New Economics Papers
on Agricultural Economics
Issue of 2008‒09‒13
23 papers chosen by

  1. A structural ricardian analysis of climate change impacts and adaptations in African agriculture By Seo, S. Niggol; Mendelsohn, Robert
  2. Long-term adaptation : selecting farm types across agro-ecological zones in Africa By Seo, Niggol; Mendelsohn, Robert; Dinar, Ariel; Kurukulasuriya, Pradeep; Hassan, Rashid
  3. Biotechnology and the Development of Food Markets: Retrospect and Prospects By GianCarlo Moschini
  5. The impact of remittances on rural poverty and inequality in China By Zhu, Nong; Luo, Xubei
  6. Differential adaptation strategies to climate change in African cropland by agro-ecological zones By Seo, Niggol; Mendelsohn, Robert; Kurukulasuriya, Pradeep; Dinar, Ariel; Hassan, Rashid
  7. Are low food prices pro-poor ? net food buyers and sellers in low-income countries By Aksoy , M. Ataman; Isik-Dikmelik, Aylin
  8. A ricardian analysis of the distribution of climate change impacts on agriculture across agro-ecological zones in Africa By Seo, S. Niggol; Mendelsohn, Robert; Dinar, Ariel; Hassan, Rashid; Kurukulasuriya, Pradeep
  9. Spatial specialization and farm-nonfarm linkages By Deichmann, Uwe; Shilpi, Forhad; Vakis, Renos
  10. Comparing Price and Non-price Approaches to Urban Water Conservation By Sheila M. Olmstead; Robert N. Stavins
  11. Linking African smallholders to high-value markets : practitioner perspectives on benefits, constraints, and interventions By Henson, Spencer; Jaffee, Steven; Cranfield, John; Blandon, Jose; Siegel, Paul
  12. Commercio elettronico per la dinamica delle catene agro-alimentari internazionali: un’analisi del potenziale [E-commerce for the dynamics of international agri-food chains: an adoption potential analysis] By Melanie Fritz; Maurizio Canavari; Nicola Cantore; Jivka Deiters; Erika Pignatti
  13. Integrating seasonal forecasts and insurance for adaptation among subsistence farmers : the case of Malawi By Osgood, Daniel E.; Suarez, Pablo; Hansen, James; Carriquiry, Miguel; Mishra, Ashok
  14. A note on rising food prices By Mitchell, Donald
  15. Differential adaptation strategies by agro-ecological zones in African livestock management By Seo, S. Niggol; Mendelsohn, Robert; Dinar, Ariel; Kurukulasuriya, Pradeep
  16. Domestic water pricing with household surveys : a study of acceptability and willingness to pay in Chongqing, China By Wang, Hua; Xie, Jian; Li, Honglin
  17. Small enterprise growth and the rural investment climate : evidence from Tanzania By Kinda, Tidiane; Loening, Josef L.
  18. Determinants of land use changes: a spatial multinomial probit approach By Olivier Parent; Raja Chakir
  19. Implications of higher global food prices for poverty in low-income countries By Ivanic, Maros; Martin, Will
  20. Employment Impacts of EU Biofuels Policy: Combining Bottom-up Technology Information and Sectoral Market Simulations in an Input-output Framework By Neuwahl, Frederik; Löschel, Andreas; Mongelli, Ignazio; Delgado, Luis
  21. Natural disturbances and natural hazards in mountain forests: a framework for the economic valuation By Sandra Notaro; Alessandro Paletto
  22. Testing for Complementarity and Substitutability among Multiple Technologies: The Case of U.S. Hog Farms By Yu, Li; Hurley, Terrance; Kliebenstein, James; Orazem, Peter
  23. Does forest damage have an economic impact? A case study from the Italian Alps By Sandra Notaro; Alessandro Paletto; Roberta Raffaelli

  1. By: Seo, S. Niggol; Mendelsohn, Robert
    Abstract: This paper develops a Structural Ricardian model to measure climate change impacts that explicitly models the choice of farm type in African agriculture. This two stage model first estimates the type of farm chosen and then the conditional incomes of each farm type after removing selection biases. The results indicate that increases in temperature encourage farmers to adopt mixed farming and avoid specialized farms such as crop-only or livestock-only farms. Increases in precipitation encourage farmers to shift from irrigated to rainfed crops. As temperatures increase, farm incomes from crop-only farms or livestock-only farms fall whereas incomes from mixed farms increase. With precipitation increases, farm incomes from irrigated farms fall whereas incomes from rainfed farms increase. Naturally, the Structural Ricardian model predicts much smaller impacts than a model that holds farm type fixed. With a hot dry climate scenario, the Structural Ricardian model predicts that farm income will fall 50 percent but the fixed farm type model predicts farm incomes will fall 75 percent.
    Keywords: Crops&Crop Management Systems,Agriculture&Farming Systems,Livestock&Animal Husbandry,Climate Change,Rural Development Knowledge&Information Systems
    Date: 2008–04–01
  2. By: Seo, Niggol; Mendelsohn, Robert; Dinar, Ariel; Kurukulasuriya, Pradeep; Hassan, Rashid
    Abstract: Using economic data from more than 8,500 household surveys across 10 African countries, this paper examines whether the choice of farm type depends on the climate and agro-ecological zone of each farm. The paper also studies how farm type choice varies across farmers in each zone, using a multinomial logit choice model. Farmers are observed to choose from one of the following five types of farms: rainfed crop-only, irrigated crop-only, mixed rainfed (crop and livestock), mixed irrigated, and livestock-only farming. The authors compare current decisions against future decisions as if the only change were climate change. They focus on two climate scenarios from existing climate models: the Canadian Climate Centre scenario, which is hot and dry, and the Parallel Climate Model scenario, which is mild and wet. The results indicate that the change in farm types varies dramatically by climate scenario but also by agro-ecological zone. Policy makers must be careful to encourage the appropriate suite of measures to promote the most adapted farm type to each location.
    Keywords: Crops&Crop Management Systems,Climate Change,Agriculture&Farming Systems,Livestock&Animal Husbandry,Rural Development Knowledge&Information Systems
    Date: 2008–04–01
  3. By: GianCarlo Moschini (Center for Agricultural and Rural Development (CARD))
    Abstract: Biotechnology has had an important impact on the agricultural and food industries over the last twelve years by way of fast and extensive adoption of a few genetically modified (GM) crops. This has produced large efficiency gains, including higher yields and reduced costs of weed and pest control, as well as some environmental benefits. The expected development of crops with additional agronomic traits, and with output traits to improve the nutrition and health attributes of food products, holds the potential for even more pervasive impacts. Full realisation of such promises may require overcoming the constraining effects of restrictive GM product regulations.
    Keywords: biotechnology, genetically modified products, innovation, regulation, research and development.
    JEL: Q16 Q18 O33 L51
    Date: 2008–08
  4. By: Yigezu A. Yigezu; John H. Sanders (Department of Agricultural Economics, College of Agriculture, Purdue University)
    Abstract: Many developing regions have excellent potential agricultural resources. However, historically population has become so concentrated on such small holdings that acute poverty and malnutrition now predominate. The food scientists’ response to the chronic nutritional problem has often been subsidized bio-fortification with nutritional supplements or more recently cultivars with higher nutrient levels. Where much of the population is in this inadequate nutrition category as in highland Ethiopia, the supplements are neither financially feasible nor sustainable. The cultivars can provide a few critical nutrients but are not a comprehensive solution. To improve nutrition, it is necessary to increase income so that an increased quality and quantitative diet can be obtained. Here we evaluate a strategy to introduce new agricultural technologies where a central aspect of evaluation is combining the nutritional and income goals. This analysis is undertaken in the Qobo valley, Amhara state, Ethiopia. Using behavioralist criteria for decision making defined by the farmers, the effects of different potential combinations of technologies and supporting agricultural policies on the household nutritional gaps and farmers’ incomes are analyzed. An integrated approach involving the combined technologies of water harvesting, fertilization and Striga resistance combined with improved credit programs has the potential to increase income by 31% and to eliminate malnutrition except in the most adverse state of nature (10% probability). Both the treatment of the nutritional deficits and the decision making criteria defined by farmers are expected to be useful techniques in other developing country technology and policy analysis as well.
    Keywords: Adoption, agricultural technologies, Striga resistance, inorganic fertilizers, tied-ridges, marketing strategies, inventory credit, nutrition, income, capped-lexicographic utility.
    JEL: O13 O33 Q16 Q18
    Date: 2008
  5. By: Zhu, Nong; Luo, Xubei
    Abstract: Large numbers of agricultural labor moved from the countryside to cities after the economic reforms in China. Migration and remittances play an important role in transforming the structure of rural household income. This paper examines the impact of rural-to-urban migration on rural poverty and inequality in the case of Hubei province using the data of a 2002 household survey. Since remittances are a potential substitute for farm income, the paper presents counterfactual scenarios of what rural income, poverty, and inequality would have been in the absence of migration. The results show that, by providing alternatives to households with lower marginal labor productivity in agriculture, migration leads to an increase in rural income. In contrast to many studies that suggest the increasing share of non-farm income in total income widens inequality, this paper offers support for the hypothesis that migration tends to have egalitarian effects on rural income for three reasons: (i) migration is rational self-selection - farmers with higher agricultural productivities choose to remain in local agricultural production while those with higher expected return in urban non-farm sectors migrate; (ii) poorer households facing binding constraints of land shortage are more likely to migrate; and (iii) the poorest poor benefit disproportionately from remittances.
    Keywords: Rural Poverty Reduction,Population Policies,Access to Finance,Inequality
    Date: 2008–05–01
  6. By: Seo, Niggol; Mendelsohn, Robert; Kurukulasuriya, Pradeep; Dinar, Ariel; Hassan, Rashid
    Abstract: This paper quantifies how African farmers have adapted their crop and irrigation decisions to their farm's current agro-ecological zone. The results indicate that farmers carefully consider the climate and other conditions of their farm when making these choices. These results are then used to forecast how farmers might change their irrigation and crop choice decisions if climate changes. The model predicts African farmers would adopt irrigation more often under a very hot and dry climate scenario but less often with a mild and wet scenario. However, farms in the deserts, lowland humid forest, or mid elevation humid forest would reduce irrigation even in the very hot and dry climate scenario. Area under fruits and vegetables would increase Africa-wide with the very hot and dry climate scenario, except in the lowland semi-arid agro-ecological zone. Millet would increase overall under the mild and wet scenario, but decline substantially in the lowland dry savannah and lowland semi-arid agro-ecological zones. Maize would be chosen less often across all the agro-ecological zones under both climate scenarios. Wheat would decrease across Africa. The authors recommend that care must be taken to match adaptations to local conditions because the optimal adaptation would depend on the agro-ecological zone and the climate scenario.
    Keywords: Crops&Crop Management Systems,Climate Change,Food&Beverage Industry,Renewable Energy,Rural Poverty Reduction
    Date: 2008–04–01
  7. By: Aksoy , M. Ataman; Isik-Dikmelik, Aylin
    Abstract: There is a general consensus that most of the poor in developing countries are net food buyers and food price increases are bad for the poor. This could be expected of urban poor, but it is also often attributed to the rural poor. Recent food price increases have increased the importance of this issue, and the possible policy responses to these price increases. This paper examines the characteristics of net food sellers and buyers in nine low-income countries. Although the largest share of poor households are found to be net food buyers, almost 50 percent of net food buyers are marginal net food buyers who would not be significantly affected by food price increases. Only three of the nine countries examined exhibited a substantial proportion of vulnerable households. The average incomes (as measured by expenditure) of net food buyers were found to be higher than net food sellers in eight of the nine countries examined. Thus, food price increases, ceteris paribus, would transfer income from generally higher income net food buyers to poorer net food sellers. The analysis also finds that the occupations and income sources of net sellers and buyers in rural areas are significantly different. In rural areas where food production is the main activity and where there are limited non-food activities, the incomes of net buyers might depend on the incomes and farming activities of net food sellers. These results suggest the need for reevaluation of the consensus on the impact of food prices on food needs. Further work on the regional differences, and more important, on the second order effects, are necessary to answer these questions more precisely. Only on the basis of further analysis can we start generating better policy responses.
    Keywords: Food&Beverage Industry,Rural Poverty Reduction,,Poverty Lines
    Date: 2008–06–01
  8. By: Seo, S. Niggol; Mendelsohn, Robert; Dinar, Ariel; Hassan, Rashid; Kurukulasuriya, Pradeep
    Abstract: This paper examines the distribution of climate change impacts across the 16 agro-ecological zones in Africa using data from the Food and Agriculture Organization combined with economic survey data from a Global Environment Facility/World Bank project. Net revenue per hectare of cropland is regressed on a set of climate, soil, and socio-economic variables using different econometric specifications"with"and"without"country fixed effects. Country fixed effects slightly reduce predicted future climate related damage to agriculture. With a mild climate scenario, African farmers gain income from climate change; with a more severe scenario, they lose income. Some locations are more affected than others. The analysis of agro-ecological zones implies that the effects of climate change will vary across Africa. For example, currently productive areas such as dry/moist savannah are more vulnerable to climate change while currently less productive agricultural zones such as humid forest or sub-humid zones become more productive in the future. The agro-ecological zone classification can help explain the variation of impacts across the landscape.
    Keywords: Climate Change,Global Environment Facility,Common Property Resource Development,Rural Poverty Reduction,Transport and Environment
    Date: 2008–04–01
  9. By: Deichmann, Uwe; Shilpi, Forhad; Vakis, Renos
    Abstract: Using individual level employment data from Bangladesh, this paper presents empirical evidence on the relative importance of farm and urban linkages for rural nonfarm employment. The econometric results indicate that high return wage work and self-employment in nonfarm activities cluster around major urban centers. The negative effects of isolation on high return wage work and on self-employment are magnified in locations with higher agricultural potential. The low return nonfarm activities respond primarily to local demand displaying no significant spatial variation. The empirical results highlight the need for improved connectivity of regions with higher agricultural potential to urban centers for nonfarm development in Bangladesh.
    Keywords: Transport Economics Policy&Planning,Rural Poverty Reduction,Crops&Crop Management Systems,Labor Policies
    Date: 2008–04–01
  10. By: Sheila M. Olmstead (Yale School of Forestry and Environmental Studies); Robert N. Stavins (Harvard University)
    Abstract: Urban water conservation is typically achieved through prescriptive regulations, including the rationing of water for particular uses and requirements for the installation of particular technologies. A significant shift has occurred in pollution control regulations toward market-based policies in recent decades. We offer an analysis of the relative merits of market-based and prescriptive approaches to water conservation, where prices have rarely been used to allocate scarce supplies. The analysis emphasizes the emerging theoretical and empirical evidence that using prices to manage water demand is more cost-effective than implementing non-price conservation programs, similar to results for pollution control in earlier decades. Price-based approaches also have advantages in terms of monitoring and enforcement. In terms of predictability and equity, neither policy instrument has an inherent advantage over the other. As in any policy context, political considerations are important.
    Keywords: Cost-effectiveness, Water Conservation, Market-based Approaches, Policy Instrument Choice, Water Price
    JEL: Q25 Q28 Q58 L95
    Date: 2008–09
  11. By: Henson, Spencer; Jaffee, Steven; Cranfield, John; Blandon, Jose; Siegel, Paul
    Abstract: This paper provides the results of an international survey of practitioners with experience in facilitating the participation of African smallholder farmers in supply chains for higher-value and/or differentiated agricultural products. It explores their perceptions about the constraints inhibiting and the impacts associated with this supply chain participation. It also examines their perceptions about the factors affecting the success of project and policy interventions in this area, about how this success is and should be measured, and about the appropriate roles for national governments, the private sector, and development assistance entities in facilitating smallholder gains in this area. The results confirm a growing'consensus'about institutional roles, yet suggest some ambiguity regarding the impacts of smallholder participation in higher-value supply chains and the appropriateness of the indicators most commonly used to gauge such impacts. The results also suggest a need to strengthen knowledge about both the'old'and'new'sets of constraints (and solutions) related to remunerative smallholder inclusion, in the form of the rising role of standards alongside more long-standing concerns about infrastructure and logistical links to markets.
    Keywords: Access to Finance,Environmental Economics&Policies,Labor Policies,Economic Theory&Research,Agricultural Knowledge&Information Systems
    Date: 2008–03–01
  12. By: Melanie Fritz (University of Bonn); Maurizio Canavari (Alma Mater Studiorum University of Bologna); Nicola Cantore (Alma Mater Studiorum University of Bologna); Jivka Deiters (University of Bonn); Erika Pignatti (Alma Mater Studiorum University of Bologna)
    Abstract: Business-to-business (B2B) e-commerce is an innovative use of information and communication technologies and refers to the exchange of goods and related information between companies supported by Internet-based tools such as electronic marketplaces (also called electronic trade platforms) or online shops. It provides opportunities for cost-efficiency in supply chain management processes and access to new markets. With regard to the food sector with its chain levels input – agriculture – industry – retail – consumer, B2B e-commerce would take place in the exchange of food products between all levels except retail to consumer (business-to-consumer e-commerce). It is evident and widely known that B2B e-commerce brings key advantages and potentials for European consumers and the European food sector: - The affordability of high quality, traceable food for European consumers is supported as the innovation potentials from e-commerce technologies for cost-efficient processes along the food chain. The healthy choice of quality food will become the easy and affordable choice for European consumers. - The competitiveness of the European food sector with the majority of SMEs increases as B2B e-commerce technologies support cost-efficient transaction processes in food supply chains. In recent years, the availability of sophisticated B2B e-commerce technology has improved tremendously. The “European e-Business Market Watch” initiative from the Directorate-General Enterprise and Industry from the European Commission has shown that only large multinationals exploit the potentials of B2B e-commerce in the food sector for their supply chain management with their business partners. SMEs however, which create the majority of turn over in the European food sector and therefore create jobs and welfare in Europe, are reluctant to take up existing B2B e-commerce technologies into their food supply of selling. The crucial barrier to adoption is that trust between companies is not mediated appropriately by existing e-commerce technology. Currently, the barrier for food sector SMEs towards B2B e-commerce come from - the difficulty to examine the quality and safety of food products. This refers to all kinds of transactions in the food sector, whether supported by e-commerce or not. However, when it comes to e-commerce, the difficulty of physical product examination plays a much larger role as physical product inspection is not possible; - the (perceived) risk of performing a transaction via e-commerce. This includes concerns regarding secure transfer of data, or the possibly unknown transaction partner. Elements for the generation of trust between companies in the food chain and therefore of trustworthy B2B e-commerce environments for the food sector include guaranties regarding food quality, multimedia food product presentations to signal their quality, secure e-commerce technology infrastructures, third-party quality signs to be provided. As trust is highly subjective and depends on culture, food chains in different European countries with a different cultural background require different combinations of trust generating elements regarding the quality and safety of food. Different food chain scenarios with their transaction processes and risks regarding food quality and food safety and related trust elements need to be analysed and differences in trust in different European food chains need to be considered. It is the objective of this paper to identify food chains with trans-European cross-border exchange of food and international food chains in order to analyse the transaction processes and typical risks regarding food quality and food safety. The analysis focuses on trans-European cross-border and international food chains with their chain levels (e.g. production to wholesale trade, wholesale trade to industry, or wholesale trade to retail). In particular, it regards the food categories meat, grains, fresh vegetables, and fresh fruits and the particular risks regarding food quality and safety along the chains.
    Keywords: e-commerce, B2B transactions, agri-food trade
    JEL: Q13
    Date: 2008–08
  13. By: Osgood, Daniel E.; Suarez, Pablo; Hansen, James; Carriquiry, Miguel; Mishra, Ashok
    Abstract: Climate variability poses a severe threat to subsistence farmers in southern Africa. Two different approaches have emerged in recent years to address these threats: the use of seasonal precipitation forecasts for risk reduction (for example, choosing seed varieties that can perform well for expected rainfall conditions), and the use of innovative financial instruments for risk sharing (for example, index-based weather insurance bundled to microcredit for agricultural inputs). So far these two approaches have remained entirely separated. This paper explores the integration of seasonal forecasts into an ongoing pilot insurance scheme for smallholder farmers in Malawi. The authors propose a model that adjusts the amount of high-yield agricultural inputs given to farmers to favorable or unfavorable rainfall conditions expected for the season. Simulation results - combining climatic, agricultural, and financial models - indicate that this approach substantially increases production in La Niña years (when droughts are very unlikely for the study area), and reduces losses in El Niño years (when insufficient rainfall often damages crops). Cumulative gross revenues are more than twice as large for the proposed scheme, given modeling assumptions. The resulting accumulation of wealth can reduce long-term vulnerability to drought for participating farmers. Conclusions highlight the potential of this approach for adaptation to climate variability and change in southern Africa.
    Keywords: Hazard Risk Management,Debt Markets,,Rural Poverty Reduction,Banks&Banking Reform
    Date: 2008–06–01
  14. By: Mitchell, Donald
    Abstract: The rapid rise in food prices has been a burden on the poor in developing countries, who spend roughly half of their household incomes on food. This paper examines the factors behind the rapid increase in internationally traded food prices since 2002 and estimates the contribution of various factors such as the increased production of biofuels from food grains and oilseeds, the weak dollar, and the increase in food production costs due to higher energy prices. It concludes that the most important factor was the large increase in biofuels production in the U.S. and the EU. Without these increases, global wheat and maize stocks would not have declined appreciably, oilseed prices would not have tripled, and price increases due to other factors, such as droughts, would have been more moderate. Recent export bans and speculative activities would probably not have occurred because they were largely responses to rising prices. While it is difficult to compare the results of this study with those of other studies due to differences in methodologies, time periods and prices considered, many other studies have also recognized biofuels production as a major driver of food prices. The contribution of biofuels to the rise in food prices raises an important policy issue, since much of the increase was due to EU and U.S. government policies that provided incentives to biofuels production, and biofuels policies which subsidize production need to be reconsidered in light of their impact on food prices.
    Keywords: Food&Beverage Industry,Markets and Market Access,Crops&Crop Management Systems,Economic Theory&Research,Renewable Energy
    Date: 2008–07–01
  15. By: Seo, S. Niggol; Mendelsohn, Robert; Dinar, Ariel; Kurukulasuriya, Pradeep
    Abstract: This paper examines how farmers have adapted their livestock operation to the current climate in each agro-ecological zone in Africa. The authors examine how climate has affected the farmer's choice to raise livestock or not and the choice of animal species. To measure adaptation, the analysis regresses the farmer's choice on climate, soil, water flow, and socio-economic variables. The findings show that climate does in fact affect the farmer's decision about whether to raise livestock and the species. The paper also simulates how future climates may alter these decisions using forecasts from climate models and the estimated model. With a hot dry scenario, livestock ownership will increase slightly across all of Africa, but especially in West Africa and high elevation agro-ecological zones. Dairy cattle will decrease in semi-arid regions, sheep will increase in the lowlands, and chickens will increase at high elevations. With a mild and wet scenario, however, livestock adoption will fall dramatically in lowland and high latitude moist agro-ecological zones. Beef cattle will increase and sheep will fall in dry zones, dairy cattle will fall precipitously and goats will rise in moist zones, and chickens will increase at high elevations but fall at mid elevations. Livestock adaptations depend on the climate scenario and will vary across the landscape. Agro-ecological zones are a useful way to capture how these changes differ from place to place.
    Keywords: Livestock&Animal Husbandry,Wildlife Resources,Peri-Urban Communities,Rural Urban Linkages,Dairies&Dairying
    Date: 2008–04–01
  16. By: Wang, Hua; Xie, Jian; Li, Honglin
    Abstract: In determining domestic water prices, policy makers often need to use information about the demand side rather than only relying on information about the supply side. Household surveys have frequently been employed to collect demand-side information. This paper presents a multiple bounded discrete choice household survey model. It discusses how the model can be utilized to collect and analyze information about the acceptability of different water prices by different types of households, as well as households'willingness to pay for water service improvement. The results obtained from these surveys can be directly utilized in the development of water pricing and subsidy policies. The paper also presents an empirical multiple bounded discrete choice study conducted in Chongqing, China. In this case, domestic water service quality was seriously inadequate, but financial resources were insufficient to improve service quality. With a survey of about 1,500 households in five suburban districts in Chongqing Municipality, this study shows that a significant increase in the water price is feasible as long as the poorest households can be properly subsidized and certain public awareness and accountability campaigns can be conducted to make the price increase more acceptable to the public. The analysis also indicates that the order in which hypothetical prices are presented to respondents systematically affects their answers, and should be taken into account when designing survey instruments.
    Keywords: Town Water Supply and Sanitation,Water Supply and Sanitation Governance and Institutions,Environmental Economics&Policies,Water and Industry,Water Supply and Systems
    Date: 2008–08–01
  17. By: Kinda, Tidiane; Loening, Josef L.
    Abstract: This paper analyzes characteristics of nonfarm enterprises, their employment growth patterns, and constraints in doing business in rural Tanzania. Using unique survey data, the authors describe a low-return sector struggling to compete in a difficult business environment. However, about one-third of rural enterprises are growing fast. Most enterprises engage in agricultural trade. Due to a rapidly growing agricultural sector in recent years, limiting demand-side constraints, rural enterprise constraints in Tanzania mainly operate from the supply side. This suggests that, in particular, access to finance, road infrastructure, and rural cell phone communication is correlated with employment growth. A major finding is that subjective and objective measurements of business constraints are broadly comparable. The authors discuss a number of factors that would help to unleash the full potential of private sector-led growth in rural areas. The findings show that marginal improvements in the rural investment climate matter for growth.
    Keywords: Access to Finance,Rural Poverty Reduction,Microfinance,Banks&Banking Reform,
    Date: 2008–07–01
  18. By: Olivier Parent; Raja Chakir
    Abstract: Changes in land use patterns impact significantly environmental conditions as well as economic and social welfare. These changes are influenced by socio-economic as well as pedo-climatic factors. A good understanding of how these factors influence land use patterns would provide new dimensions to policy making and public policy evaluation. To this end, we propose a Spatial Multinomial Probit model to examine the determinants of land use change, at the parcel level, in the French D´epartement du Rhones from 1992 to 2003. It is based on an economic model that assumes that landowners have a choice between 4 land use categories for a given parcel at a given date: (1) agricultural, (2) forest, (3) urban and (4) no use. Each landowner compares costs and benefits associated with each parcel and each class and chooses the optimal land use to maximize his/her profit. We propose a Spatial Multinomial Probit model that allows for covariates and spatial dependence, and we use these features to explore the relative importance of factors that drive landowners to choose a specific land use category. Our findings suggest the presence of spatial patterns, implying that the decision to choose land use for a given parcel of land is strongly influenced by nonobserved factors in neighboring parcels. Moreover, results confirm that interdependencies among land use alternatives, accounted for in the spatial multinomial probit model by the correlation structure, are required for the estimation of land use decision.
    Date: 2008
  19. By: Ivanic, Maros; Martin, Will
    Abstract: In many poor countries, the recent increases in prices of staple foods raise the real incomes of those selling food, many of whom are relatively poor, while hurting net food consumers, many of whom are also relatively poor. The impacts on poverty will certainly be very diverse, but the average impact on poverty depends upon the balance between these two effects, and can only be determined by looking at real-world data. Results using household data for ten observations on nine low-income countries show that the short-run impacts of higher staple food prices on poverty differ considerably by commodity and by country, but, that poverty increases are much more frequent, and larger, than poverty reductions. The recent large increases in food prices appear likely to raise overall poverty in low income countries substantially.
    Keywords: Rural Poverty Reduction,Markets and Market Access,Population Policies,Achieving Shared Growth
    Date: 2008–04–01
  20. By: Neuwahl, Frederik; Löschel, Andreas; Mongelli, Ignazio; Delgado, Luis
    Abstract: This paper analyses the employment consequences of policies aimed to support biofuels in the European Union. The promotion of biofuel use has been advocated as a means to promote the sustainable use of natural resources and to reduce greenhouse gas emissions originating from transport activities on the one hand, and to reduce dependence on imported oil and thereby increase security of the European energy supply on the other hand. The employment impacts of increasing biofuels shares are calculated by taking into account a set of elements comprising the demand for capital goods required to produce biofuels, the additional demand for agricultural feedstock, higher fuel prices or reduced household budget in the case of price subsidisation, price effects ensuing from a hypothetical world oil price reduction linked to substitution in the EU market, and price impacts on agro-food commodities. The calculations refer to scenarios for the year 2020 targets as set out by the recent Renewable Energy Roadmap. Employment effects are assessed in an input-output framework taking into account bottom-up technology information to specify biofuels activities and linked to partial equilibrium models for the agricultural and energy sectors. The simulations suggest that biofuels targets on the order of 10-15% could be achieved without adverse net employment effects. In diesem Papier werden die Beschäftigungswirkungen der Förderung von Biokraftstoffen in der Europäischen Union untersucht. Die Förderung von Biokraftstoffen wird mit der nachhaltigen Nutzung natürlicher Ressourcen, der Reduktion von Treibhausgasemissionen im Transportsektor und der Verminderung der Erdölabhängigkeit und damit einhergehender erhöhter Energiesicherheit in Europa begründet. Bei der Quantifizierung der Beschäftigungseffekte der Biokraftstoffförderung in Europa wurden verschiedene Effekte berücksichtigt: gesteigerte Nachfrage nach Agrarerzeugnissen und Kapitalgütern zu Herstellung von Biokraftstoffen, höhere Kraftstoffpreise, Preisrückgänge auf dem Rohölmarkt infolge der Substitutionseffekte des Biokraftstoffeinsatzes und Preissteigerungen bei Agrarprodukten und Lebensmitteln. Dazu wird ein Input-Output Modell um die Biokraftstofferzeugung erweitert und mit Partialmodellen des Agrar- und Energiesektors gekoppelt. Als besonders wichtige Faktoren für potentielle Beschäftigungseffekte haben sich die Entwicklung einer auf den Weltmärkten führenden EU Biokraftstoffindustrie und der abschwächende Effekte der Biokraftstoffe auf den Ölpreis erwiesen. Die Simulationen legen nahe, dass sich die verschiedenen positiven und negativen Effekte weitgehend kompensieren und ein Biokraftstoffanteil von 10 – 15 Prozent ohne signifikant negative Beschäftigungseffekte erzielt werden kann.
    Keywords: Biofuels, Input-output, Employment
    Date: 2008
  21. By: Sandra Notaro; Alessandro Paletto
    Abstract: This paper focuses on the economic aspects of the protective role of forests against natural hazards, developing an estimation methodology applicable on a local scale. We identified the main variables that influence on a local level those forest attributes involved directly or indirectly in protection with the aim of zoning forests in homogeneous areas in terms of the level of protection they offer. Applying the replacement cost method a monetary value of the protective function can be estimated for homogeneous zones. The zoning permits the cost of replacement works to be calculated precisely according to the characteristics of the territory in each zone. The methodology was tested in the province of Trento (North East Italy) in an area where forests serve multiple functions and where the social objectives are intimately linked to those of indirect protection of the mountain slopes and direct protection of human activities. The estimation of the protective function of mountain forests enables environmental concerns to be included in economic decision-making by integrating economic and ecological approaches. It could be useful as a criterion for ranking different forest management options, i.e. forest management approaches based on the principle of close-to-nature forestry with management forms that focus on the productive function of forests. Accordingly it could enable forest managers to build consensus around management forms that take into account natural hazards and natural disturbances.
    Date: 2008
  22. By: Yu, Li; Hurley, Terrance; Kliebenstein, James; Orazem, Peter
    Abstract: We propose a strategy to identify the complementarity or substitutability among technology bundles. Under the assumption that alternative technologies are independent, we develop a hypothetical distribution of multiple technology adoptions. Differences between the observed distribution of technology choices and the hypothetical distribution can be subjected to statistical tests. Combinations of technologies that occur with greater frequency than would occur under independence are complementary technologies. Combinations that occur with less frequency are substitute technologies. This method is easily applied to simultaneous decisions regarding many technologies. We use the strategy to evaluate multiple technology adoptions on U.S. hog farms. We find that some technologies used in pork production are substitutable for one another while others are complementary. However, as the number of bundled technologies increases, they are increasingly likely to be complementary with one another, even if subsets are substitutes when viewed in isolation. This finding suggests that farmers have an incentive to adopt many technologies at once. Larger farms and farms run by more educated operators are the most likely to adopt multiple technologies. The complementarity among technologies in large bundles is contributing to a form of returns to scale that contributes to growth in average farm size.
    Keywords: technology, adoption, complementarity, substitutability, independence, hogs, pork, farm size, human capital
    JEL: O3
    Date: 2008–09–02
  23. By: Sandra Notaro; Alessandro Paletto; Roberta Raffaelli
    Abstract: The aim of this paper is to take stock of the situation regarding the main types of damage to forests and their respective economic consequences, with reference to a case study in the Italian Alps (Trentino province). Each kind of damage (wind and snow, defoliation, fire and tillage) has been analysed in terms of its impact on four forest functions (production, protection, tourism-recreation and carbon sequestration) and evaluated in monetary terms. Market value was used to estimate the production and carbon sequestration functions, replacement cost method for protection, and contingent valuation for tourism-recreation. Applying desk research on damage caused by the main biotic and abiotic factors to this particular case study led to estimate a annual damage of about € 1,633,595 equal to € 4.73 per hectar. This can be considered a lower bound estimate of possibly greater damage. Another interesting result emerged from the evaluation exercise is that the wealth of information produced through monitoring and scientific research in the last twenty years does not readily lend itself to economic analysis.
    Keywords: forest damage, forest functions, interaction between damage and functions, economic valuation, Alpine forests
    Date: 2008

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.