nep-agr New Economics Papers
on Agricultural Economics
Issue of 2008‒03‒15
eleven papers chosen by
Angelo Zago
University of Verona

  1. Managing increasing environmental risks through agro-biodiversity and agri-environmental policies By Stefan Baumgärtner; Martin F. Quaas
  2. Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change By Searchinger, Timothy; Heimlich, Ralph; Houghton, R. A.; Dong, Fengxia; Elobeid, Amani; Fabiosa, Jacinto F.; Tokgoz, Simla; Hayes, Dermot J.; Yu, Tun-Hsiang (Edward)
  3. The relationship between farm size and productivity: empirical evidence from the Nepalese mid-hills By Thapa, Sridhar
  4. An empirical examination of repeated auctions for biodiversity conservation contracts By Markus Groth
  5. Family Labourforce as a Determinant of Tenancy-Labour Interlinked Contract By KUNDU, AMIT
  6. Analyzing Poverty Impact of Trade Liberalization Policies in CGE Models: Theory and Some Policy Experiments in Agricultural and Non-agricultural Sectors in South Asia By Khan, haider
  7. Policies to Reduce Emissions from Deforestation and Degradation (REDD) in Tropical Forests: An Examination of the Issues Facing the Incorporation of REDD into Market-Based Climate Policies By Myers, Erin C.
  8. Migration, Risk and the Intra-Household Allocation of Labor in El Salvador By Halliday, Timothy
  9. Behaviours of Conservation Organizations and their Environmental Implications. Analysis based on New (and not so new) Institutional Economics By Clem Tisdell
  10. Embedding Research in Society: Development Assistance Options for Supporting Agricultural Innovation in a Global Knowledge Economy By Hall, Andy
  11. Standards and Development By Jo Swinnen; Jim Vercammen; Scott Rozelle

  1. By: Stefan Baumgärtner (Centre for Sustainability, Leuphana University of Lüneburg); Martin F. Quaas (Department of Ecological Modelling, UFZ-Centre for Environmental Research Leipzig-Halle)
    Abstract: Agro-biodiversity can provide natural insurance to risk-averse farmers by reducing the variance of crop yield, and to society at large by reducing the uncertainty in the provision of public-good ecosystem services such as e.g. CO2 storage. We analyze the choice of agro-biodiversity by risk-averse farmers who have access to financial insurance, and study the implications for agri-environmental policy design when on-farm agro-biodiversity generates a positive risk externality. While increasing environmental risk leads private farmers to increase their level of on-farm agro-biodiversity, the level of agro-biodiversity in the laissez-faire equilibrium remains ineciently low. We show how either one of two agri-environmental policy instruments can cure this risk-related market failure: an ex-ante Pigouvian subsidy on on-farm agro-biodiversity and an ex-post compensation payment for the actual provision of public environmental benefits. In the absence of regulation, welfare may increase rather than decrease with increasing environmental risk, if the agroecosystems is characterized by a high natural insurance function, low costs and large external benefits of agro-biodiversity.
    Keywords: agro-biodiversity, ecosystem services, agri-environmental policy, insurance, risk-aversion, uncertainty
    JEL: Q1 Q57 H23 D62
    Date: 2008–03
  2. By: Searchinger, Timothy; Heimlich, Ralph; Houghton, R. A.; Dong, Fengxia; Elobeid, Amani; Fabiosa, Jacinto F.; Tokgoz, Simla; Hayes, Dermot J.; Yu, Tun-Hsiang (Edward)
    Abstract: Most prior studies have found that substituting biofuels for gasoline will reduce greenhouse gases because biofuels sequester carbon through the growth of the feedstock. These analyses have failed to count the carbon emissions that occur as farmers worldwide respond to higher prices and convert forest and grassland to new cropland to replace the grain (or cropland) diverted to biofuels. By using a worldwide agricultural model to estimate emissions from land-use change, we found that corn-based ethanol, instead of producing a 20% savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gases for 167 years. Biofuels from switchgrass, if grown on U.S. corn lands, increase emissions by 50%. This result raises concerns about large biofuel mandates and highlights the value of using waste products.
    Date: 2008–03–13
  3. By: Thapa, Sridhar
    Abstract: This paper examines the farm size and productivity relationship using data from Nepalese mid hills. The household data used has been drawn from a survey conducted by the author and financed by the Norwegian University of Life Science. The analysis uses models both allowing for and not allowing for village dummies(as cluster controls), the ratio of irrigated land (as proxy for land quality), and other socio-economic variables such as households, belonging to caste groups, and family size (as proxy for access to resources). The result supported the almost ‘stylized fact’ of inverse relationship (IR) between farm size and output per hectare. Total cash input use and labour hours per hectare were found to be higher on small farms. The findings of regression equations allowing for village dummies and other socio-economic variables do not support the explanation that the IR between farm size and productivity is due to variation in regions as well as access to resources. Nevertheless, family size and caste dummies show some effects on farm value added. The paper further investigates returns to scale in Nepalese agriculture, applying the Cobb-Douglas (CD) production function. The result shows constant returns to scale. Labour input seems more influential in farm production, followed by manure, in the sample farms. The overall result shows that the IR between farm size and output per hectare is perhaps due to the result more of other inputs used by small farms rather than diseconomies of scale.
    Keywords: inverse relationship; farm size; productivity; returns to scale; Nepal
    JEL: Q15 O13
    Date: 2007–03
  4. By: Markus Groth (Centre for Sustainability Management, Leuphana University of Lüneburg)
    Abstract: The European Union’s Council Regulation on support for rural development by the European Agricultural Fund for Rural Development has introduced auctioning as a new instrument for granting agri-environmental payments and awarding conservation contracts for the recent multi-annual budgetary plan. This paper therefore deals with the conception and results of two case study auctions for conservation contracts. Results of two field experiments show much differentiated bid prices in the model-region and budgetary cost-effectiveness gains of up to 21% in the first auction and up to 36% in the repeated auction. Besides these promising results, some critical aspects as well as lessons to be learned will also be discussed in this paper to improve the design and performance of upcoming conservation auctions.
    Keywords: agri-environmental policy, discriminatory-price auction, multi-unit auction, ecological services, plant biodiversity, experimental economics
    JEL: C93 D44 H41 Q24 Q28 Q57 R52
    Date: 2008–03–04
  5. By: KUNDU, AMIT
    Abstract: In this interlinked contract land market is tied with labour market. The landlord leases-out small size of land to the landless agricultural labour households under fixed rent system prior to agricultural peak season on the basis of their commitment to work under his field through out that season. A household can bind itself in such a contract if and only if it has certain number of family labour force. But which households can ultimately tie them in such a contract is totally decided by the market force in that village economy where the family labour force is the determining factor. The paper also shows that this interlinked contract may generate involuntary unemployment in the agricultural labour market and under certain conditions the tied households can not only cross the reservation level of income but also can cross the poverty line.
    Keywords: Family Farming; Agricultural Labour Market; Interlinked Contract; Poverty
    JEL: J43 I3
    Date: 2007–10–26
  6. By: Khan, haider
    Abstract: The paper uses a dualistic, compact and “generic” (macroeconomic) computable general equilibrium (CGE) model specially constructed for the purpose of investigating the implications of trade liberalization for poverty reduction in South Asia. The model is a stylized representation of economies with large populations including large numbers of both urban and rural poor as in India, Pakistan or Bangladesh. The current “generic” model uses CES production functions and Harris-Todaro type migration model together with representative data to generate economy wide results. It is found that a dualistic production structure with sufficient details on the labor markets and household side can capture some of the effects of trade liberalization on poverty reduction. The model’s general equilibrium results suggest that trade liberalization can complement other specific policy interventions for poverty reduction.
    Keywords: Poverty; Trade Liberalization; Dualism; CGE model; Agriculture Informal; Urban Informal sector.
    JEL: F16 D31 C68 A10 D43 A11
    Date: 2008–03
  7. By: Myers, Erin C. (Resources for the Future)
    Abstract: Deforestation and forest degradation account for 20 percent of annual total greenhouse gas (GHG) emissions. The vast majority of these forestry emissions come from deforestation in developing countries. Currently, there is significant dialogue at the international level about how to integrate reducing emissions from deforestation and degradation (REDD) into the existing climate change regime through market-based incentives. This paper examines the issues that arise when trying to create an economically and environmentally robust market-based REDD policy. The paper begins with an overview of the role of forests in climate change, and is followed by an examination of design elements that will affect the integrity of a REDD policy, including issues of scope, monitoring, baselines, leakage, stakeholder interests, permanence and liability, and the potential impact of REDD credits on the carbon market. The paper closes with an overview of the issues facing developing countries that would host REDD activities.
    Keywords: avoided deforestation, RED, REDD, reducing emissions from deforestation and degradation, climate change, market-based policy mechanisms, land use, land-use change and forestry, UNFCCC, Kyoto, emissions, CO2, GHG
    JEL: Q00 Q23 Q54 Q57
    Date: 2007–12–01
  8. By: Halliday, Timothy (University of Hawaii at Manoa)
    Abstract: We use panel data from El Salvador and investigate the intra-household allocation of labor as a risk-coping strategy. Adverse agricultural productivity shocks both increased male migration to the US and male agricultural labor supply. This is not a contradiction if there were non-monotonic effects on shadow wages within the survey period. In contrast, damage sustained from the 2001 earthquakes exclusively stunted female migration. This is consistent with the earthquakes increasing the demand for home production.
    Keywords: migration, labor supply, insurance, intra-household allocation
    JEL: J22 J61
    Date: 2008–01
  9. By: Clem Tisdell (School of Economics, The University of Queensland, Brisbane 4072, Australia)
    Abstract: This article draws mostly (but not entirely) on new institutional economics to consider the likely behaviours of non-government conservation organizations and the implications of these behaviours for biodiversity conservation. It considers how institutional factors may result in behaviour of conservation NGOs diverging from their objectives, including their support for biodiversity conservation; examines aspects of rent capture and conservation alliances; specifies social factors that may restrict the diversity of species supported by NGOs for conservation; considers bounded rationality in relation to the operation of conservation NGOs; and using game theory, shows how competition between NGOs for funding can result in economic inefficiencies and narrow the diversity of species supported for conservation. It also considers generally how the social role of conservation NGOs might be assessed.
    Keywords: Australia, biodiversity conservation, bounded rationality, civil society, Common Agricultural Policy, European Union, Landcare, mixed goods, new institutional economics, New Zealand, NGO's, principal-and-agent problem, political acceptability
    JEL: Q00 Q2 Q5 Q57 Z13
    Date: 2007–12
  10. By: Hall, Andy (UNU-MERIT, LINK)
    Abstract: The emergence of a globalised knowledge economy, and the contemporary views of innovation capacity that this trend enables and informs, provides a new context in which development assistance to agricultural research and development needs to be considered. The main argument in this paper, which focuses on The Netherlands, is that development assistance should use this emerging scenario to identify niches where inputs can add value to the R&D investments of others, particularly in activities that help wire up innovation systems, linking R&D to other activities and actors in society. The paper outlines four agricultural innovation priorities and guiding principles for development assistance that could help strengthen national and global innovation capacity. These trends also raise many tensions and dilemmas for the development research community in Northern countries. A key message of this paper is that these tensions could be better handled if a long-term vision for development assistance to ST&I - which recognised the contingencies of the global knowledge economy and the importance of participation in the resolution of international issues that affect all countries - were in place. The paper concludes by suggesting that national development assistance policies on ST&I cannot be thought of separately from a country's general ST&I policy as participation in the resolution of international issues is a key element of a country's comparative advantage. This requires investments in expertise in the North and not just financial assistance to the South.
    Keywords: knowledge economy, development assistance, agricultural research, agricultural innovation, science and technology policy, innovation policy, development research, international development, community, globalization
    JEL: O13 O19 O29 O38 Q18
    Date: 2008
  11. By: Jo Swinnen; Jim Vercammen; Scott Rozelle
    Abstract: Consumers have increasing demands for product standards. This has important implications for development. While there has been increasing attention to empirical work in this area, it is often grounded in a poor conceptual base. To overcome this shortcoming, this paper develops a formal theory of the process of the introduction of high product standards in developing countries and identifies the implications of the emergence of high product standards. The model endogenizes the introduction of high standards and the choices of the actors—firms and producers—who make up the supply chain. Initial differences in income, the nature of capital constraints, transaction costs, the efficiency of traditional marketing channels and policies and institutions are shown to affect the likelihood of and the speed with which the high standards economy emerges. Initial differences in some of these same factors—as well as inter-country differences in the distribution of the sizes of farmers—are also shown to determine who begins to produce and sell high standards commodities in the early stages of the growth process. We also use the model to analyze the welfare effects of the introduction of high standards production systems.
    Date: 2008

This nep-agr issue is ©2008 by Angelo Zago. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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