New Economics Papers
on Agricultural Economics
Issue of 2007‒11‒17
twenty-six papers chosen by

  1. Weather Risk, Wages in Kind, and the Off-Farm Labor Supply of Agricultural Households in a Developing Country By Takahiro Ito; Takashi Kurosak
  2. Investment, subsiddies, and pro-poor growth in rural India: By Fan, Shenggen; Gulati, Ashok; Thorat, Sukhadeo
  3. Quality control in non-staple food markets: evidence from India By Fafchamps, Marcel; Vargas-Hill, Ruth; Minten, Bart
  4. Micro-level analysis of farmers' adaptation to climate change in Southern Africa: By Nhemachena, Charles; Hassan, Rashid
  5. Diversification in Indian agriculture towards high-value crops: the role of smallholders By Birthal, P.S.; Joshi, P.K.; Roy, Devesh; Thorat, Amit
  6. Gambling with Liberalization: Smallholder Livelihoods in Contemporary Rural Malawi By Takane, Tsutomu
  7. Assessing the impact of the National Agricultural Advisory Services (NAADS) in the Uganda rural livelihoods: By Benin, Samuel; Nkonya, Ephraim; Okecho, Geresom; Pender, John; Nahdy, Silim; Mugarura, Samuel; Kayobyo, Godfrey
  8. Is Increased Agricultural Protection Beneficial for South Africa? By Margaret Chitiga; Ramos Mabugu
  9. The food retail revolution in poor countries: is it coming or is it over? evidence from Madagascar By Minten, Bart
  10. Development domains for Ethiopia: capturing the geographical context of smallholder development options By Chamberlin, Jordan; Pender, John; Yu, Bingxin
  11. Rural investment to accelerate growth and poverty reduction in Kenya: By Thurlow, James; Kiringai, Jane; Gautam, Madhur
  12. The Marginal Willingness-to-Pay for Health Related Food Characteristics By Thunström, Linda
  13. Parables: applied economics literature about the impact of genetically engineered crop varieties in developing economies By Smale, Melinda; Zambrano, Patricia; Falck-Zepeda, José; Gruère, Guillaume
  14. Risk aversion in low income countries: experimental evidence from Ethiopia By Yesuf, Mahmud; Bluffstone, Randy
  15. An analysis of the Swiss vote on the use of genetically modified crops By Felix Schlaepfer
  16. Generating plausible crop distribution and performance maps for Sub-Saharan Africa using a spatially disaggregated data fusion and optimization approach: By You, Liangzhi; Wood, Stanley; Wood-Sichra, Ulrike
  17. Impact of the South Korea-U.S. Free Trade Agreement on the U.S. Livestock Sector By Fabiosa, Jacinto F.; Hayes, Dermot J.; Dong, Fengxia
  18. China's Agricultural Crisis and Famine of 1959-61: A Survey and Comparison to Soviet Famines By Dennis Tao Yang
  19. Smallholders' commercialization through cooperatives: a diagnostic for Ethiopia By Bernard, Tanguy; Gabre-Madhin, Eleni; Taffesse, Alemayehu Seyoum
  20. The economic impact and the distribution of benefits and risk from the adoption of insect resistant (Bt) cotton in West Africa: By Falck-Zepeda, Jose; Horna, Daniela; Smale, Melinda
  21. Food Markets in Russia. Dynamics of Their Integration By Gluschenko, Konstantin; Khimich, Alexandra
  22. The optimal management of wetlands: quantifying trade-offs between flood risks, recreation and biodiversity conservation By Ekin Birol; Nick Hanley; Phoebe Koundouri; Yiannis Kountouris
  23. The Impact of Tax Reforms Designed to Encourage a Healthier Grain Consumption By Nordström, Jonas; Thunström, Linda
  24. Determinants of Water Connection Type and Ownership of Water-Using Appliances in Ireland By Joe O'Doherty; Seán Lyons; Richard S.J. Tol
  25. Why do ICDPs fail? The relationship between subsistence farming, poaching and eco- tourism in wildlife and habitat conservation By Ralph Winkler
  26. Risk Aversion and International Environmental Agreements By Vincent Boucher; Yann Bramoullé

  1. By: Takahiro Ito; Takashi Kurosak
    Abstract: This paper investigates the effects of weather risk on the off-farm labor supply of agricultural households in a developing country. Faced with the uninsurable risk of output and food price fluctuations, poor farmers in developing countries may diversify labor allocation across activities in order to smooth income in real terms.A key feature of this paper is that it distinguishes different types of off-farm labor markets: agriculture and nonagriculture on the one hand, and, wages paid in cash and wages paid in kind on the other. We develop a theoretical model of household optimization, which predicts that when farmers are faced with more production risk in their farm production, they find it more attractive to engage in nonagricultural work as a means of risk diversification, but the agricultural wage sector becomes more attractive when food security is an important issue for the farmers and agricultural wages are paid in kind. To test this prediction, we estimate a multivariate twolimit tobit model of labor allocation using household data from rural areas of Bihar and Uttar Pradesh, India. The regression results show that the share of the off-farm labor supply increases with weather risk, the increase is much larger in the case of nonagricultural work than in the case of agricultural wage work, and the increase is much larger in the case of agricultural wages paid in kind than in the cash wage case. Simulation results based on the regression estimates show that the sectoral difference is substantial, implying that empirical and theoretical studies on farmers' labor supply response to risk should distinguish between the types of off-farm work involved.
    Keywords: covariate risk, non-farm employment, self-employment, food security, India
    JEL: Q12 O15 J22
    Date: 2007–11
  2. By: Fan, Shenggen; Gulati, Ashok; Thorat, Sukhadeo
    Abstract: "This paper reviews the trends in government subsidies and investments in and for Indian agriculture; develops a conceptual framework and model to assess the impact of various subsidies and investments on agricultural growth and poverty reduction; and, presents several reform options with regard to re-prioritizing government spending and improving institutions and governance. There are three major findings. First, initial subsidies in credit, fertilizer, and irrigation have been crucial for small farmers to adopt new technologies. Small farms are often losers in the initial adoption stage of a new technology since prices of the agricultural products are typically being pushed down by greater supply of products from large farms, which adopted the new technology. But as more and more farmers have adopted HYV, continued subsidies have led to inefficiency of the overall economy. Second, agricultural research, education, and rural roads are the three most effective public spending items in promoting agricultural growth and poverty reduction during all periods. Finally, the trade-off between agricultural growth and poverty reduction is generally small among different types of investments. As for agricultural research, education, and infrastructure development, they have large growth impact and a large poverty reduction impact. Several policy lessons can be drawn. Agricultural input and output subsidies have proved to be unproductive, financially unsustainable, environmentally unfriendly in recent years, and contributed to increased inequality among rural Indian states. To sustain long-term growth in agricultural production, and therefore provide a long-term solution to poverty reduction, the government should cut subsidies of fertilizer, irrigation, power, and credit and increase investments in agricultural research and development, rural infrastructure, and education. Promoting nonfarm opportunities is also important. However, simply reallocating public resources is not the full solution. Reforming institutions can have an equal, if not larger, impact on future agricultural and rural growth and rural poverty reduction." from Authors' Abstract
    Keywords: Rural poverty, Agricultural growth, Investments, subsidies,
    Date: 2007
  3. By: Fafchamps, Marcel; Vargas-Hill, Ruth; Minten, Bart
    Abstract: "Using original data collected about growers, traders, processors, markets, and village communities, we compare the situation in four states – Tamil Nadu, Uttar Pradesh, Maharashtra, and Orissa. We examine the way that information about crop attributes is conveyed (or not) along the value chain. We also document the infrastructure available at the level of the market. We find that little information circulates about unobservable crop characteristics. Growers receive a price premium when they dry, grade, and pack their produce, but we find no evidence that information about crop health and safety or agricultural practices circulates through the value chain or that growers are encouraged to follow specific agricultural practices for quality purposes. Market infrastructure is deficient regarding sanitation, with few public toilets, inadequate drainage, and no coordinated pest control." from Authors' Abstract
    Keywords: Food marketing, Food safety, Food quality, Value chain,
    Date: 2007
  4. By: Nhemachena, Charles; Hassan, Rashid
    Abstract: "Adaptation to climate change involves changes in agricultural management practices in response to changes in climate conditions. It often involves a combination of various individual responses at the farm-level and assumes that farmers have access to alternative practices and technologies available in the region. This study examines farmer adaptation strategies to climate change in Southern Africa based on a cross-section database of three countries (South Africa, Zambia and Zimbabwe) collected as part of the Global Environment Facility/World Bank (GEF/WB) Climate Change and African Agriculture Project. The study describes farmer perceptions to changes in long-term temperature and precipitation as well as various farm-level adaptation measures and barriers to adaptation at the farm household level. A multivariate discrete choice model is used to identify the determinants of farm-level adaptation strategies. Results confirm that access to credit and extension and awareness of climate change are some of the important determinants of farm-level adaptation. An important policy message from these results is that enhanced access to credit, information (climatic and agronomic) as well as to markets (input and output) can significantly increase farm-level adaptation. Government policies should support research and development on appropriate technologies to help farmers adapt to changes in climatic conditions. Examples of such policy measures include crop development, improving climate information forecasting, and promoting appropriate farm-level adaptation measures such as use of irrigation technologies." from Authors' Abstract
    Keywords: Climate change, Adaptation,
    Date: 2007
  5. By: Birthal, P.S.; Joshi, P.K.; Roy, Devesh; Thorat, Amit
    Abstract: "Agricultural diversification towards high-value crops can potentially increase farm incomes, especially in a country like India where demand for high-value food products has been increasing more quickly than that for staple crops. Indian agriculture is overwhelmingly dominated by smallholders, and researchers have long debated the ability of a smallholder-dominated subsistence farm economy to diversify into riskier high-value crops. Here, we present evidence that the gradual diversification of Indian agriculture towards high-value crops exhibits a pro-smallholder bias, with smallholders playing a proportionally larger role in the cultivation of vegetables versus fruits. The observed patterns are consistent with simple comparative advantage-based production choices. The comparatively high labor endowments of the small farmers, as reflected in their greater family sizes, induce them to diversify towards vegetables. Although fruit cultivation is also labor intensive (as compared to cultivation of staples), fruits are relatively capital intensive, making them a less advantageous choice for smallholders who tend to have low capital endowments. Furthermore, both the probability of participation in fruit and vegetable cultivation as well as land allocation to horticulture decreases with the size of landholdings in India. Small or medium holders do not appear to allocate a greater share of land to fruits or vegetables. However, the share allocated to vegetables is significantly higher if the family size is bigger, while the reverse is true in the case of fruits." from Authors' Abstract
    Keywords: diversification, Smallholders, High value agriculture,
    Date: 2007
  6. By: Takane, Tsutomu
    Abstract: This paper examines the livelihoods of smallholder households in Malawi based on information derived from six villages in various parts of the country. Through detailed analysis of own-farm production and off-farm economic activities, the study explores similarities, diversities, and disparities in rural livelihoods. Liberalization policies and the high risk of crop failure have produced large disparities between those who achieve high income from own-farm production and those who do not. Off-farm income can help to reduce the risk of own-farm production, but is also a source of income disparity and provides little opportunity for upward economic mobility to escape poverty.
    Keywords: Livelihoods, Rural development, Agriculture, Nonfarm income, Malawi, Africa, Household, Income
    JEL: Q12
    Date: 2007–08
  7. By: Benin, Samuel; Nkonya, Ephraim; Okecho, Geresom; Pender, John; Nahdy, Silim; Mugarura, Samuel; Kayobyo, Godfrey
    Abstract: "The National Agricultural Advisory Services (NAADS) program of Uganda is an innovative public-private extension service delivery approach, with the goal of increasing market oriented agricultural production by empowering farmers to demand and control agricultural advisory services. Although initial evaluations of NAADS have been quite favourable, these evaluations have been primary qualitative in nature. This study quantifies the initial impacts of NAADS in the districts and sub-counties where the program was operating by 2005. It is based on descriptive analyses of results of a survey of 116 farmer groups and 894 farmers in sixteen districts where the program was operating at the time and four districts where NAADS had not yet begun operating to control for factors that may have contributed to differing initial conditions among the communities. Based on observed differences across the NAADS and non-NAADS sub-counties, it appears that the NAADS program is having substantial positive impacts on the availability and quality of advisory services provided to farmers, promoting adoption of new crop and livestock enterprises as well improving adoption and use of modern agricultural production technologies and practices. NAADS also appears to have promoted greater use of post-harvest technologies and commercial marketing of commodities, consistent with its mission to promote more commercially-oriented agriculture. Despite positive effects of NAADS on adoption of improved production technologies and practices, no significant differences were found in yield growth between NAADS and non-NAADS sub-counties for most crops, reflecting the still low levels of adoption of these technologies even in NAADS sub-counties, as well as other factors affecting productivity. However, NAADS appears to have helped farmers to avoid the large declines in farm income that affected most farmers between 2000 and 2004, due more to encouraging farmers to diversify into profitable new farming enterprises such as groundnuts, maize and rice than to increases in productivity caused by NAADS. NAADS appears to be having more success in promoting adoption of improved varieties of crops and some other yield enhancing technologies than in promoting improved soil fertility management. This raises concern about the sustainability of productivity increases that may occur, since such increases may lead to more rapid soil nutrient mining unless comparable success in promoting improved soil fertility management is achieved. Continued emphasis on improving the market environment, promoting adoption of more remunerative crop enterprises, and applied agronomic research identifying more effective ways to profitably combine inorganic and organic soil fertility measures in different crop systems can help to address this problem. Shortage of capital and credit facilities was often cited by farmers as a critical constraint facing them, in addition to scarcity of agricultural inputs, lack of adequate farmland, unfavorable weather patterns and problems of pests and diseases. These emphasize that the quality of advisory services is not the only important factor influencing technology adoption and productivity, and the need for complementary progress in other areas, especially development of the rural financial system. Implications are drawn for enterprise targeting and ensuring sustainability of improvements in productivity, as well as for designing and implementing service provision programs in other parts of the Uganda and in other countries." from Author's Abstract
    Keywords: Impact assessment, Agricultural extension,
    Date: 2007
  8. By: Margaret Chitiga (Department of Economics, University of Pretoria); Ramos Mabugu (Financial and Fiscal Commission)
    Abstract: This paper focuses on the effects that a higher tariff on agriculture and food imports could have on poverty and the macroeconomy using a top down computable general equilibrium microsimulation model. This question is of broader relevance to developing countries that may be contemplating the use of World Trade Organisation permissible trade barriers so as to achieve a domestic policy objective. Generally speaking, the results suggest that doubling protection of agriculture and food would lead to a reallocation of labour toward the sectors with high initial protection and those with high domestic orientation. Agriculture and food sectors are harmed by increased protection if the government chooses to use indirect tax rates to compensate for revenue changes because of induced demand contraction by the indirect tax adjustment. Exports and imports in general decline. The analysis also shows that increasing food and agricultural protection has very negligible but negative effects on welfare and poverty.
    Keywords: CGE model; microsimulation, trade policy, special and differential treatment, poverty, welfare, South Africa
    JEL: D33 D58 E27 F17 I32 O15 O55
    Date: 2007–09
  9. By: Minten, Bart
    Abstract: "Global retail chains are becoming increasingly dominant in the global food trade and their rise leads to dramatic impacts on agricultural supply chains and on small producers. However, the prospects and impacts of a food retail revolution in poor countries are not yet well understood. Here, we examine this question in Madagascar, a poor but stable country where global retailers have been present for over a decade. Our survey and analysis finds that while global retail chains sell better quality food, their prices are 40 to 90% higher, ceteris paribus, than those seen in traditional retail markets. In poor settings, characterized by high food price elasticities, a lack of willingness to pay for quality, and small retail margins, supermarkets appear to set prices with an eye toward maximizing profits based on price-inelastic demands for quality products from a small middle class interested in one-stop shopping. It seems unlikely that global retail chains will further increase their food retail share in such poor settings." from Authors' Abstract
    Keywords: Food retail, Supermarkets, Food quality, Poor Developing countries,
    Date: 2007
  10. By: Chamberlin, Jordan; Pender, John; Yu, Bingxin
    Abstract: "The choices that smallholder farmers are able to make are strongly conditioned by the geographic conditions in which they live. The importance of this fact for rural development strategy is not lost on policy makers. For example, the government of Ethiopia frequently frames policy discussions by broadly different geographical conditions of moisture availability, recognizing moisture reliable, drought prone and pastoralist areas. These conditions are seen as important criteria for determining the nature, extent and priority of development interventions for different parts of the country. There is considerable evidence, however, that other geographical factors also have important implications for rural development options. This paper uses agroecology, access to markets, and population density to define development domains: geographical locations sharing broadly similar rural development constraints and opportunities. Unlike similar efforts conducted elsewhere, this work is unique in that it seeks to move away from a subjective mapping of factors of theorized importance to a more rigorous definition of development domains on the basis of quantitative data on smallholder livelihood strategies. After selecting variables for mapping, we calibrate our definition for domains in such a way that their explanatory power is maximized across a range of livelihood strategies that figure in the current Ethiopian rural development discourse (market engagement, dependence upon agriculture, etc.)." Authors' Abstract
    Keywords: Smallholders, Small farmers, Geographic conditions, rural development strategies, Development policy, Agro-ecology, Market access, Livelihoods, Population density,
    Date: 2006
  11. By: Thurlow, James; Kiringai, Jane; Gautam, Madhur
    Abstract: "Kenya's economy is relatively diverse, with both agricultural and industrial potential. However, the economy has performed poorly over the last decade, and poverty and inequality have risen. This paper examines the impact of alternative growth paths and rural investments on poverty using an economy-wide model. It finds that if Kenya continues along its current growth path, its economy will have to grow by more than 10 percent per year over the coming decade to meet the Millennium Development Goal (MDG) of halving poverty by 2015. Therefore, Kenya must search for alternative sources of poverty-reducing growth. The results of the model indicate that poverty is unlikely to decline significantly without an acceleration of agricultural growth. Growth in agriculture is found to benefit both urban and rural households, whereas industry-led growth benefits a smaller segment of the urban population, thus exacerbating inequality. Kenya's current Economic Recovery Strategy, however, is not optimistic about agriculture's growth potential, focusing more heavily on industry-led growth. Therefore, as Kenya prepares its new national strategy, the country should place greater emphasis on and direct resources toward accelerating agricultural growth. In assessing the impact of rural investments on growth and poverty, the paper finds that increasing agricultural spending to meet the 10 percent target set by the Maputo Declaration would lift an additional 1.5 million people above the poverty line by 2015. Specific agricultural investments have higher returns in different parts of the country, however. Irrigation favors the lowlands and the poorest segment of the population, while research and extension (R&E) favors the midlands and highlands. Investment in R&E is also found to have the highest returns in both growth and poverty reduction. However, increasing agricultural spending to 10 percent of total spending is insufficient to meet either the MDG or the 6 percent agricultural growth target of the Comprehensive African Agriculture Development Program, which Kenya has recently adopted. . Achieving this target requires nonagricultural investments, such as in roads and market development. Building rural roads and reducing agricultural transaction costs significantly reduces poverty and encourages growth beyond rural areas. While it is necessary to increase spending on agriculture, the fiscal burden of an agricultural strategy can be greatly reduced by improving investment efficiency." from Author's Abstract
    Keywords: Agriculture, Rural investment, Poverty, Inequality,
    Date: 2007
  12. By: Thunström, Linda (The Swedish Retail Institute (HUI))
    Abstract: With food, consumers often face a trade-off between taste and nutrition. A priori, it is not obvious which would be more important to the average consumer, so it is an empirical question how consumers value food characteristics that simultaneously affect taste and nutritional value. In this paper, Swedish consumer preferences regarding food characteristics in breakfast cereals, hard bread and potato products are analyzed. In particular, the value consumers attach to fat, fibre, salt and sugar is studied, as well as the value of easily accessible nutritional information provided by a nutrition symbol. The equations estimated are derived from a hedonic price model. The price data originates from a household panel and scanner data, whereas the corresponding data on food characteristics was collected manually in supermarkets or from producers. The value consumers attach to food characteristics are found to vary by product and the results also imply that these values could be sensitive to changes in the combination of characteristics in a product.
    Keywords: hedonic pricing; willingness to pay; food characteristics
    JEL: D12 I10
    Date: 2007–11–06
  13. By: Smale, Melinda; Zambrano, Patricia; Falck-Zepeda, José; Gruère, Guillaume
    Abstract: "A vast literature has accumulated since crop varieties with transgenic resistance to insects and herbicide tolerance were released to farmers in 1996 and 1997. A comparatively minor segment of this literature consists of studies conducted by agricultural economists to measure the farm-level impact of transgenic crop varieties, the size and distribution of the economic benefits from adopting them, consumer attitudes toward GE products, and implications for international trade. This paper focuses only on the applied economics literature about the impact of transgenic crop varieties in non-industrialized agricultural systems, with an emphasis on methods. A number of studies have surveyed the findings for both industrialized and non-industrialized agriculture, at various points in time, but surveys of methods are less frequent and have typically examined only one overall question or approach. Clearly, the methods used in research influence the findings that are presented and what they mean. Understanding the methods therefore enhances understanding of the findings. Four categories of impact analysis are considered: farmers, consumers, industry and trade. In part due to methodological limitations and the relatively brief time frame of most analyses, results are promising, but the balance sheet is mixed. Thus, findings of current case studies should not be generalized to other locations, crops, and traits. The aim of this review is to progress toward the defining a “best practices” methodology for national researchers who seek to produce relevant information about emerging crop biotechnologies for national policymakers. " Authors' Abstract
    Keywords: Genetically engineered crops, Economic impacts, Technology adoption, Developing economies, Economics methods, Best practices, biotechnology,
    Date: 2006
  14. By: Yesuf, Mahmud; Bluffstone, Randy
    Abstract: "Production systems in low-income developing countries are generally poorly diversified, focusing on rainfed staple crop production and raising livestock. These activities are inherently risky and investment and production decisions by farm households are therefore made within environments that are affected by risk. Because of poorly developed or absent credit and insurance markets it is difficult to pass any of these risks to a third party. As a result, it is often found that even when the expected net return is high, households are reluctant to adopt new agricultural technologies when they involve risk. Better understanding risk behavior will be essential for identifying appropriate farm-level strategies for adaptation to climate change by low-income farmers. Despite risk's potentially central role in farm investment decisions, there have been few attempts to estimate the magnitude and nature of risk aversion of farm households in low-income developing countries. To partially close this gap, this paper uses an experimental approach applied to 262 households in the Ethiopian highlands with real payoffs. By incorporating both small and large stakes and gains and losses into the experiment, we test for the presence of low stake risk aversion and loss aversion. We find that more than 50 percent of the households are severely or extremely risk averse. This contrasts with studies in Asia where most household decision-makers exhibit moderate to intermediate risk aversion. We find that households that stand to lose as well as gain something from participation in games are significantly more risk averse than households playing gains-only games. This strongly suggests that agricultural extension efforts involving losses as well as gains may face systematic resistance by farmers in low-income, high-risk environments. Promotion of technologies with downside risks – even if the upside potential is enormous – should therefore be combined with insurance or other support. We also find that even without the possibility of losses households are much more averse to risk when stakes are high. Results indicate that insurance or other support can likely be phased out. After initial successes have convinced farmers that technologies are viable, risk aversion declines. There are also significant differences in risk averting behavior between relatively poorer and wealthier farm households, which is consistent with decreasing absolute risk aversion. This suggests that as wealth is built up households are willing to take on more risk in exchange for higher returns. Both these findings suggest a strong path dependence. Efforts to develop poor rural areas through promotion of risky technologies should take this path dependence into account. Early successes are important, but households should also be allowed to build up wealth before they are challenged or tempted to take on more risky ventures. Furthermore, the finding that even without the possibility of losses households are much more risk averse when stakes are higher, suggests that agricultural extension should start modestly before asking households to take on larger gambles." from Authors' Abstract
    Keywords: experimental studies, loss aversion, risk aversion, econometric models, Farm households,
    Date: 2007
  15. By: Felix Schlaepfer (Socioeconomic Institute, University of Zurich)
    Abstract: In November 2005, 55.7 percent of 2 million Swiss voters approved a 5-year moratorium (ban) on the commercial cultivation of genetically modified (GM) plants within Switzerland. The present study examines how individual voting decisions were determined by (i) socioeconomic characteristics, (ii) political preference/ideology and (iii) agreement with a series of arguments in favour and against the use of GM plants in Swiss agriculture. The analysis is based on the data of the regular voter survey undertaken after national-level voting decisions in Switzerland. Among the socioeconomic characteristics, only the age group was clearly significant with individuals above 65 years less opposed to crop biotechnology. Several political preference/ideology variables were significant determinants of the vote, most notably the preferences about the role of the state in the economy. Perceived consequences of the use of GM plants for health, natural diversity of plants and animals were also strongly and significantly associated with approving and disapproving voter groups. The disapproving votes were not motivated by perceived benefits of GM-food production but mainly by perceived interests of Swiss science and industry. Our findings suggest that current concerns about the use of genetically engineered plants in agriculture may not automatically decrease with higher levels of education/knowledge and generational change. Furthermore, the analysis of the voter motives suggests that the public support for GM-free agricultural production would be even larger in other countries, where industrial interests in crop biotechnology are less pronounced.
    Keywords: Externalities, genetically modified organisms (GMO), public goods, voting
    JEL: D62 D72 Q26
    Date: 2007–11
  16. By: You, Liangzhi; Wood, Stanley; Wood-Sichra, Ulrike
    Abstract: "Agricultural production statistics reported at country or sub-national geopolitical scales are used in a wide range of economic analyses, and spatially explicit (geo-referenced) production data are increasingly needed to support improved approaches to the planning and implementation of agricultural development. However, it is extremely challenging to compile and maintain collections of sub-national crop production data, particularly for poorer regions of the world. Large gaps exist in our knowledge of the current geographic distribution and spatial patterns of crop performance, and these gaps are unlikely to be filled in the near future. Regardless, the spatial scale of many sub-national statistical reporting units remains too coarse to capture the patterns of spatial heterogeneity in crop production and performance that are likely to be important from a policy and investment planning perspective. To fill these spatial data gaps, we have developed and applied a meso-scale model for the spatial disaggregation of crop production. Using a cross-entropy approach, our model makes plausible pixel-scale assessment of the spatial distribution of crop production within geopolitical units (e.g. countries or sub-national provinces and districts). The pixel-scale allocations are performed through the compilation and judicious fusion of relevant spatially explicit data, including production statistics, land use data, satellite imagery, biophysical crop “suitability” assessments, population density, and distance to urban centers, as wells as any prior knowledge about the spatial distribution of individual crops. The development, application and validation of a prior version of the model using data from Brazil strongly suggested that our spatial allocation approach shows considerable promise. This paper describes efforts to generate crop distribution maps for Sub-Saharan Africa for the year 2000 using this approach. Apart from the empirical challenge of applying the approach across many countries, the application includes three significant model improvements, namely (1) the ability to cope with production data sources that provided different degrees of spatial disaggregation for different crops within a single country; (2) the inclusion of a digital map of irrigation intensity as a new input layer; and (3) increased disaggregation of rainfed production systems. Using the modified spatial allocation model, we generated 5-minute (approximately 10-km) resolution grid maps for 20 major crops across Sub-Saharan Africa, namely barley, dry beans, cassava, cocoa, coffee, cotton, cowpeas, groundnuts, maize, millet, oil palm, plantain, potato, rice, sorghum, soybeans, sugar cane, sweet potato, wheat, and yam. The approach provides plausible results but also highlights the need for much more reliable input data for the region, especially with regard to sub-national production statistics and satellite-based estimates of cropland extent and intensity." from Author's Abstract
    Keywords: Cross entropy, Spatial allocation, Agricultural production, crop suitability, Geographic information systems, Satellite image,
    Date: 2007
  17. By: Fabiosa, Jacinto F.; Hayes, Dermot J.; Dong, Fengxia
    Abstract: The recently signed Korea-U.S. Free Trade Agreement (KORUS FTA) grants the U.S. livestock industry with preferential access to South Korea’s import market. This study evaluates the likely impacts of the KORUS FTA on the U.S. livestock sector. Using the Food and Agricultural Policy Research Institute’s modeling system, we find that livestock prices increase by 0.5% to 3.8% under the agreement. And together with an expansion by 381 to 883 million pounds in meat exports, the value of U.S. exports increase by close to U.S.$2 billion, or a 15.2% increase. Because of differential baseline starting market shares and differential rates and staging specifications, the beef sector results are primarily driven by trade diversion impacts, while a combination of trade diversion and trade creation characterizes the results in pork and poultry sectors.
    Keywords: dairy, free trade agreement, livestock, poultry, trade creation and diversion.
    Date: 2007–11–08
  18. By: Dennis Tao Yang
    Abstract: China?s Great Leap Forward (GLF) of 1958-61, a campaign of unprecedented mobilization efforts to achieve rapid industrialization, ended as a catastrophe. National grain production collapsed and a widespread famine claimed millions of human lives. This paper reviews a growing economic literature on this historical crisis. While multiple causes are hypothesized, empirical findings suggest that the collapse of grain production was primarily attributable to a systematic failure in central planning, involving the diversion of agricultural resources to industry and excessive grain procurements that precipitated malnutrition among peasants and decimation of labor productivity. The resulting decline in grain availability, as well as urban bias in China?s food distribution system, became the main culprits of the enormous famine. In light of the Chinese experience, this paper also explores the role of defective planning in the Soviet famines of 1931-3 and 1947.
    Keywords: central planning, food supply, famine, urban bias, China, USSR
    Date: 2007
  19. By: Bernard, Tanguy; Gabre-Madhin, Eleni; Taffesse, Alemayehu Seyoum
    Abstract: "This paper examines the impact of cooperatives on smallholder commercialization of cereals, using detailed household data from rural Ethiopia. We review the involvement of cooperatives, in terms of who participates and where they are located. We then use the strong government role in promoting the establishment of cooperatives to assume that the decision of where to establish a cooperative is largely driven by external considerations, and is thus exogenous to the members themselves justifying the use of propensity-score matching in order to compare households that are cooperative members to similar households in comparable areas without cooperatives. Four conclusions are derived from the analysis. First, despite the spread of cooperatives – they existed in less than 15 percent of districts in 1994 and nearly 35 percent in 2005 – there are important disparities across regions. Within regions, cooperatives tend to be located in areas that already have better access to markets and lower exposure to price and environmental risks. Second, at the household level participation is only 9 percent, with poorer households less likely to participate. Third, while cooperatives obtain higher prices for their members, they are not associated with a significant increase in the overall share of cereal production sold by their members. Fourth, these average results hide considerable heterogeneity in the impact across households. In particular, we find smaller farmers tend to reduce their marketable surplus as a result of higher prices, while the opposite is true for larger farmers." from Authors' Abstract
    Keywords: Smallholders, Marketing, Cooperatives, Commercialization, Cereal crops,
    Date: 2007
  20. By: Falck-Zepeda, Jose; Horna, Daniela; Smale, Melinda
    Abstract: "Cotton is the largest source of export receipts of several West African countries. Statistics however show a decreasing tendency in cotton yields and an increasing tendency in pesticide use. Under this circumstances there appear to be potential payoffs from the use of biotechnology products in the farming systems of the region. In this study we estimate different scenarios for the potential deployment of insect resistant cotton in selected countries in West Africa (WA). We use an economic surplus model augmented with a more rigorous sensitivity analysis of model parameters. Hypothetical scenarios of Bt cotton adoption in WA are simulated and single point values of model parameters are substituted with probability distributions. The scenarios include: no adoption in WA; adoption of existing varieties; adoption of WA varieties backcrossed with private sector lines; and fluctuating adoption patterns. According to the simulations, the total net benefits of adopting Bt seem to be small even after including the innovator surplus who accrues a larger share of the benefits. In contrast the WA countries included in the evaluation are worse off if they decide no to adopt Bt cotton. These results are in part explained by the conservative assumptions taken. The adoption pattern and the length of the adoption period affect the share of benefits earned by producers as compared to innovators. This study provides tools and information that can be used to build greater confidence in the process of setting agricultural research investment priorities." from Authors' Abstract
    Keywords: Economic impacts, Bt-cotton, Economic surplus model, Economic surplus, Risk, Probability distributions, Impact assessment, Net benefits,
    Date: 2007
  21. By: Gluschenko, Konstantin (Institute of Economics and Industrial Engineering, Siberian Branch of the Russian Academy of Sciences, Novosibirsk, Russia); Khimich, Alexandra (Higher School of Economics, Moscow, Russia)
    Abstract: In the context of integrated market, a price of any product in regions depends on its demand in a national market rather than in a regional one. Applying the econometric model based on this theoretical statement, the paper assesses to degree the markets of some food products are integrated. The fact that since nearly 1994 the growth of segmentation in such markets changes to the tendency of their integration has been observed. We conclude that there is an integrated food market in Russia; and its integration has been just the same as that one in the countries of developed market economy.
    Keywords: Price dispersion, Market integration, Food markets, Russia, Russian regions
    JEL: K49 P22 P37 R19
    Date: 2007–11
  22. By: Ekin Birol (Department of Land Economy, University of Cambridge, UK); Nick Hanley; Phoebe Koundouri; Yiannis Kountouris
    Abstract: This paper employs a choice experiment to estimate the value of management options for the Bobrek wetland in Poland. The local public’s valuation of several wetland management attributes, including flood risk reduction, biodiversity conservation and improvement of recreational access, are investigated. A latent class model and a covariance heterogeneity model are estimated to account for heterogeneity in the preferences of the local public. The results reveal that there is considerable preference heterogeneity across the local public; however on average they derive the highest values from reductions of flooding risk. The results of this study are expected to assist policy makers in undertaking effective flood risk reduction measures and formulating efficient, equitable and sustainable wetland management policies in accordance with the European Union Water Framework Directive (2000/60/EC).
    Keywords: choice experiment, latent class model, covariance heterogeneity model, flood risk, biodiversity conservation, recreation
    JEL: Q2 Q4 R4
    Date: 2007
  23. By: Nordström, Jonas (Institute of Food and Resource Economics); Thunström, Linda (The Swedish Retail Institute)
    Abstract: In this paper, we simulate the effects of taxes on products and/or nutrients aimed at encouraging a healthier grain consumption. To carry out the analysis, we use a rich data set on household consumption of grain products, combined with information about the nutritional content of the products. We estimate behavioural parameters that are used to simulate the impact on the average household of different types of tax reforms; entailing either a subsidy on commodities particularly rich in fibre or a subsidy of the fibre density in grain products. Our results suggest that to direct the fibre intake of the average household towards nutritional recommendations, reforms with a substantial impact on consumer prices are required. Our results also imply that subsidizing the fibre density is more cost-efficient than reducing the VAT on commodities rich in fibre. Regardless of the type of subsidy imposed, the increase in the fibre intake is accompanied by unwanted increases in the nutrients that are often over consumed; fat, saturated fat, salt and sugar and added sugar. Funding the subsidies by taxing these nutrients, or less healthy commodities, prevents such developments.
    Keywords: Consumer economics; food; health; taxation
    JEL: D12 H23 I18
    Date: 2007–11–06
  24. By: Joe O'Doherty (Economic and Social Research Institute (ESRI)); Seán Lyons (Economic and Social Research Institute (ESRI)); Richard S.J. Tol (Economic and Social Research Institute (ESRI))
    Abstract: Domestic water demand is influenced both by the number of households and their characteristics, in particular the extent to which they employ water-using appliances. This paper focuses on domestic ownership of water-using appliances in Ireland, a country where rapid economic and demographic change are putting pressure on water and sewerage infrastructure. Using a large household micro-dataset, we use discrete response logistic models to examine the determinants of the water and sewage mains connection status of Irish homes, identify the characteristics of households that are associated with having larger or smaller numbers of appliances, and investigate what types of households own particular combinations of appliances.
    Keywords: Water usage, Ireland, appliance ownership, water supply
    Date: 2007–10
  25. By: Ralph Winkler (CER-ETH – Center of Economic Research at ETH Zurich)
    Abstract: In this paper we investigate the reasons why integrated conservation and development projects (ICDPs) fail to achieve their conservation goals. We develop a bio-economic model of open access land and wildlife exploitation, which is consistent with many farming and hunting societies living in close proximity to forest reserves in developing countries. We show that the ICDP creates incentives to conserve habitat and wildlife, but, in general, the socially optimal level of conservation cannot be achieved, because of externalities among the local communities. We show how a social planner can achieve the socially optimal levels of habitat and wildlife by a more encompassing tax/subsidy regime.
    Keywords: bio-economic modelling, competing land-use, ecotourism, integrated conservation and development projects, poaching, wildlife and habitat conservation
    JEL: Q56 O13 H23
    Date: 2007–11
  26. By: Vincent Boucher; Yann Bramoullé
    Abstract: We introduce uncertainty and risk aversion to the study of international environmental agreements. We consider a simple model with identical agents and linear payoffs. We show that a stable treaty with positive action always exists. While uncertainty lowers the action of signatories, we find that it may increase participation. In addition, uncertainty may generate multiple equilibria. A treaty with low action and low participation may coexist with one with high action and high participation. Overall, and despite risk aversion, the impact of uncertainty on welfare may be positive. A reduction in uncertainty may hurt international cooperation.
    Keywords: International Environmental Agreements, Risk Aversion, Uncertainty
    JEL: D62 D80 Q54
    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.