New Economics Papers
on Agricultural Economics
Issue of 2008‒12‒21
fourteen papers chosen by

  1. Managing Agricultural Price Risk in Developing Countries By Julie Dana; Christopher L. Gilbert
  2. The 30-Year Challenge: Agriculture's Strategic Role in Feeding and Fueling a Growing World By Thompson, Wyatt
  3. Dual use of budgeting in uncertainty contexts: Explorative study of senior sales and marketing managers By Löning, Hélène; Besson, M.; Mendoza, Carla
  4. Food Price Inflation and Children's Schooling By Michael Grimm
  5. The Economics of Climate Change Impacts and Policy Benefits at City Scale: A Conceptual Framework By Stéphane Hallegatte; Fanny Henriet; Jan Corfee-Morlot
  6. How to Understand High Food Prices By Christopher L. Gilbert
  7. Fair Trade - Is It Really Fair? By Tomas Konecny; Jan Myslivecek
  9. Is an Environmental Management System able to influence environmental and competitive performance? The case of the Eco-Management and Audit Scheme (EMAS) in the European Union By Francesco Testa; Fabio Iraldo
  10. Are Asset Returns Predictable from the National Accounts? By Pierre Lafourcade
  11. The Farm Level Economic Impacts of Increased Cash Lease Rates By Raulston, J. Marc; Knapek, George M.; Richardson, James W.; Outlaw, Joe L.; Anderson, David P.
  12. A Meta-Analysis of Contingent Valuation Studies in Coastal and Near-Shore Marine Ecosystems By Shuang Liu; David I Stern
  13. Benchmark forecasts for climate change By Green, Kesten C; Armstrong, J Scott; Soon, Willie
  14. Modelling preference heterogeneity in stated choice data: an analysis for public goods generated by agriculture By Colombo, Sergio; Hanley, Nick; Louviere, Jordan

  1. By: Julie Dana; Christopher L. Gilbert
    Abstract: We survey the experience of risk management in developing country agricultural supply chains. We focus on exposure, instruments, impediments to access and developing country futures markets. We draw on lessons from experience over the past two decades.
    Keywords: Commodities, Risk Management, Developing Countries
    JEL: Q13 Q14
    Date: 2008
  2. By: Thompson, Wyatt
    Abstract: To develop this report, Farm Foundation drew on the insights of leaders from business, government, non-governmental organizations and academia. We began with a small group of individuals whose discussions defined the 30-year challenge in six broad categories: 1. global financial markets and recession, 2. global food security, 3. global energy security, 4. climate change, 5. competition for natural resources, and 6. global economic development. Farm Foundation then invited a broader group of leaders to explore each of the six categories, identifying critical strategic problems, alternative strategies and potential policies. Those discussions are the basis of this report. The topics and options presented here are not intended to be inclusive; rather they are a template from which to expand discussion and debate. This is not a consensus document and it does not make recommendations. It does reflect the diverse opinions expressed by project participants, their analysis of the problems which must solved to meet the 30-year challenge, and their assessment of some potential options to deal with those problems.
    Keywords: Agricultural and Food Policy, Agricultural Finance, Environmental Economics and Policy, Food Security and Poverty, International Development, Resource /Energy Economics and Policy,
    Date: 2008–12
  3. By: Löning, Hélène; Besson, M.; Mendoza, Carla
    Abstract: Based on prior accounting literature and Simons’ framework (1990, 1995), the authors explore the use of budgets in PEU situations in a qualitative study. They conducted a field-based study and interviewed 14 senior sales and marketing managers from various industries, using projective techniques imported from psychological research.
    Keywords: budgeting; uncertainty; perceived environmental uncertainty (PEU); interactive control system (ICS); sales and marketing managers
    JEL: D81
    Date: 2008–04–01
  4. By: Michael Grimm
    Abstract: I analyze the impact of food price inflation on parental decisions to send their children to school. Moreover, I use the fact that food crop farmers and cotton farmers were exposed differently to that shock to estimate the income elasticity of school enrolment. The results suggest that the shock-induced loss in purchasing power had an immediate effect on enrolment rates. Instrumental variable estimates show that the effect of household income on children's school enrolment is much larger than a simple OLS regression would suggest. Hence, policies to expand education in Sub-Saharan Africa, should not neglect the demand side.
    Keywords: Education, Household Income, Inflation, Aggregate Shocks, Africa
    JEL: I21 O12 Q12
    Date: 2008
  5. By: Stéphane Hallegatte; Fanny Henriet; Jan Corfee-Morlot
    Abstract: Climate change has become a priority issue in global environmental governance and cities are important players. For over three decades, the OECD has been actively supporting member and non-member countries to design environmental policies that are both economically efficient and effective at achieving their environmental objectives.1 Through peer reviews of policy implementation, the OECD helps governments to improve their collective and individual environmental performance, through sound economic and policy analysis and dialogue on how to establish and to achieve climate change goals. Climate change has been on the agenda since the late 1980s at the OECD, where we provide a forum for countries to, discuss and develop a shared understanding of the key policy challenges as well as to assess performance and identify good practice in the design and implementation of climate policies. Today the OECD is actively working with governments to highlight the role of cities to deliver cost-effective policy responses to climate change. A number of projects at the OECD are advancing the understanding of the roles that cities can play to respond to efficiently and effectively to climate change. This report is one in a series under the OECD Environment Directorate’s project on Cities and Climate Change. The project aims to explore the city-scale risks of climate change and the local benefits of both adaptation policies and (global) mitigation strategies.
    Keywords: sustainable development, government policy, climate change, global warming, natural disasters, regional economics, General Macroeconomics, Regional, Urban and rural Analyses
    JEL: Q01 Q51 Q54 Q56 Q58 R00
    Date: 2008–12–10
  6. By: Christopher L. Gilbert
    Abstract: Commodity price booms are best explained by macroeconomic rather than market-specific factors. I argue that the rise in food prices over 2007 and the first half of 2008 should be seen as part of the wider commodity boom which is largely the result of rapid economic growth in China and throughout Asia in a context of loose money and in which, because of previous low investment, supply was inelastic. The demand for grains and oilseeds as biofuel feedstocks was the main cause of the price rise but macroeconomic and financial factors explain its extent. The futures market may be an important monetary transmission mechanism, but it is commodity investors, not speculators, who, by investing in commodities as an asset class, may have generalized prices rises across markets.
    Keywords: Food prices, commodity prices, money, futures markets
    JEL: Q11
    Date: 2008
  7. By: Tomas Konecny; Jan Myslivecek
    Abstract: One of the arguments against the Fair Trade scheme is that the guaranteed minimum price tends to depress world prices and thus the incomes of non-participating farmers (e.g. The Economist, 2006). We develop a model that distinguishes between the impact of the introduction of a Fair Trade market per se and the effect of minimum price policies given that a Fair Trade market actually exists. The model suggests that the claims against Fair Trade might not be correct. The introduction of a Fair Trade market may increase the incomes of both participating and non-participating farmers. The minimum contracting price as part of Fair Trade standards, however, precludes the full realization of the program’s potential benefits. The minimum price also paradoxically increases the profits of the middlemen whose local monopsony power the Fair Trade scheme originally aimed to retrench. Furthermore, the total surplus generated by Fair Trade cooperatives declines as the guaranteed price increases.
    Keywords: Certification, regulation, price setting, coffee, Fair Trade, monopsony
    JEL: D18 D21 D43 D45 D71 J51 Q17 Q56
    Date: 2008–09
  8. By: Sushil Mohan; Bill Russell
    Abstract: Over the past thirty five years coffee markets have been subject to market controls and regulations culminating in the liberalisation of coffee markets in the early 1990s. This paper models the relationship between the producers’ and world prices of coffee in Brazil, Guatemala and India allowing for the effects of changes in market structures. We find that liberalisation has benefited producers substantially in terms of higher real coffee prices and a higher share of the world price of coffee.
    Keywords: coffee prices, cointegration, coffee markets, liberalisation, coffee producers,transfer costs
    JEL: Q11 Q17 Q18 C32 C52 F13 F14
    Date: 2008–12
  9. By: Francesco Testa (Scuola Superiore Sant'Anna of Pisa); Fabio Iraldo (Scuola Superiore Sant'Anna of Pisa & IEFE – Institute for Environmental and Energy Policy and Economics, Bocconi University; Scuola Superiore Sant'Anna of Pisa & IEFE – Institute for Environmental and Energy Policy and Economics, Bocconi University)
    Abstract: The EMAS Regulation (Reg 761/01 EC) is an EU scheme for the implementation of an Environmental Management System (EMS) by any organization, implemented by the European Commission since the year 1993. The EMS has been originally proposed both by the European Commission and by ISO as the frontrunner of a series of policy tools that were conceived to enable companies to simultaneously pursue environmental objectives and competitive targets (in a synergetic way). Based on the unique dataset of the EVER project, this paper investigates whether or not an EMS implemented within the EMAS Regulation has an effect on firm performance both from an environmental and a competitive point of view. The econometric analysis shows a positive impact of well-designed environmental management system on environmental performance and, as a consequence, on technical and organizational innovations. Effects on other competitive variable as market performance, resource productivity and intangible asset are not strongly supported
    Date: 2008–12–12
  10. By: Pierre Lafourcade
    Abstract: Rational expectations and the logic of budget constraints imply that the predictability of asset returns hinges on the stability and persistence of households' ratio of saving to asset wealth, not of consumption to total wealth. This misalignment undermines the rationale for Lettau and Ludvigson's estimated cay, a stationary but unduly loose approximation to the true but non-mean-reverting cay. Definitional considerations on saving, assets and returns suggest rehabilitating money in the households'  flow of funds identity. Accounting for money balances in cay restores stationarity, but at the cost of drastically lower persistence and predictive potential. 
    JEL: E01 E21 E41
    Date: 2008–12
  11. By: Raulston, J. Marc; Knapek, George M.; Richardson, James W.; Outlaw, Joe L.; Anderson, David P.
    Abstract: Higher commodity price expectations have led to increases in cash lease rates nationwide. This study evaluates the farm level impacts of higher cash lease rates. Current levels of cash rents along with land tenure arrangements of specific farms are instrumental in determining the impacts of increases in lease rates.
    Keywords: Farm Management, Land Economics/Use,
    Date: 2008
  12. By: Shuang Liu; David I Stern (CSIRO Entomology, Australia)
    Abstract: The ecosystem services provided by coastal and near-shore marine systems contribute significantly to human welfare. However, studies that document values of these services are widely scattered in the peer-reviewed literature. We collected 39 contingent valuation papers with 120 observations to conduct the first meta-analysis of the ecosystem service values provided by the coastal and near-shore marine systems. Our results show that over ¾ of the variation in Willingness to Pay (WTP) for coastal ecosystem services could be explained by variables in commodity, methodology, and study quality. We also used the meta-regression model to predict out-of-sample WTPs and the benefit transfer result showed that the overall median transfer error was 57%. Based on such results, one could argue that such meta-analyses can provide useful guidance regarding at least the general magnitudes of welfare effects. However, we also caution against the application of such a result in a broader context of benefit transfer as it is derived from a limited amount of data, and it may suffer from some degree of measurement error, generalization error, and publication selection error. Lastly, we discuss possible ways of minimizing these errors.
    Keywords: ecosystem services, valuation, meta-analysis, coastal
    JEL: Q25 Q51 Q57
    Date: 2008–12
  13. By: Green, Kesten C; Armstrong, J Scott; Soon, Willie
    Abstract: We assessed three important criteria of forecastability—simplicity, certainty, and variability. Climate is complex due to many causal variables and their variable interactions. There is uncertainty about causes, effects, and data. Using evidence-based (scientific) forecasting principles, we determined that a naïve “no change” extrapolation method was the appropriate benchmark. To be useful to policy makers, a proposed forecasting method would have to provide forecasts that were substantially more accurate than the benchmark. We calculated benchmark forecasts against the UK Met Office Hadley Centre’s annual average thermometer data from 1850 through 2007. For 20- and 50-year horizons the mean absolute errors were 0.18°C and 0.24°C. The accuracy of forecasts from our naïve model is such that even perfect forecasts would be unlikely to help policy makers. We nevertheless evaluated the Intergovernmental Panel on Climate Change’s 1992 forecast of 0.03°C-per-year temperature increases. The small sample of errors from ex ante forecasts for 1992 through 2008 was practically indistinguishable from the naïve benchmark errors. To get a larger sample and evidence on longer horizons we backcast successively from 1974 to 1850. Averaged over all horizons, IPCC errors were more than seven-times greater than errors from the benchmark. Relative errors were larger for longer backcast horizons.
    Keywords: backcasting; climate model; decision making; ex ante forecasts; out-of-sample errors; predictability; public policy; relative absolute errors; unconditional forecasts
    JEL: C53 O2 Q54
    Date: 2008–12–12
  14. By: Colombo, Sergio; Hanley, Nick; Louviere, Jordan
    Abstract: Stated choice models based on the random utility framework are becoming increasingly popular in the applied economics literature. The need to account for respondents' preference heterogeneity in such models has motivated researchers in agricultural, environmental, health and transport economics to apply random parameter logit and latent class models. In most of the published literature these models incorporate heterogeneity in preferences through the systematic component of utility. An alternative approach is to investigate heterogeneity through the random component of utility, and covariance heterogeneity models are one means of doing this. In this paper we compare these alternative ways of incorporating preference heterogeneity in stated choice models and evaluate how the selection of approach affects welfare estimates in a given empirical application. We find that a Latent Class approach fits our data best but all the models perform well in terms of out-of-sample predictions. Finally, we discuss what criteria a researcher can use to decide which approach is most appropriate for a given data set.
    Keywords: choice experiments; covariance heterogeneity model; agri-environmental policy; landscape values; latent class model; preference heterogeneity; random parameter logit model; error component models; welfare measure s
    Date: 2008–12

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.