nep-agr New Economics Papers
on Agricultural Economics
Issue of 2007‒04‒09
nineteen papers chosen by
Angelo Zago
University of Verona

  1. Adoption Subsidies and Environmental Impacts of Alternative Energy Crops By Bruce A. Babcock; Philip W. Gassman; Manoj Jha; Catherine L. Kling
  2. A Modelling Framework for Addressing the Synergies between Global Conventions through Land Use Changes: Carbon Sequestration, Biodiversity Conservation, Prevention of Land Degradation and Food Security in Agricultural and Forested Lands in Developing Countries By Raul Ponce-Hernandez
  3. Land Use Intensity Module: Land Use in Rural New Zealand Version 1 By Joanna Hendy; Suzi Kerr
  4. Water Markets in the West: Prices, Trading, and Contractual Forms By Jedidiah Brewer; Robert Glennon; Alan Ker; Gary D. Libecap
  5. Agricultural Distortions, Structural Change, and Economic Growth: A Cross-Country Analysis By Benjamin N. Dennis; Talan Iscan
  6. Greenhouse gas emissions charges and credits agricultural land: what can a model tell us? By Joanna Hendy; Suzi Kerr; Troy Baisden
  7. The impact of OECD Agricultural trade liberalization on poverty in Uganda By Charles Augustine Abuka; Michael Atingi-Ego; Jacob Opolot; Marian Mraz
  8. Local and Regional Food Aid Procurement: An Assessment of Experience in Africa and Elements of Good Donor Practice. By David Tschirley
  9. Food Subsidies and Poverty in Egypt: Analysis of Program Reform using Stochastic Dominance By Mathieu Audet; Dorothée Boccanfuso; Paul Makdissi
  10. Market Access in FTAs: Assessment Based on Rules of Origin and Agricultural Trade Liberalization By Inkyo CHEONG; Jungran CHO
  11. The Impact of Regulations on Agricultural Trade: Evidence from SPS and TBT Agreements By Anne-Celia Disdier; Lionel Fontagne; Mondher Mimouni
  12. Abatement and Transaction Costs of Carbon-Sink Projects Involving Smallholders By Oscar Cacho; Leslie Lipper
  13. After the Ban: The Japanese Market for U.S. Beef By Roxanne Clemens
  14. Carbon Sequestration with Reforestations and Biodiversity-Scenic Values By A. Caparrós; E. Cerdá; P. Ovando; P. Campos
  15. Valuing Animal Genetic Resources: A Choice Modeling Application to Indigenous Cattle in Kenya By Eric Ruto; Guy Garrod; Riccardo Scarpa
  16. The Causes of Chronic and Transient Poverty and Their Implications for Poverty Reduction Policy in Rural China By Shi Li; Pingping Wang; Ximing Yue
  17. Designing a Decision Support System for Marine Reserves Management: An Economic Analysis for the Dutch North Sea By Arjan Ruijs; Hongyu Ding; Ekko C. van Ierland
  18. Environmental Taxation and International Eco-Industries By Joan Canton
  19. Voluntary Environmental Agreements, Emission Taxes and International Trade: The Importance of the Timing of Strategies By Conrad, Klaus

  1. By: Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)); Philip W. Gassman (Center for Agricultural and Rural Development (CARD)); Manoj Jha (Center for Agricultural and Rural Development (CARD)); Catherine L. Kling (Center for Agricultural and Rural Development (CARD))
    Abstract: We provide estimates of the costs associated with inducing substantial conversion of land from production of traditional crops to switchgrass. Higher traditional crop prices due to increased demand for corn from the ethanol industry has increased the relative advantage that row crops have over switchgrass. Results indicate that farmers will convert to switchgrass production only with significant conversion subsidies. To examine potential environmental consequences of conversion, we investigate three stylized landscape usage scenarios, one with an entire conversion of a watershed to switchgrass production, a second with the entire watershed planted to continuous corn under a 50% removal rate of the biomass, and a third scenario that places switchgrass on the most erodible land in the watershed and places continuous corn on the least erodible. For each of these illustrative scenarios, the watershed-scale Soil and Water Assessment Tool (SWAT) hydrological model (Arnold et al., 1998; Arnold and Forher, 2005) is used to evaluate the effect of these landscape uses on sediment and nutrient loadings in the Maquoketa Watershed in eastern Iowa.
    Keywords: adoption subsidy, cellulosic ethanol, energy crops, land use, SWAT, switchgrass, water quality.
    Date: 2007–03
  2. By: Raul Ponce-Hernandez (Trent University)
    Abstract: This paper proposed a methodological framework for the assessment of carbon stocks and the development and identification of land use, land use change and land management scenarios, whereby enhancing carbon sequestration synergistically increases biodiversity, the prevention of land degradation and food security through the increases in crop yields. The framework integrates satellite image interpretation, computer modelling tools (i.e. software customization of off-the-shelf soil organic matter turnover simulation models) and Geographical Information Systems (GIS). The framework addresses directly and indirectly the cross-cutting ecological concerns foci of major global conventions: climate change, biodiversity, the combat of desertification and food security. Their synergies are targeted by providing procedures for assessing and identifying simultaneously carbon sinks, potential increases in plant diversity, measures to prevent land degradation and enhancements in food security through crop yields, implicit in each land use change and land management scenario. The scenarios aim at providing “win-win” options to decision makers through the framework’s decision support tools. Issues concerning complex model parameterization and spatial representation were tackled through tight coupling soil carbon models to GIS via software customization. Results of applying the framework in the field in two developing countries indicate that reasonably accurate estimates of carbon sequestration can be obtained through modeling; and that alternative best soil organic matter management practices that arrest shifting “slash-and-burn” cultivation and prevent burning and emissions, can be identified. Such options also result in increased crop yields and food security for an average family size in the area, while enhancing biodiversity and preventing land degradation. These options demonstrate that the judicious management of organic matter is central to greenhouse gas mitigation and the attainment of synergistic ecological benefits, which is the concern of global conventions. The framework is to be further developed through successive approximations and refinement in future, extending its applicability to other landscapes.
    Keywords: Climate Change, Greenhouse Gas Mitigation, Carbon Sequestration, Soil Organic Matter, Modeling, Land-Use Change, Land Management, Ecological Synergies, Agriculture
    JEL: C15 C21 Q1 Q15 Q24
    Date: 2007–03
  3. By: Joanna Hendy (Motu Economic and Public Policy Research); Suzi Kerr (Motu Economic and Public Policy Research)
    Abstract: This document outlines the development of the dynamic functions and simple algorithms that make up the Land Use in Rural New Zealand (LURNZ) land-use intensity module. The module includes stocking rate functions for dairy, sheep, and beef livestock; fertiliser intensity functions for dairy and sheep/beef; and algorithms for the evolution of the age classes of the plantation forestry estate, and of reverting scrubland. This module is designed so that: (1) output from models of rural production and rural land use can be compared using the land-use intensity functions as conversion factors; (2) output from the land use module of LURNZ can be converted into the implied levels of rural activities that can be directly related to certain environmental impacts. This module is part of the LURNZv1 simulation model and can be used in conjunction with the LURNZ land use and greenhouse gas modules.
    Keywords: Land use intensity, rural production, forestry, pastoral farming, fertiliser
    JEL: Q24 Q25 Q15 Q23
    Date: 2006–06
  4. By: Jedidiah Brewer; Robert Glennon; Alan Ker; Gary D. Libecap
    Abstract: Rising urban and environmental demand for water has created growing pressure to re-allocate water from traditional agricultural uses. The evolution of water markets has been more complicated than those for other resources. In this paper, we first explain these differences by examining water rights and regulatory issues. Second, we place our research in the context of the economics literature on water marketing. Third, we present new, comprehensive data on prices and the extent, nature, and timing of water transfers across 12 western states from 1987-2005. We find that prices are higher for agriculture-to-urban trades versus within-agriculture trades, in part, reflecting the differences in marginal values between the two uses. Prices for urban use are also growing relative to agricultural use. Markets are responding in that the number of agriculture-to-urban transactions is rising, whereas the number of agriculture-to-agriculture transfers is not. Further, there is a shift from using short-term leases to using multi-year leases of water and permanent sales of water rights. This pattern underscores the need to consider the amounts of water obligated over time, rather than examining only annual flows in assessing the quantities of water traded as is the common practice in the literature. Considering water obligated over time, termed committed water, we find significantly more is transferred and the direction of trading is different than if the focus is on annual flows. Finally, the data reveal considerable variation in water trading across the states.
    JEL: H41 K32 Q21 Q25 Q27 Q56
    Date: 2007–03
  5. By: Benjamin N. Dennis; Talan Iscan (Millennium Challenge Corporation, University of the Pacific; Department of Economics, Dalhousie University)
    Keywords: agriculture; industrialization; development
    Date: 2007–03–08
  6. By: Joanna Hendy (Motu Economic and Public Policy Research); Suzi Kerr (Motu Economic and Public Policy Research); Troy Baisden (Landcare Research)
    Abstract: Using the simulation model Land Use in Rural New Zealand version 1 -climate (LURNZv1-climate), we simulate the effects of an agricultural land-use emissions charge and a reward for native forest and scrub regeneration. Our results are preliminary and at this stage should be considered illustrative. We find that, on its own, an agricultural emissions charge based on solely on land use would be disruptive and may not be very effective in reducing emissions. In addition, we find that including an additional policy that rewards regenerating forest and scrub without a similar reward for plantation forestry might negatively impact on plantation forestry, increasing emissions growth in the short-run. We are currently developing a second version of LURNZ-climate, which will be more robust and thus lend more weight to our future results.
    Keywords: Climate change, land use, methane, nitrous oxide, dairy, sheep, beef, Government policy
    JEL: Q24 Q15 Q18 R14 Q54 Q58
    Date: 2006–06
  7. By: Charles Augustine Abuka; Michael Atingi-Ego; Jacob Opolot; Marian Mraz
    Abstract: The paper examines the projected impacts of agricultural trade liberalisation by OECD countries on poverty in Uganda and compares them to the poverty impacts of all merchandise trade liberalisation. The overall impact of OECD agricultural trade liberalisation on welfare in Uganda from this simulation is positive in contrast to previous research, nevertheless, the poor appear to be made worse off. The liberalisation of all OECD merchandise trade including non-agricultural commodities reduces welfare for all deciles irrespective of household poverty status, residence and region. The results for global partial merchandise trade liberalisation are similar to those for total trade liberalisation with an overall welfare decline of about 0.5 percent. More specifically, even the modest welfare gains for producers from increased prices seem to be offset by welfare losses from increases in consumer goods. Overall, because of the large subsistence agricultural sector, households tend to experience little or no change in total welfare arising from agricultural price changes. Increases in market value of their agricultural based output tend to be offset by changes in the opportunity cost of their subsistence consumption of the bulk of that output.
    Keywords: Microsimulation, agricultural trade liberalization, Uganda , poverty
    Date: 2007–04–04
  8. By: David Tschirley (Department of Agricultural Economics, Michigan State University)
    Abstract: This report discusses the potential for procurement of food aid in local/regional markets to improve the effectiveness of response to food emergency victims. The paper examines the relevance of local/regional procurement (LRP) to donors and the rationale for using it, reviews LRP’s efficiency relative to in-kind food aid and to local prices in the markets in which it occurs (focusing on Africa), proposes a classification of risks involved in LRP, discusses a range of potential LRP modalities, and closes by proposing a framework of guiding principles,information systems, and operational procedures for responsible and effective LRP.
    Keywords: Africa, food security, food policy, food aid
    JEL: Q18
    Date: 2007
  9. By: Mathieu Audet; Dorothée Boccanfuso; Paul Makdissi
    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
  10. By: Inkyo CHEONG; Jungran CHO
    Date: 2007–03
  11. By: Anne-Celia Disdier; Lionel Fontagne; Mondher Mimouni
    Abstract: According to WTO rules, countries are allowed to adopt regulations under the Sanitary and Phyto-Sanitary (SPS) and Technical Barriers to Trade (TBT) agreements in order to protect human, animal and plant health as well as environment, wildlife and human safety. These non-tariff barriers (NTBs) may play an important role in the conduct of international negotiations. Developing countries (DCs) protest regularly against the increasing use of NTBs by developed countries. In this paper focusing on agricultural trade where such measures play a prominent role, we investigate two central questions: first, do these measures influence significantly trade flows? Second, is the impact similar for all exporting countries or are there differences (i) between OECD countries and developing (DCs) & least developed (LDCs) ones? Our source data are WTO members’ notifications of SPS and TBTs. These notifications are collected and analyzed by the UNCTAD. For each notification, the database provides the notifying country, the affected product (at the six-digit level of the Harmonized System of classification), and the classification code of the barrier. The UNCTAD distinguishes seven broad categories of measures. These categories includes 43 different measures such as the ban of some products (SPS) or technical measures (pre-shipment inspection or quarantine requirements). Considering the number of affected products, “technical barriers” is the most frequent measure. With rare exceptions, SPS and TBT measures are applicable to all exporting countries. They do not have a bilateral dimension. However, exporters will be differently affected by these measures depending on the structure of their exports in terms of products and markets.
    Keywords: Agriculture; sanitary and phyto-sanitary norms; technical barriers to trade; ad valorem equivalents; protectionism; SPS; NTB; market access; international trade
    JEL: F13 Q17 Q10
    Date: 2007–02
  12. By: Oscar Cacho (University of New England); Leslie Lipper (Food and Agriculture Organization)
    Abstract: Agroforestry projects have the potential to help mitigate global warming by acting as sinks for greenhouse gasses. However, participation in carbon-sink projects may be constrained by high costs. This problem may be particularly severe for projects involving smallholders in developing countries. Of particular concern are the transaction costs incurred in developing projects, measuring, certifying and selling the carbon-sequestration services generated by such projects. This paper addresses these issues by analysing the implications of transaction and abatement costs in carbon-sequestration projects. A model of project participation is developed, which accounts for the conditions under which both buyers and sellers would be willing to engage in a carbon transaction that involves a long-term commitment. The model is used to identify critical project-design variables (minimum project size, farm price of carbon, minimum area of participating farms). A project feasibility frontier (PFF) is derived, which shows the minimum project size that is feasible for any given market price of carbon. The PFF is used to analyse how the transaction costs imposed by the Clean Development Mechanism of the Kyoto Protocol affect project feasibility.
    Keywords: Agroforestry, Climate Policy, Carbon Sequestration Costs
    JEL: Q23 Q57 O1 O13
    Date: 2007–03
  13. By: Roxanne Clemens (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC))
    Abstract: In the months following the reopening of the Japanese market to imports of U.S. beef on July 26, 2006, Japanese importers were unable to procure adequate supplies. This paper discusses reasons for early supply shortages and some of the policy and trade issues that will affect demand for U.S. beef in the short to medium term. The paper also discusses current marketing efforts for domestic and imported beef, new marketing technologies, and general consumer trends. The information presented in this paper includes on-site observations and data from meetings with Japanese importers and retailers and industry experts during market research in Tokyo and Osaka in November 2006.
    Keywords: age verification, beef traceability, food safety, Japan, marketing.
    Date: 2007–04
  14. By: A. Caparrós (Spanish Council for Scientific Research (CSIC)); E. Cerdá (University Complutense Madrid); P. Ovando (Spanish Council for Scientific Research (CSIC-IPGP)); P. Campos (Spanish Council for Scientific Research (CSIC-IPGP))
    Abstract: This paper presents an optimal control model to analyze reforestations with two different species, including commercial values, carbon sequestration and biodiversity or scenic values. We solve the model qualitatively with general functions and discuss the implications of partial or total internalization of environmental values, showing that internalizing only carbon sequestration may have negative impacts on biodiversity-scenic values. To evaluate the practical relevance, we compare reforestations in the South-west of Spain with cork-oaks (a slow growing native species) and with eucalyptus (a fast growing alien species). We do the analysis with two different carbon crediting methods: the Carbon Flow Method and the Ton Year Accounting Method. With the .first method forest surface increases more, but using mainly eucalyptus. With the second, additional reforestations are done mainly using cork-oaks. We value the impact on visitors of these reforestations using stated preferences methods, showing that when these values are internalized cork-oaks are favored.
    Keywords: Optimal Control, Forests, Carbon, Sequestration, Biodiversity, Scenic, Stated Preferences, Carbon Accounting
    JEL: Q23 Q26 Q51 Q57
    Date: 2007–03
  15. By: Eric Ruto (University of Newcastle); Guy Garrod (University of Newcastle); Riccardo Scarpa (University of Waikato)
    Abstract: In an effort to improve productivity and profits many farmers have replaced traditional livestock breeds with higher yielding alternatives. While such changes may bring about short-term economic gains, the loss of traditional livestock breeds could result in the loss of an important genetic resource as a variety of important genetic traits adapted to local conditions gradually become less common in the population. This is a particular problem in Africa, where livestock make a substantial contribution to human livelihoods. Using the example of cattle in Kenya’s pastoral livestock markets this study uses a choice experiment approach to investigate buyers’ preferences for indigenous breeds such as the Maasai Zebu. The analysis employs a latent class approach to characterize heterogeneity in valuations both within and across respondents buying cattle for breeding, slaughter or resale. The results show that there are at least three classes of buyers with distinct preferences for cattle traits and that most buyers favor exotic rather than indigenous breeds. Such preferences have implications for the conservation of indigenous cattle in Kenya and in other developing countries and suggest that some form of intervention may be required to ensure the preservation of this important animal genetic resource.
    Keywords: animal genetic resources; economic valuation; choice experiments; latent class models;indigenous livestock; Maasai Zebu cattle
    JEL: N5 O13 C25 Q26
    Date: 2007–03–23
  16. By: Shi Li; Pingping Wang; Ximing Yue
    Abstract: The study focuses on two components of total poverty: chronic and transient poverty, and investigates their relative importance in total observed poverty, as well as the determinants of each components. We found that transient poverty accounts for a large proportion of total poverty observed in the poor rural areas of China. By analyzing the determinants of the two types of poverty, we found that household demographic characteristics, such as age of the head of households, family sizes, labour participation ratio, and educational level of the head of the households, are very important to the poverty status of households. These factors matter more to chronic poverty than transient poverty, and have greater impacts on the poverty measured by consumption than that measured by income. Besides the demographic factors of households, other household factors like physical stocks, the composition of income, and the amount of cultivated lands also have significant effects on both chronic and transient poverty. It is also confirmed that change in cash holding and saving and borrowing grain are used by rural households to cope with income variation and smooth their consumption. Attributes of community where the households reside are also important to poverty. With very few exceptions, we did not find that poverty programs have significant impact on poverty reduction at the households' level. We interpreted this as the poverty programs benefiting the wealthy more than the poor in a given poor area. The main reason for this could be that the implementation design of these programs fails to target the poor.
    Keywords: Income risk, chronic poverty, transient poverty, poverty program evaluation, China
    JEL: H54 O22 O53
    Date: 2007
  17. By: Arjan Ruijs (Environmental Economics and Natural Resources Group Wageningen University); Hongyu Ding (Fondazione Eni Enrico Mattei and Venice International University); Ekko C. van Ierland (Wageningen University)
    Abstract: In this paper we discuss how a Decision Support System (DSS) for managing the marine environment can be set up. We use the Driving force-Pressure-State-Impact-Respond (DPSIR) framework to analyze which are the major driving forces impacting upon the marine environment in the North Sea. Moreover, a number of potential responses are identified. Furthermore, a preliminary and simplified optimization model has been set up and can be used in a DSS to decide on the best location of marine reserves for the protection of species. The model is based on a bio-economic metapopulation model that can be used to decide which parts of the sea should be opened for fisheries and which should be protected as marine reserve. It accounts for the dispersal of fish and considers both the economic returns from fisheries and the ecological value of marine biodiversity. A number of suggestions are given on how to extend and improve the DSS.
    Keywords: Decision Support System, Marine Biodiversity Conservation, DPSIR Framework, Bioeconomic Modeling, North Sea
    JEL: Q2 Q5 Q57 Q58
    Date: 2007–02
  18. By: Joan Canton (GREQAM, Université de la Méditerranée)
    Abstract: Environmental policies are discussed when two countries differ in their ability to abate pollution. Northern eco-industries (the industry supplying abatement activities) are more efficient than Southern ones. Segmented environmental markets and a Northern monopoly yield identical second-best taxes in both countries. When markets are global, Southern countries underestimate the market power of eco-industries. Introducing competition creates positive (resp. negative) rent-shifting distortions in South (resp. North). Cooperation could reduce Northern pollution but has ambiguous consequences in South.
    Keywords: Eco-Industry, Strategic Environmental Policy, Asymmetric Oligopolies
    JEL: D62 H23 F12
    Date: 2007–02
  19. By: Conrad, Klaus (Institut für Volkswirtschaft und Statistik (IVS))
    Abstract: The purpose of the paper is to narrow the gap between the widespread use of voluntary agreements and research on the rationale of such approaches. A topical example are voluntary agreements of many industries to reduce carbon dioxide emissions because of
    JEL: D43 F13 H23

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