalisation of land policy through ZANU PF's aggressive centralisation of the land issue within the political and economic crises; and finally, a limited awareness of these issues by commercial farmers, donors and the international community, and consequently poor counter-strategising by these groups.
  14. By: Sara Bleich; David Cutler; Christopher Murray; Alyce Adams
    Abstract: Obesity has risen dramatically in the past few decades. However, the relative contribution of energy intake and energy expenditure to rising obesity is not known. Moreover, the extent to which social and economic factors tip the energy balance is not well understood. In this longitudinal analysis of developed countries, we estimate the relative contribution of increased caloric intake and reduced physical activity to obesity using two methods of energy accounting. Results show that rising obesity is primarily the result of consuming more calories. We estimate multivariate regression models and use simulation analysis to explore technological and sociodemographic determinants of this dietary excess. Results indicate that the increase in caloric intake is associated with technological innovations such as reduced food prices as well as changing sociodemographic factors such as increased urbanization and increased female labor force participation. The study findings offer useful insights to future research concerned with the etiology of obesity and may help inform the development of obesity-related policy. In particular, our results suggest that policies to encourage less caloric intake may help reverse past trends in increased consumption.
    JEL: I12 I18
    Date: 2007–03
  15. By: Leenheer, J.; Heerde, H.J. van; Bijmolt, T.H.A.; Smidts, A. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: One of the pressing issues in marketing is whether loyalty programs really enhance behavioral loyalty. Loyalty program members may have a much higher share-of-wallet at the firm with the loyalty program than non-members have, but this does not necessarily imply that loyalty programs are effective. Loyal customers may select themselves to become members in order to benefit from the program. Since this implies that program membership is endogenous, we estimate models for both the membership decision (using instrumental variables) and for the effect of membership on share-of-wallet, our measure of behavioral loyalty. We use panel data from a representative sample of Dutch households who report their loyalty program memberships for all seven loyalty programs in grocery retailing as well as their expenditures at each of the 20 major supermarket chains. We find a small positive yet significant effect of loyalty program membership on share-of-wallet. This effect is seven times smaller than is suggested by a na?ve model that ignores the endogeneity of program membership. The predictive validity of the proposed model is much better than for the na?ve model. Our results show that creating loyalty program membership is a crucial step to enhance share-of-wallet, and we provide guidelines how to achieve this.
    Keywords: Loyalty programs;Grocery retailing;Endogeneity;Tobit-II model;Attraction models;
    Date: 2006–11–01

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