New Economics Papers
on Agricultural Economics
Issue of 2009‒02‒22
thirteen papers chosen by

  1. Reforming foodgrains management: Achieving food security with cost-effectiveness By A. Ganesh-Kumar; Ashok Gulati; Ralph Cummings, Jr
  2. Optimal Risk Sharing Under Limited Commitment: Evidence From Rural Vietnam By Patrick Eozenou
  3. Calibration of a Land Cover Supply Function Using Transition Probabilities By Ahmed, Syud Amer; Thomas Hertel; Ruben Lubowski
  4. The transferability and performance of payment-by-results biodiversity conservation procurement auctions: empirical evidence from northernmost Germany By Markus Groth
  6. Enhancing Agriculture and Energy Sector Analysis in CGE Modelling: An Overview of Modifications to the USAGE Model By R. Ashley P. Winston
  7. The Cost of Climate Change to the German Fruit Vegetation Sector By Claudia Kemfert; Hans Kremers
  8. On the impact of trust on consumer willingness to purchase GM food : evidence from a European survey By Rousselière, D.; Rousselière, S.
  9. Economic Value of Weather Forecasting Systems Information: A Risk Aversion Approach By Emilio Cerdá; Sonia Quiroga Gómez
  10. Access to land and rural poverty in developing countries: theory and evidence from Guatemala By Bandeira, Pablo; Sumpsi, Jose Maria
  11. The Capitalisation of Area Payments into Farmland Rents: Theory and Evidence from the New EU Member States By Pavel Ciaian; d'Artis Kancs
  13. The Effect of Fast Food Restaurants on Obesity By Janet Currie; Stefano DellaVigna; Enrico Moretti; Vikram Pathania

  1. By: A. Ganesh-Kumar (Indira Gandhi Institute of Development Research); Ashok Gulati (International Food Policy Research Institute, New Delhi); Ralph Cummings, Jr
    Abstract: This paper examines the efficacy of the current system of public foodgrains management and policies in promoting food security in the country. It argues that the system has outlived its usefulness, and that continuing with the same only stifles growth in foodgrains, with very little welfare benefits to the poor. The paper then presents a series of suggestions for reforming and modernizing the foodgrains management system in the country that would be welfare improving and also efficient, saving vast amounts of resources that can be used to invest in augmenting agricultural, especially foodgrains output.
    Keywords: Food grains management, Food policy, Food security
    JEL: O15 Q18
    Date: 2008–12
  2. By: Patrick Eozenou (European University Institute, Villa San Paolo, Via Della Piazzuola 43, 50133 Florence, Italy)
    Abstract: We use panel data from a household survey conducted in Vietnam to analyze the effectiveness of informal risk sharing arrangements in protecting household consumption from idiosyncratic income shocks. We focus on the effects of reported harvest shocks and of estimated shocks to agricultural revenues on adult equivalent consumption. The full-insurance allocation is tested against a specified alternative under which contracts are not fully enforceable ex-post. We find that farmers hit by unfavorable events stabilize their consumption level below the village aggregate level, irrespective of the level of realized shocks. At the same time, farmers experiencing more favorable shocks enjoy higher consumption in proportion to the realized value of idiosyncratic shocks. Together, these finding are consistent with a simple 2-period model of optimal risk sharing with one-sided limited commitment. These results hold for total consumption and for non-durable consumption. We also find however some evidence supporting the full insurance hypothesis for food consumption.
    Keywords: Consumption, Risk-sharing, Informal Insurance,Vietnam.
    JEL: D8 I3 O1
    Date: 2009
  3. By: Ahmed, Syud Amer; Thomas Hertel; Ruben Lubowski
    Abstract: An important question that arises frequently in the economic analysis of environmental and energy policies is, how does the supply of land across various uses change in response to policies? The GTAP modeling framework of Hertel (1997) addresses this question by determining the supply of land across different uses through a Constant Elasticity of Transformation (CET) supply function. In the standard GTAP model, the only type of land explicitly modeled is agricultural land, and this is distributed across uses with a one-level, CET function. However, in the GTAP-AEZ framework, data are available on a wider range of activities, including forestry (Sohngen et al., forthcoming). Given the recent availability of data on land cover (Ramankutty et al., 2007) and harvested cropland (Monfreda et al., forthcoming) the land supply decision is more naturally divided into the allocation of land cover across forestry, grazing and crops, followed by the allocation of harvested area across cropping activities. In this Research Memorandum, we focus on the former problem, namely the allocation of land cover between these three competing commercial uses. Naturally, the quality of the land cover responses produced by GTAP-based simulations is contingent on the value of the CET parameter. And the value of this parameter is likely to depend on the length of run for the analysis in question. This research memorandum describes the empirically based calibration strategy used to determine the value for the CET parameter, based on recent research in the United States. The following section reviews the theory of the CET parameter and how it is relevant for modeling land supply. Sections 3 and 4 describe the calibration methodology and data, while the final section discusses the calibration results.
    Date: 2009
  4. By: Markus Groth (Institute of Economics, University of Lüneburg)
    Abstract: Managed grasslands contribute in a number of ways to the biodiversity of European agricultural landscapes and provide a wide range of ecosystem services that are also of socio-economic value. Against the background of a rapid biodiversity loss in agricultural landscapes, increasing attention is being paid to farming practices that enhance ecosystem services. Therefore developing cost-effective conservation payment schemes is the main challenge facing present European agri-environmental policy. This paper deals with the transferability of a payment scheme that combines a payment-by-results approach with the use of discriminatory-price conservation procurement auctions in order to improve the cost-effectiveness of conservation schemes for grassland plant biodiversity. Hence the design, implementation and results of the adapted case-study payment scheme in the county Steinburg in the northernmost federal state of Germany (Schleswig-Holstein) will be focussed. Results concerning the ecological-effectiveness of the payment-by-results approach as well bid-prices and potential cost-effectiveness gains by the use of conservation procurement auctions point out that it was possible to transfer the payment scheme successfully to another region, whereby the adapted case-study even outperforms the original case-study.
    Keywords: agri-environmental policy, discriminatory-price auction, ecological services, experimental economics, multi-unit auction, payment-by-results, plant biodiversity, rural development.
    JEL: C93 D44 H41 Q24 Q28 Q57 R52
    Date: 2009–02
  5. By: Perry, Miles
    Abstract: World trade in biomass is likely to increase in the years up to 2020 as imports are required to meet the demand created (directly or indirectly) by policy measures such as the EU Biofuels Directive. This paper assesses the macroeconomic consequences such large-scale trade for the exporting country, using a computable general equilibrium (CGE) model of Argentina. Given an exogenous increase in world prices for biomass, the model finds that production shifts towards biomass and away from other sectors. Implications of this include changes in the relative prices of goods and the purchasing power of labour. Price rises are largest in land-intensive sectors of the economy and the overall purchasing power of labour is adversely affected since biomass sectors are among the least labour intensive. When expansion of the agricultural area is permitted, relative price changes become less pronounced. However, expansion of the agricultural frontier may have adverse environmental impacts, including lowering the net GHG savings attributable to the biomass produced.
    Keywords: CGE; Biofuels; Argentina
    JEL: F18 Q17 Q5 D58
    Date: 2008–06–05
  6. By: R. Ashley P. Winston
    Abstract: This paper describes some key developments to USAGE, a dynamic computable general equilibrium (CGE) model of the US economy, aimed at enhancing its utility in agricultural and bio-fuels/bio-energy analysis. The USAGE model is a large-scale dynamic CGE model of the US economy developed by the Centre of Policy Studies at Monash University in collaboration with the US International Trade Commission (USITC), and has been updated and modified for this study with assistance from the Economic Research service of the US Department of Agriculture (ERS-USDA). Additional sectoral detail and theory are developed and applied to USAGE, including a detailed modeling of land use in US agriculture involving 72 types of land, the explicit modeling of TRQ policies and by-product biomass supply (such as crop residues) using nested complementarity relationships, and careful accounting for subsidies in US ethanol production and their effects on public revenue streams.
    Keywords: USAGE, US agriculture, by-product biomass supply, complementarity relationships, ethanol production
    JEL: Q24 Q42 Q48 C68
    Date: 2009–01
  7. By: Claudia Kemfert; Hans Kremers
    Abstract: This paper applies the concept of damage coefficients introduced in Houba and Kremers (2008) to provide an estimate of the cost of climate change - in particular the cost of changes in mean regional temperature and precipitation - to the fruit vegetation sector. We concentrate on the production of apples in the German 'Alte Land' region. The estimated cost of climate change on apple-growing in the 'Alte Land' is dependent on the assumptions regarding developments in the rentability of land not related to climate change in the fruit sector.
    Keywords: fruit vegetation, Alte Land, climate change, land productivity, land rentability, cost of climate change
    JEL: D01 D21 D24 D61 D62 Q12 Q24 Q51 Q54 R32
    Date: 2009
  8. By: Rousselière, D.; Rousselière, S.
    Abstract: Many researches try to explain consumer’s acceptance and opposition to GMO with focus on social factors. With a causal or an associationist theoretical model, different authors put forward the notion of trust as determining to define the position of individuals. Because as in the present case we could fear the simultaneity of decisions (trust, risk perceptions and acceptability), we have to take into account this endogeneity risk. With data from a European Survey (Eurobarometer 64.3 2005), multivariate probit was used to specify the importance of trust in the various organizations involved in the public debate on the acceptance of genetically modified foods on behalf of the “ordinary citizens”. We discuss this portrait of European citizens that shows them to be increasingly optimistic about biotechnology, while being divided on this question.
    JEL: C35 D12 L66
    Date: 2009
  9. By: Emilio Cerdá; Sonia Quiroga Gómez
    Abstract: Extreme meteorological events have increased over the last decades and it is widely accepted that it is due to climate change (IPCC, 2007; Beniston et al., 2007). Some of these extremes, like drought or frost episodes largely affect agricultural outputs and risk management becomes crucial. The goal of this paper it is to analyze farmers’ decisions about risk management, taking into account climatological and meteorological information. We consider a situation in which the farmer, as part of crop management, has available a technology to protect the harvest from weather effects. This approach has been used by Murphy et al. (1985), Katz and Murphy (1990 and 1997) and others in the case that the farmer maximizes the expected returns. In our model we introduce the attitude towards risk. Thus we can evaluate how the optimal decision is affected by the absolute risk aversion coefficient of Arrow-Pratt, and compute the economic value of the information in this context, while proposing a measure to estimate the amount of money that the farmer is willing to pay for this information in terms of the certainty equivalent.
    Date: 2009–01
  10. By: Bandeira, Pablo; Sumpsi, Jose Maria
    Abstract: The lack of consensus on the social and economic impact from access to land continues to generate heated political and academic debates. The existing empirical literature does not consider possible opportunity costs, factors that can affect this impact and different time horizons. Toward solving this problem, this article elaborates a theoretical argument on the potential benefits, opportunity costs and asset accumulation dynamics that may derive from gaining access to or increasing the size of rural land in developing countries. Empirical tests of the argument and poverty reduction assessment are then carried out using household data from Guatemala. Finally, policy and future research implications are derived.
    Keywords: Access to land; rural poverty; off-farm income; Guatemala.
    JEL: Q15 O12
    Date: 2009–01–12
  11. By: Pavel Ciaian; d'Artis Kancs
    Abstract: This study investigates the impact of the SAPS (Simplified Area Payment Scheme) on rental land values in seven New EU Member States (NMS). Using the FADN farm level panel data with 20,930 observations from 2004 and 2005 we are able to control for unobserved heterogeneity, simultaneity, and omitted variable bias, which often distort the incidence measures. According to our results, the SAPS has a positive and statistically significant impact on land rents in the NMS. However, the effect is smaller than theoretically predicted. Land rents capture only 0.19 of the marginal Euro of the SAPS. Taking into account the level of land renting in the NMS, around 10 percent of the total value of SAPS payments benefit non-farming land owners through higher farmland rental prices. Because the share of rented land is higher for corporate than for individual farms, family farms will likely benefit more from the SAPS than corporate farms.
    Keywords: Area payments, land capitalisation, land market.
    JEL: Q11 Q12 Q15 Q18 P32
    Date: 2009–02–04
  12. By: Elsa Martin (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); Hubert Stahn (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: The point of departure of this work is the lack of coordination of European environmental internalizing policies. At the national level, while the water authority generally has to internalize the negative externalities of water extraction, the agricultural one aims at encouraging environmentally friendly one. More locally, considering an aquifer as being the only vector of environmental effects, we show that the externalities occurring can compensate themselves in such a way that the open-loop Nash game played by the two distinct authorities in charge of these policies is inefficient. In this special case, we propose to implement a coordinated policy based on a double fiscal scheme also showed budget balanced.
    Keywords: water policy; agricultural policy; externalities
    Date: 2009–02–12
  13. By: Janet Currie; Stefano DellaVigna; Enrico Moretti; Vikram Pathania
    Abstract: We investigate the health consequences of changes in the supply of fast food using the exact geographical location of fast food restaurants. Specifically, we ask how the supply of fast food affects the obesity rates of 3 million school children and the weight gain of over 1 million pregnant women. We find that among 9th grade children, a fast food restaurant within a tenth of a mile of a school is associated with at least a 5.2 percent increase in obesity rates. There is no discernable effect at .25 miles and at .5 miles. Among pregnant women, models with mother fixed effects indicate that a fast food restaurant within a half mile of her residence results in a 2.5 percent increase in the probability of gaining over 20 kilos. The effect is larger, but less precisely estimated at .1 miles. In contrast, the presence of non-fast food restaurants is uncorrelated with obesity and weight gain. Moreover, proximity to future fast food restaurants is uncorrelated with current obesity and weight gain, conditional on current proximity to fast food. The implied effects of fast-food on caloric intake are at least one order of magnitude smaller for mothers, which suggests that they are less constrained by travel costs than school children. Our results imply that policies restricting access to fast food near schools could have significant effects on obesity among school children, but similar policies restricting the availability of fast food in residential areas are unlikely to have large effects on adults.
    JEL: I1 I18 J0
    Date: 2009–02

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