New Economics Papers
on Agricultural Economics
Issue of 2007‒05‒26
nineteen papers chosen by

  1. Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors: A Preliminary Assessment, The By Elobeid, Amani; Tokgoz, Simla; Hayes, Dermot J.; Babcock, Bruce A.; Hart, Chad E.
  2. Rural Nonfarm Employment Under Trade Reform Evidence From Vietnam, 1993-2002 By Pham, T.H.
  3. Farmers’ Demand for Recycled Wastewater in Cyprus: A Contingent Valuation Approach By Ekin Birol; Phoebe Koundouri; Yiannis Kountouris
  4. Distortions to Agricultural Incentives in Egypt By James Cassing; Saad Nassar; Gamal Siam; Hoda Moussa
  5. Determining the Methods for Measuring the Economic and Fiscal Impacts Associated with Organic Crop Conversion in Iowa By Swenson, David A.
  6. Investment and Subsidies in Indian Agriculture By Raghbendra Jha
  7. The Impacts of Trade Liberalization on Poverty in Nigeria: Dynamic Simulations in a CGE Model By Manson Nwafor; Adeola Adenikinju; Kanayo Ogujiuba
  8. Rural Windfall or a New Resource Curse? Coca, Income, and Civil Conflict in Colombia By Joshua D. Angrist; Adriana D. Kugler
  9. How Sustainable are Sustainable Development Programs? The Case of the Sloping Land Conversion Program in China By Andreas Kontoleon; Pauline Grosjean
  10. Growth and Direction of the Biodiesel Industry in the United States, The By Paulson, Nicholas D.; Ginder, Roger
  11. Biodiversity and Geography By Michael Rauscher; Edward B. Barbier
  12. Les effets des labels " bio " et " commerce équitable " sur le consentement à payer des chocolats By Tagbata, D.; Sirieix, L.
  13. Standards-as-Barriers versus Standards-as-Catalysts: Assessing the Impact of HACCP Implementation on U.S. Seafood Imports By Sven Anders; Julie Caswell
  14. Assessing the non-timber value of old-growth forests in Sweden By Broberg, Thomas
  15. An Ordinal Regression Model using Dealer Satisfaction Data By Alexander Staus
  16. Transient and Chronic Rural Household Poverty: Evidence from Kenya By Milu Muyanga; Miltone Ayieko; Mary Bundi
  17. Farmers’ The Transformation of Post-Communist Societies in Central and Eastern Europe and the Former Soviet Union: An Economic and Ecological Sustainability Perspective By Serban Scrieciu; Lindsay C Stringer
  18. Using a modified DEA model to estimate the importance of objectives. An application to agricultural economics. By Francisco J. André; Inés Herrero; Laura Riesgo
  19. Nutrient Trading in Lake Rotorua: Where are we Now? By Kelly Lock; Suzi Kerr

  1. By: Elobeid, Amani; Tokgoz, Simla; Hayes, Dermot J.; Babcock, Bruce A.; Hart, Chad E.
    Abstract: The ongoing growth of corn–based ethanol production raises some fundamental questions about what impact continued growth will have on US and world agriculture. Estimates of the long–run potential for ethanol production can be made by calculating the corn price at which the incentive to expand ethanol production disappears. Under current ethanol tax policy, if the prices of crude oil, natural gas and distillers grains stay at current levels, then the break–even corn price is $4.05 per bushel. A multi–commodity, multi–country system of integrated commodity models is used to estimate the impacts if we ever get to $4.05 corn. At this price, corn–based ethanol production would reach 31.5 billion gallons per year. Supporting this level of production would require 95.6 million acres of corn to be planted. Total corn production would be approximately 15.6 billion bushels, compared to 11.0 billion bushels today. Most of the additional corn acres come from reduced soybean acreage. The demand for biotech corn varieties that allow for continuous corn production would increase dramatically as would the demand for corn, soybean, and wheat varieties that can be grown in marginal areas.
    Keywords: biofuels, commodity markets, corn price, energy markets, ethanol.
    Date: 2007–02–09
  2. By: Pham, T.H. (Poverty Research Unit at Sussex, Department of Economics, University of Sussex)
    Abstract: Vietnam?s rural economy has substantially diversified over the past two decades. The rural nonfarm sector has grown rapidly and became an important source of employment and income for rural households. This growing nonfarm employment was associated with radical changes in the trade policy reform that has put the country to the top two or three performers in the developing world. This paper examines the potential effect of the trade policy reform on nonfarm employment in rural Vietnam during the period 1993-2002. It proposes two trade openness indices that allow changes in the trade policy at the macro level to be transmitted to rural households. The results reveal that the trade policy reform does have a material impact on rural nonfarm employment. While a more liberalized agricultural sector encourages nonfarm diversification, a lower protection level in the nonfarm sector discourages individual participation in nonfarm income-generating activities.
    Keywords: Trade liberalization, trade policy reform, rural nonfarm employment, Vietnam
    JEL: F13 F16 J21
    Date: 2007–01
  3. By: Ekin Birol (Department of Land Economy, University of Cambridge, UK); Phoebe Koundouri; Yiannis Kountouris (Department of Land Economy, University of Cambridge, UK)
    Abstract: This paper employs the contingent valuation (CV) method, to investigate Cypriot farmers’ willingness to adopt a new water resource, namely recycled wastewater, and to estimate farmers’ willingness to pay for varying quantities and qualities of recycled wastewater. A pilot CV study is undertaken with 97 farmers located in the Akrotiri aquifer area in Cyprus, a common-pool water resource with rapidly deteriorating water quality and quantity. The results reveal that farmers are willing to adopt this new water resource, and they derive the highest economic values from a recycled wastewater use program, which provides high quality recycled wastewater, and high water quantity in the aquifer.
    Keywords: contingent valuation, willingness to pay, water quantity, water quality, recycled wastewater, aquifer recharge
    JEL: Q2 Q4 R4
    Date: 2007
  4. By: James Cassing; Saad Nassar; Gamal Siam; Hoda Moussa
    Abstract: . . .
    Date: 2007–05
  5. By: Swenson, David A.
    Abstract: This research demonstrates methods for comparing the potential region-wide economic impact value of organic versus conventional crop practices. The impetus for this research was the passage of a county ordinance in Woodbury County, Iowa, allowing a maximum of $50,000 of county property tax abatements for qualifying conventional-to-organic production conversions. This study used Iowa State University Cooperative Extension Service crop enterprise budget information to compare the returns to operators of two productions systems: a conventional corn-soybean rotation versus an organic rotation consisting of corn–soybeans–oats-alfalfa. The research demonstrated that there are very strong differences not only in the superior average returns to organic farming operators when compared to conventional corn–soybean operations, but in the overall economic impacts.
    JEL: B4
    Date: 2007–05–17
  6. By: Raghbendra Jha
    Abstract: One of the principal elements of the economic reforms program initiated in 1991 was to reduce the fiscal deficit of the central government which, at that time, faced a solvency crisis. This reduction was at least partially achieved by reducing transfers to state governments. As a result, state government budgets faced crises and agriculture, being largely a state subject, was denied adequate investment. This paper reviews the performance of Indian agriculture, particularly in the post-reform period. It attributes this lacklustre performance to the stagnation of agricultural investment whereas there has been a contemporaneous rise in agricultural subsidies. Thus while current operations are being subsidised to some extent resource for augmentation of productive capacity in agriculture are dwindling.
    Date: 2007
  7. By: Manson Nwafor; Adeola Adenikinju; Kanayo Ogujiuba
    Abstract: The study examines the effects that trade liberalization will have on poverty in Nigeria. Previous studies have been limited by static and partial equilibrium analysis. We use a Dynamic Computable General Equilibrium Model to analyze this issue. The more favorably affected sectors are capital intensive; therefore, capital income improves over time while land and labor income reduce. This has positive implications for urban households and negative implications for rural households due to the dependence of the latter on mostly land and labor income. As a result, urban poverty decreases in the short and long run while rural poverty increases in both periods. Policies to improve the agricultural sector will thus have to be implemented before or concurrently with trade liberalization in order for it to have a pro-poor effect. In this way, the rural areas which obtain most of their income from this sector will respond more positively to trade liberalization.
    Keywords: CGE Model, Trade liberalisation, Nigeria, Poverty, Dynamic, ECOWAS, Import tariffs
    JEL: D58 F13 I32 C68
    Date: 2007
  8. By: Joshua D. Angrist (MIT, NBER and IZA); Adriana D. Kugler (University of Houston, NBER, CEPR and IZA)
    Abstract: Natural and agricultural resources for which there is a substantial black market, such as coca, opium, and diamonds, appear especially likely to be exploited by the parties to a civil conflict. Even legally traded commodities such as oil and timber have been linked to civil war. On the other hand, these resources may also provide one of the few reliable sources of income in the countryside. In this paper, we study the economic and social consequences of a major exogenous shift in the production of one such resource - coca paste - into Colombia, where most coca leaf is now harvested. Our analysis shows that this shift generated only modest economic gains in rural areas, primarily in the form of increased selfemployment earnings and increased labor supply by teenage boys. The results also suggest that the rural areas which saw accelerated coca production subsequently became more violent, while urban areas were affected little. The acceleration in violence is greater in departments (provinces) where there was a pre-coca guerilla presence. Taken together, these findings are consistent with the view that the Colombian civil conflict is fueled by the financial opportunities that coca provides, and that the consequent rent-seeking activity by combatants limits the economic gains from coca cultivation.
    Keywords: rural development, economic shocks, civil war, illegal drugs
    JEL: Q34 O13
    Date: 2007–05
  9. By: Andreas Kontoleon (Department of Land Economy, University of Cambridge, UK); Pauline Grosjean (LERNA, University of Toulouse and European Bank for Reconstruction and Development, France)
    Abstract: This paper undertakes a direct comprehensive assessment of the long-run sustainability of one the world’s largest sustainable development programs, the Slopping Land Conversion Program (SLCP) in China under different plausible post-SLCP scenarios. The analysis is based on farmer contingent behavior post-program land and labor decisions as well as choice experiment data. Our econometric results highlight the main obstacles to the program’s sustainability, which include specific shortfalls in program implementation as well as certain institutional constraints such as tenure insecurity, poor land renting rights, limited access to credit and limited land management rights.
    Keywords: sustainable development programs, sustainability, recursive probit, choice modeling, Asia, China
    JEL: Q2 Q4 R4
    Date: 2007
  10. By: Paulson, Nicholas D.; Ginder, Roger
    Abstract: The biodiesel industry in the United States has realized significant growth over the past decade through large increases in annual production and production capacity and a transition from smaller batch plants to larger-scale continuous producers. The larger, continuous-flow plants provide operating cost advantages over the smaller batch plants through their ability to capture co-products and reuse certain components in the production process. This paper uses a simple capital budgeting model developed by the authors along with production data supplied by industry sources to estimate production costs, return-on-investment levels, and break-even conditions for two common plant sizes (30 and 60 million gallon annual capacities) over a range of biodiesel and feedstock price levels. The analysis shows that the larger plant realizes returns to scale in both labor and capital costs, enabling the larger plant to pay up to $0.015 more per pound for the feedstock to achieve equivalent return levels as the smaller plant under the same conditions. The paper contributes to the growing literature on the biodiesel industry by using the most current conversion rates for the production technology and current price levels to estimate biodiesel production costs and potential plant performance, providing a useful follow-up to previous studies.
    Keywords: biodiesel, biofuels, feedstock, production costs, return on investment.
    Date: 2007–05–16
  11. By: Michael Rauscher (University of Rostock and ifo Institut München); Edward B. Barbier (University of Wyoming)
    Abstract: The paper combines an economic-geography model of agglomeration and periphery with a model of species diversity and looks at optimal policies of biodiversity conservation. The subject of the paper is "natural" biodiversity, which is inevitably impaired by anthropogenic impact. Thus, the economic and the ecological system compete for space and the question arises as to how this conflict should be resolved. The decisive parameters of the model are related to biological diversity (endemism vs. redundancy of species) and the patterns of economic geography (centrifugal and centripetal forces). As regards the choice of environmental-policy instruments, it is shown that Pigouvian taxes do not always establish the optimal allocation.
    Keywords: biodiversity, new economic geography, agglomeration, species redundancy vs. endemism, environmental regulation
    JEL: Q56 Q57 Q58 R12 R14 R23
    Date: 2007
  12. By: Tagbata, D.; Sirieix, L.
    Abstract: Previous research has extensively studied the gap between environmental or social concern, and behaviour. However, measuring environmental or social dimension valuation remains challenging. This paper therefore fills this gap by measuring fair trade and organic labels valuation, using an experimental method (BDM mechanism). Two "organic and fair trade" and two conventional chocolate products have been tested by 102 consumers (blind test and full products test). Results show that organic and fair trade labels increase consumers willingness to pay (WTP), and allow to identify three consumers clusters : in the first one, consumers do not value these labels; on the contrary, consumers' WTP for organic and fair trade products in the second segment is significantly higher than their WTP for conventional products. In the last segment, taste is the most important criterion, and there is an additional WTP for fair trade and organic label only if consumers like the product. Our research is a contribution to a better understanding of consumers' valuation of fair trade and organic label, leading to managerial proposals as regard to this market (importance of taste, usefulness of double labels). ...French Abstract : Cet article répond à la question théorique des liens entre préoccupations environnementales et sociales, et à la question pratique de l'intérêt du double label " bio-équitable ", en s'appuyant sur une expérimentation économique basée sur le principe des enchères (mécanisme BDM). Quatre chocolats (deux bio-équitables, deux conventionnels) ont été dégustés et les personnes interrogées ont donné leur consentements à payer (CAP) sur la base de la dégustation ou/et des labels. Les résultats montrent qu'à l'aveugle, les deux chocolats bio-équitables ne sont pas les plus appréciés, mais qu'ils ont les CAP les plus élevés lorsque les labels sont apparents. Cependant, trois segments de consommateurs réagissant différemment au label " bio-équitable " ont été identifiés : près de la moitié sont insensibles à la présence du label ; pour un deuxième segment, l'influence du label " bio-équitable " sur la valorisation des produits est positive et importante ; enfin, pour le troisième segment, la valorisation du label " bio-équitable " est conditionnée au goût du produit. Notre étude apporte des résultats intéressants qu'il conviendra de vérifier sur des échantillons représentatifs dans plusieurs pays : le label bio-équitable entraîne une valorisation des produits ; cependant, la sensibilité des consommateurs à ce label est variable et le marché de ces produits ne doit pas être sur-estimé. Par ailleurs, les efforts sur l'amélioration de la qualité des produits bio-équitables doivent être maintenus. Enfin, le couplage des labels " bio " et " équitable " sur un même produit entraîne une sous-additivité du CAP par rapport aux CAP des deux labels considérés séparément et la double labellisation ne doit donc pas être systématique.
    JEL: C90 D12 D64 M31 Q20
    Date: 2007
  13. By: Sven Anders (Department of Rural Economy, University of Alberta Edmonton); Julie Caswell (Department of Resource Economics, University of Massachusetts, Amherst, MA)
    Abstract: The United States mandated a Hazard Analysis Critical Control Points (HACCP) food safety standard for seafood in 1997. Panel model results for the period 1990 to 2004 suggest that HACCP introduction had a negative and significant impact on overall seafood imports from the top 33 suppliers. While the effect for developed countries was positive, the negative HACCP effect for developing countries supports the view of “standards-as-barriers” versus ”standards-as-catalysts.” When the effect is analyzed at an individual country level a different perspective emerges. Regardless of development status, leading seafood exporters generally gained sales volume with the U.S., while most other smaller trading partners faced losses or stagnant sales.
    Keywords: food standards, international trade, developed and developing countries
    JEL: Q18 F14 L51
    Date: 2007–05
  14. By: Broberg, Thomas (Department of Economics, Umeå University)
    Abstract: This paper estimates the public benefit of preserving 126 000 hectares of old-growth forest in the sub-mountainous region of Sweden through contingent valuation. The primary benefit of this in-situ conservation of biodiversity is the forest’s relative diversity and richness, which provides important habitat for threatened species. Thus, benefits arise predominantly from nonuse values. We find that a majority of the Swedish population is unwilling to contribute financially to the preservation project (median WTP equals zero). The estimated mean WTP is SEK 300, implying an aggregate benefit of SEK 9 billion. We estimate two types of valuation functions in order to reject the hypothesis that respondents state random numbers as their WTP. Firstly, a binary logit model indicates that variables related to a respondent’s education level, income level and concern about the environment are positively correlated with the likelihood of supporting the preservation project, while being a male and having an anti-environmental attitude towards public expenditures are negatively correlated. After controlling for whether or not locals are employed in forest-related industries, we find that locals, in general, are more likely to have a positive WTP. Secondly, we estimate a valuation function conditioned on respondents with a positive WTP and find that the size of their contribution is explained by income, general concern about the environment, and the motive underlying their valuation (e.g., use versus nonuse). No differences between locals and non-locals were found.
    Keywords: contingent valuation; willingness to pay; social benefit; nonuse values; non-timber value; old-growth forest; preservation; conservation
    JEL: Q20 Q23 Q26 Q28 Q38
    Date: 2007–05–16
  15. By: Alexander Staus (Institute for Agricultural Policy and Agricultural Markets, University of Hohenheim)
    Abstract: This article analyses dealer satisfaction data in the agricultural technology market in Germany. The dealers could rate their suppliers in the 'overall satisfaction' and in 38 questions which can be summarized in 8 dimensions. An ordinal regression model which is also known as the proportional odds model is used to analyse the ordinal scaled rating of the dealers. The ordinal regression model is a well examined method in econometric theory, but many authors prefer using a linear regression model due to better interpretation, even the assumptions of a linear regression do not fit the data. Since the estimated coefficients of an ordinal regression model can not be properly interpreted we show other methods for a better insight of the relationship of the dealer satisfaction and the influencing variables. These methods are easy to use and it is recommended to list some of them in empirical papers.
    Keywords: ordinal regression, dealer satisfaction, interpretation
    JEL: C25 C51 Q13
    Date: 2007–05
  16. By: Milu Muyanga; Miltone Ayieko; Mary Bundi
    Abstract: Most of the earlier studies of poverty in Kenya have basically been static in nature. They have attempted to measure household welfare -- incidence, gap and severity -- at a point in time. Such studies are undeniably vital. However, they do not necessarily provide a good indication of welfare stability over time. This study makes an empirical contribution to poverty analysis in Kenya by incorporating poverty dynamics dimension. We first examine poverty dynamics using economic transition matrices. Next, we decompose total poverty into transient and chronic poverty components using transient poverty as censored fluctuation and equally-distributed equivalent poverty gaps approaches for comparison. The latter approach introduces inequality into poverty decomposition. Finally, we establish important correlates of poverty components using quantile-censored and non-parametric regressions. Given the high rural household poverty incidences and the country's limited resources, this study has critical implications for economic policy in Kenya.
    Keywords: Poverty dynamics, chronic poverty, transient poverty, transition matrices, panel data, inequality, Kenya
    JEL: C23 D31 D63 I30 I32
    Date: 2007
  17. By: Serban Scrieciu (Department of Land Economy, University of Cambridge, UK); Lindsay C Stringer (School of Environment and Development, University of Manchester, UK)
    Abstract: Since Communism collapsed at the end of the 1980s, the transition towards a market-based economy has been considerably influenced by the neoclassical economic approach to the reform process. This has often ignored the establishment of adequate institutional frameworks, resulting in high transition costs and the side-lining of environmental concerns. This paper takes a holistic approach to the transformation of post-Communist economies that emphasises, in addition to socio-economic and political dimensions, the importance of appropriate institutional developments in the area of environmental sustainability. Core development values and objectives need to be significantly re-evaluated, if long-term sustainability prospects are to be effectively pursued.
    Keywords: Post-Communist societies, transition, environment, sustainability, neoclassical economics, post Keynesianism
    JEL: Q2 Q4 R4
    Date: 2007
  18. By: Francisco J. André (Department of Economics, Universidad Pablo de Olavide); Inés Herrero (Department of Business Administration, Universidad Pablo de Olavide); Laura Riesgo (Department of Economics, Universidad Pablo de Olavide)
    Abstract: This paper shows a connection between Data Envelopment Analysis (DEA) and the methodology proposed by Sumpsi et al. (1997) to estimate the weights of objectives for decision makers in a multiple attribute approach. This connection gives rise to a modified DEA model that allows to estimate not only efficiency measures but also preference weights by radially projecting each unit onto a linear combination of the elements of the payoff matrix (which is obtained by standard multicriteria methods). For users of Multiple Attribute Decision Analysis the basic contribution of this paper is a new interpretation of the methodology by Sumpsi et al. (1997) in terms of efficiency. We also propose a modified procedure to calculate an efficient payoff matrix and a procedure to estimate weights through a radial projection rather than a distance minimization. For DEA users, we provide a modified DEA procedure to calculate preference weights and efficiency measures which does not depend on any observations in the dataset. This methodology has been applied to an agricultural case study in Spain.
    Keywords: Multicriteria Decision Making, Goal Programming, Weights, Preferences, Data Envelopment Analysis.
    JEL: C61 Q12
    Date: 2007–05
  19. By: Kelly Lock (Motu Economic and Public Policy Research); Suzi Kerr (Motu Economic and Public Policy Research)
    Abstract: A number of decisions need to be made when setting up a nutrient trading system including defining a target, allocating allowances and setting up a monitoring system. To ensure that the nutrient trading system implemented operates in harmony with existing regulation, existing work and institutions need to be used to guide this decision making process. This paper briefly explores each of the decisions required to implement a nutrient trading system and to what extent they have been addressed so far. This will provide context for following papers which will examine each issue in more depth.
    Keywords: Water quality; nutrients; trading; Lake Rotorua
    JEL: Q53 Q57 Q58
    Date: 2007–05

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