nep-agr New Economics Papers
on Agricultural Economics
Issue of 2008‒04‒21
fifteen papers chosen by
Angelo Zago
University of Verona

  1. Hobby Farms and Protection of Farmland in British Columbia By Tracy Stobbe; Geerte Cotteleer; G. Cornelis van Kooten
  3. Winners and Losers from World Agricultural Trade Liberalisation By Susan Senior Nello
  4. The Pastoral Boom, the Rural Land Market, and Long Swings in New Zealand Economic Growth 1873-1939 By David Greasley; Les Oxley
  5. "Agrarian Land Tenancy in Prewar Japan: Contract Choice and Implications on Productivity" By Yutaka Arimoto; Tetsuji Okazaki; Masaki Nakabayashi
  6. Testing the Validity of WTP values from a Contingent Valuation Survey in Portugal By Paulo Augusto Nunes
  7. When consumption heals producers: the effect of fair trade on marginalised producers’ health and productivity By Leonardo Becchetti; Giuseppina Gianfreda
  8. Prices, Unit Values and Local Measurement Units in Rural Surveys: an Econometric Approach with an Application to Poverty Measurement in Ethiopia By Bart Capéau; Stefan Dercon
  9. Measuring the WTP for Recreation and Biodiversity Protection Programs By Paulo Augusto Nunes
  10. Biological Carbon Sequestration and Carbon Trading Re-visited By G. Cornelis van Kooten
  11. Monetary Values for Air Pollution Risk of Death: A Contingent Valuation Survey By Olivier Chanel; Stephane Luchini
  12. Price transmission and market power analysis in the Spanish seafood market chain By Jordi Guillen; Ramon Franquesa
  13. Do EPA administrators recommend environmental policies that citizens want? By Carlsson, Fredrik; Kataria, Mitesh; Lampi, Elina
  14. Major Challenges for Fishery Policy Reform: A Political Economy Perspective By Jon G. Sutinen
  15. Do More Expensive Wines Taste Better? Evidence from a Large Sample of Blind Tastings By Goldstein, Robin; Almenberg, Johan; Dreber, Anna; Herschkowitsch, Alexis; Katz, Jacob

  1. By: Tracy Stobbe; Geerte Cotteleer; G. Cornelis van Kooten
    Abstract: Agricultural land protection near the urban-rural fringe is a goal of many jurisdictions, and none more so than British Columbia, Canada, which uses a provincial-wide zoning scheme to prevent subdivisions and non-agricultural uses of the land. A preferential tax regulation scheme for farmers is also in place, as in many jurisdictions. Small scale hobby farmers are present at the urban fringe near Victoria (the capital) both on land inside and outside of the Agricultural Land Reserve (ALR). The goal of this paper is to investigate whether or not the establishment of hobby farms creates problems for agricultural land preservation. We make use of a GIS (geographic information system) to construct detailed spatial variables and we employ two models to analyse our parcel-level data set: an hedonic pricing model and a limited dependent variable model. The conclusions drawn from the results in this paper would likely apply to other jurisdictions which seek to protect agricultural land in the urban fringe.
    Keywords: Hobby farmers, Agricultural Land Reserve, Geographical Information System, urban-rural fringe,zoning systems, farmland fragmentation
    JEL: R11 R15 C50 R14
    Date: 2008–01
  2. By: Alvaro Calzadilla; Katrin Rehdanz; Richard S.J. Tol (Economic and Social Research Institute)
    Abstract: We use the new version of the GTAP-W model to analyze the economy-wide impacts of enhanced irrigation efficiency. The new production structure of the model, which introduces a differentiation between rainfed and irrigated crops, allows a better understanding of the use of water resources in agricultural sectors. The results indicate that a water policy directed to improvements in irrigation efficiency in water-stressed regions is not beneficial for all. For water-stressed regions the effects on welfare and demand for water are mostly positive. For non-water scarce regions the results are more mixed and mostly negative. Global water savings are achieved. Not only regions where irrigation efficiency changes are able to save water, but also other regions are pushed to conserve water.
    Keywords: Computable General Equilibrium, Irrigation, Water Policy, Water Scarcity, Irrigation efficiency
    JEL: D58 Q17 Q25
    Date: 2008–04
  3. By: Susan Senior Nello
    Abstract: This paper aims at showing the role of agriculture in determining many of the controversies and problems of the current phase of globalisation. This first entails presenting key statistics indicating the main developments in world agricultural trade, illustrating how there has been a relative deterioration of the export performance of developing countries. The Doha Development Agenda of the World Trade Organisation (WTO) is then analysed, indicating the positions of the main actors involved as this illustrates the perceived vulnerabilities and opportunities arising from agricultural trade liberalisation. The final part of the article provides a survey of the main estimates of the impact of agricultural trade liberalisation, and tackles the issue of those countries, sectors and households that might be adversely affected by the process. In particular, the paper will attempt to illustrate how the possible negative consequences of the failure of the Doha Round could be overcome.
    Keywords: world agricultural trade; agricultural trade liberalisation; The CAP and WTO; Doha Development Agenda
    Date: 2007–05–25
  4. By: David Greasley; Les Oxley (University of Canterbury)
    Abstract: A pastoral boom led to higher farm and manufacturing productivity and to New Zealand attaining the world’s highest HDI in 1913. Staple exports invigorated the land market, diffused rural land ownership, and fostered intensive growth. The gains from higher land prices spread widely, but land market volatility also created instability. New Zealand had the world’s highest GDP per capita in 1938, but she experienced long swings in her growth rates. Dramatic swings in rural land market activity engendered by the pastoral boom contributed powerfully to a long depression in the 1920s; subsequently a new monetary regime facilitated fast recovery.
    Keywords: Land ownership; Pastoral sector; Manufacturing productivity; New Zealand land prices
    JEL: N17 N37 N47
    Date: 2008–02–01
  5. By: Yutaka Arimoto (JSPS Research Fellow / University of Tokyo, Faculty of Economics); Tetsuji Okazaki (Faculty of Economics, University of Tokyo); Masaki Nakabayashi (Graduate School of Economics, Osaka University)
    Abstract: This paper studies the determinants of agrarian tenancy contract choice and its implication on productivity in prewar Japan. Rapid agricultural growth under extensive tenancy relationships in prewar Japan was achieved with the prevalence of a unique rent reduction contract, which was more efficient than a share tenancy or a pure fixed-rent contract in terms of provision of incentives and risk-sharing. Despite its potential efficiency, a rent reduction contract incurred substantial transaction costs, which may have inhibited its adoption outside Japan. The prevalence of this contract in prewar Japan was likely due to the presence of villages that reduced such costs through informal governance of the private tenancy relationships. We found quantitatively at the village level that the choice of tenancy contract in prewar Iwate prefecture was affected by risk and possibly transaction costs. Furthermore, a sign of Marshallian inefficiency was found at the prefecture level, where the prevalence of tenancy and productivity is negatively correlated and such inefficiency was worse in prefectures with a greater proportion of share tenancy.
    Date: 2008–03
  6. By: Paulo Augusto Nunes
    Abstract: This paper explores the statistical validity of the willingness to pay (WTP) answers from a contingent valuation (CV) survey concerning value assessment of recreation and biodiversity protection programs. Firstly, we use a non-parametric testing approach as to evaluate the whether (a) different information levels concerning the government costs with the Park and (b) different payment vehicles influence the stated WTP responses. Secondly, we use a parametric model specification as to investigate the impact of the elicitation question format on the stated WTP responses. The likelihood ratio test results, at 95% confidence level, confirm the validity of the proposed survey a measurement instrument. Nevertheless, the presence of free riding turns out to be statistically significant in one of the survey versions. The parametric model results suggest that the differences in the mean WTP estimates across the two question formats are not statistically different. Furthermore, the double bounded dichotomous choice model value estimates point out that the WTP for the recreation protection program is lower than the WTP for the biodiversity protection program, thus confirming the importance of non-use value component of the Natural Area.
    Date: 2008–03
  7. By: Leonardo Becchetti (University of Tor Vergata); Giuseppina Gianfreda (University of Viterbo)
    Abstract: Concerned consumers in the US and Europe are increasingly willing to pay an “ethical premium” for the social and environmental value of fair trade products. One of the fair trade criteria (aimed to enhance wellbeing and capacity building of marginalised producers) relates to producers health and creation of healthy working conditions. We evaluate its significance by comparing days lost for illness of FT and non FT affiliated Kenyan farmers. We find that FT affiliation years have a significant effect in the expected direction on the dependent variable after controlling for selection bias effects.
    Keywords: Fair trade, health, impact study
    JEL: O19 O22 D64 I1
    Date: 2008
  8. By: Bart Capéau; Stefan Dercon
    Abstract: For many research problems in developing countries, some information on prices faced by households is required, for example if subsistence consumption is a substantial part of consumption. These prices are not readily available from household surveys, and at times they are not easily observed, for example if markets are thin and systematic price information can only be observed from markets some distance away from communities. Furthermore, quantities consumed and produced are often in local units presenting further problems for the analysis. We provide an econometric approach to estimate prices and quantity conversion factors from household expenditure data, using data from rural Ethiopia to illustrate the approach. In an application, we show that the conclusions about poverty changes over time are significantly affected by using alternative strategies to convert local units and to value subsistence consumption. We find in our case that mean unit values result in the overestimation of prices due to outliers and other sources of measurement error. Exogenous consumer price sources, often collected at larger markets outside the village, tend to give slightly lower values than our estimates.
    Keywords: household surveys, unit values, subsistence consumption, local measurement units, poverty
    JEL: D4 I3 R2
    Date: 2008–03
  9. By: Paulo Augusto Nunes
    Abstract: This paper focus on a contingent valuation (CV) exercise as to compute estimates for the willingness to pay (WTP) for recreation and biodiversity benefits of a Natural Park in Portugal. The CV survey gathers 1678 respondents and three development policy options. We refer to the Wilderness Areas (WA) tourism development scenario; the Recreational Areas (RA) tourism development scenario and, finally, a scenario version which is characterised by the tourism development of both WA and RA. The results show that the respondents evaluate the WA and RA differently. However, we find no statistical difference between the WTP for the WA and the WTP for the WA jointly with the RA. The last result can be interpreted as an indicator of an eventual presence of warm-glow in the WTP responses.
    Date: 2008–03
  10. By: G. Cornelis van Kooten
    Abstract: Under Kyoto, biological activities that sequester carbon can be used to create CO2 offset credits that could obviate the need for lifestyle-changing reductions in fossil fuel use. Credits are earned by storing carbon in terrestrial ecosystems and wood products, although CO2 emissions are also mitigated by delaying deforestation, which accounts for one-quarter of anthropogenic CO2 emissions. However, non-permanent carbon offsets from biological activities are difficult to compare with each other and with emissions reduction because they differ in how long they prevent CO2 from entering the atmosphere. This is the duration problem; it results in uncertainty and makes it difficult to determine the legitimacy of biological activities in mitigating climate change. While there is not doubt that biological sink activities help mitigate climate change and should not be neglected, in this paper we demonstrate that these activities cannot be included in carbon trading schemes.
    Keywords: carbon offset credits from biological activities, climate change, duration of carbon sinks
    JEL: Q54 Q56
    Date: 2008–02
  11. By: Olivier Chanel (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579); Stephane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579)
    Abstract: In this paper, we extend the individual dynamic model of life-time resource allocation to assess the monetary value given to the increase in survival probabilities of every member of a household induced by improved air quality. We then interpret this monetary value as a flow of Value of Life Years Lost (VOLY), and estimate the corresponding Value of a Prevented Fatality (VPF) for different ages and different household members. Using French contingent valuation data on air pollution, we estimate a mean VOLY of Euros 150,000 and a mean VPF<br />of Euros 2.15 million. In addition, we find an inverse U-shaped relationship between age and VPF.
    Keywords: Value of statistical life, Air pollution, Familial Altruism, Contingent Valuation
    Date: 2008–04–11
  12. By: Jordi Guillen; Ramon Franquesa (Universitat de Barcelona)
    Abstract: Spain is one of the largest seafood markets in Europe and the world. Seafood consumption has traditionally been very high in Spain; in 2005, for instance, around 36.7 kg per capita were consumed (MAPA, several years). However, little attention has been paid to the market and how the different levels of the market chain interact. This paper uses weekly data to analyse the price transmission elasticity of the main twelve seafood products in the Spanish market chain (Ex-vessel, Wholesale and Retail stages). We then investigate the price transmission asymmetry in these market stages. The results have significant implications for demand analysis, market power and margins in the seafood value chain.
    Keywords: asymmetry, price transmission, seafood products, market power
    JEL: Q22 Q11 L11
    Date: 2008
  13. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Kataria, Mitesh (National Environmental Research Institute, University of Aarhus); Lampi, Elina (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We investigate whether Swedish Environmental Protection Agency (EPA) administrator preferences regarding improvements in environmental quality differ from citizen preferences. The scope and significance of the possible difference are assessed by conducting identical choice experiments (CE) on a random sample of Swedish citizens and a random sample of administrators working at the Swedish EPA. The experiment concerns two environmental quality objectives: a Balanced Marine Environment and Clean Air. The EPA administrators were asked to choose the alternatives they would recommend as a policy, while the citizens were asked to act as private persons. We find that the rankings of attributes differ between the two groups, and that there are significant differences in the willingness to pay (WTP) for particular attributes. EPA administrators have a higher WTP for five out of the seven attributes, and in some cases the difference is not only significant but also substantial. We also asked the administrators to motivate their CE choices, and the main motive was ecological sustainability.<p>
    Keywords: Choice experiment; environmental policy; administrators; citizens
    JEL: D61 Q51 Q58
    Date: 2008–04–14
  14. By: Jon G. Sutinen
    Abstract: A political economy perspective of fisheries governance is presented in this paper. In most countries, formal and informal linkages exist among four components of the governance system. The legislature passes laws that authorise the implementation of policies and programmes by a fisheries agency. The fisheries agency establishes a fisheries management authority. Stakeholders often have a formal role – from advising to decision-making – in the management plan development process and approved plans are implemented by the fisheries agency. In general, governance failure (that is, undesirable public policy outcomes) has been attributed to special interest effects, rational voter ignorance, bundling of issues, shortsightedness, decoupling of costs and benefits, and bureaucratic inefficiencies. No studies demonstrate whether private interests significantly influence fishery policies and regulations, but evidence from other sectors suggests that this is very likely. One of the features that distinguishes the fishing industry from other regulated activities is that often there are no strong property rights, and regulation seeks to prevent overexploitation of a common pool resource (CPR). Fishers, in effect, impose costs on each other rather than on consumers, in the absence of regulation. A laboratory experiment was designed to simulate lobbying to influence regulation of a CPR. Results show that competition for fishery earnings weakens the incentive to effectively lobby for regulations that maximise group well-being. More experienced participants believe that their contributions to changing a regulation are not worthwhile. Instead, they focus more on competing for earnings from their use of the CPR. Correcting or mitigating government failure in fisheries might be assisted by the introduction of strong property rights, the devolution of rights and responsibilities to user groups, the use of the cost recovery and sustainable financing mechanisms, and for shielding fishery managers from the shortsighted tendencies of elected officials. But these recommendations may have difficulty in being implemented in the face of strong opposition from private interests in the fishery. <P>Les grands défis de la réforme de la pêche : Économie politique de la réforme <BR>Une analyse de la gouvernance des pêcheries sous l’angle de l’économie politique est présentée dans ce document. Dans la plupart des pays, il existe des liens formels et informels entre les quatre composantes du système de gouvernance. Le Parlement vote des lois autorisant les autorités compétentes de la pêche à mettre en œuvre des politiques et des programmes. Ces autorités compétentes de la pêche établissent un organisme de gestion des pêches. Les parties prenantes jouent souvent un rôle officiel — variant du conseil à la prise de décision — dans le processus d’élaboration des plans de gestion ; les plans approuvés sont mis en œuvre par les autorités compétentes de la pêche. En général, les échecs de gouvernance (à savoir les résultats indésirables des mesures adoptées par les pouvoirs publics) sont mis sur le compte des intérêts particuliers, de l’ignorance des électeurs, du regroupement des problèmes, de l’absence de vision, du découplage des coûts et des avantages et de l’inefficacité bureaucratique. Bien qu’aucune étude n’ait démontré que les intérêts privés influaient sensiblement sur les politiques et la réglementation de la pêche, ce que l’on a pu observer dans d’autres secteurs laisse à penser que cette influence est très vraisemblable. Le secteur de la pêche se distingue d’autres activités réglementées notamment par l’absence fréquente de droits de propriété solidement établis et par le fait que la réglementation tente d’éviter la surexploitation de ressources communes. En l’absence de réglementation, les pêcheurs font en fait peser des coûts les uns sur les autres plus que sur les consommateurs. Une expérience en laboratoire a été conçue pour simuler les activités de groupes de pression destinées à influer sur la réglementation des ressources communes. Les résultats de l’expérience montrent que la compétition entre pêcheurs pour réaliser le maximum de profits diminue leur volonté de faire pression en faveur de règlements qui maximiseraient le bien-être du groupe. Des participants plus expérimentés estiment que leur contribution à la modification de la réglementation ne présente aucun intérêt. Ils s’attachent en fait davantage à se disputer les profits de l’exploitation de la ressource commune. L’introduction de droits de propriété solidement établis, la délégation des droits et des responsabilités aux groupes d’utilisateurs, le recours à la récupération des coûts et à des mécanismes durables de financement et la protection des gestionnaires des pêches contre la tendance des élus à raisonner à court terme pourraient contribuer à corriger et à réduire l’échec des pouvoirs publics. Néanmoins, ces recommandations risquent de ne pouvoir être mises en œuvre aisément face à la forte opposition des intérêts privés dans le secteur de la pêche.
    Date: 2008–03
  15. By: Goldstein, Robin (Fearless Critic Media); Almenberg, Johan (Dept. of Economics, Stockholm School of Economics); Dreber, Anna (Dept. of Economics, Stockholm School of Economics); Herschkowitsch, Alexis (Fearless Critic Media); Katz, Jacob (Fearless Critic Media)
    Abstract: Individuals who are unaware of the price do not derive more enjoyment from more expensive wine. In a sample of more than 6,000 blind tastings, we find that the correlation between price and overall rating is small and negative, suggesting that individuals on average enjoy more expensive wines slightly less. For individuals with wine training, however, we find indications of a positive, or at any rate non-negative, correlation. Our results are robust to the inclusion of individual fixed effects, and are not driven by outliers: when omitting the top and bottom deciles of the price distribution, our qualitative results are strengthened, and the statistical significance is improved even further. Our results indicate that both the prices of wines and wine recommendations by experts may be poor guides for non-expert wine consumers.
    Keywords: Wine; price/quality relation; expertise
    JEL: L15 L66 M30 Q13
    Date: 2008–04–16

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.
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.