New Economics Papers
on Agricultural Economics
Issue of 2009‒03‒14
eighteen papers chosen by

  1. Buy local, pollute less: What drives households to join a community supported farm? By Douadia Bougherara; Gilles Grolleau; Naoufel Mzoughi
  2. Causes and Implications of the Food Price Surge By Meyers, William H.; Meyer, Seth
  3. Future Food Scarcities? Global Causes, Local Consequences, October 23, 2008, University of Minnesota, Summary By Ghosh, Koel; Rush, Jeff; Kinsey, Jean; Jore, Lisa
  4. Agricultural Arbitrage and Risk Preferences By Jeffrey LaFrance; Rulon Pope; Richard Just
  5. Global income distribution and poverty in the absence of agricultural distortions By Bussolo, Maurizio; De Hoyos, Rafael; Medvedev, Denis
  6. The Effect of Fast Food Restaurants on Obesity By Currie, Janet; DellaVigna, Stefano; Moretti, Enrico; Pathania, Vikram
  7. Min-max regret versus gross margin maximization in arable sector modeling By Stelios Rozakis; Akin Kazakci; Jean-Claude Sourie
  8. A model of nutrition information search with an application to food labels By Drichoutis, Andreas; Lazaridis, Panagiotis; Nayga, Rodolfo
  9. Strategic Group Formation in the Mekong Delta - The Development of a Modern Hydraulic Society By Evers, Hans-Dieter; Benedikter, Simon
  10. The Role of Media in Shaping the Consumers’ Food Risk Perception and Behavior: A Case Study of Spinach Recall By Rimal, Arbindra; Onyango, Benjamin; Miljkovic, Dragan; Hallman, William
  11. Public, private and nonprofit regulation for environmental quality By Lucie Bottega; Jenny De Freitas
  12. The Impact of Trade and Economic Growth on the Environment: Revisiting the Cross-Country Evidence By Awudu Abdulai; Linda Ramcke
  13. Environmental Regulation and Investment: Evidence from European Industries By Andrea M. Leiter; Arno Parolini; Hannes Winner
  14. Improving Flood Insurance and Flood Risk Management: Insights from St. Louis, Missouri By Kousky, Carolyn; Kunreuther, Howard C.
  15. Duality Theory for Variable Costs in Joint Production By Jeffrey LaFrance; Rulon Pope
  16. Insuring Corn, Soybeans, and Wheat; Yield Ratios and Income By Diersen, Matthew; Dodson, Tia
  17. The Generalized Quadratic Expenditure System By Jeffrey LaFrance; Rulon Pope
  18. Another look at the distribution of direct payments: The link with part-time farming By Laure Latruffe; Stefan Mann

  1. By: Douadia Bougherara; Gilles Grolleau; Naoufel Mzoughi
    Abstract: This paper examines which factors determine the participation of households in long term contracting with local farmers. Are households motivated by reducing the environmental impacts of their food consumption? A discrete-choice model of community supported agriculture (CSA) participation is applied to a sample of 264 French households. The findings suggest that difficult-to-measure attributes, notably environmental considerations play a major role in explaining CSA participation.
    Keywords: community supported agriculture; food supply; transaction cost economics
    JEL: D13 D23 Q13
    Date: 2009
  2. By: Meyers, William H.; Meyer, Seth
    Abstract: This paper analyzes the food price surge of 2005 to 2008 in order to better understand the factors causing higher and more volatile food prices during this period, to ascertain the relative importance and possible persistence of the different factors, and to suggest possible implications for future market behavior and policy reactions.
    Keywords: Agricultural and Food Policy,
    Date: 2008–12
  3. By: Ghosh, Koel; Rush, Jeff; Kinsey, Jean; Jore, Lisa
    Abstract: On October 23, 2008, The Food Industry Center in collaboration with the Center for International Food and Agricultural Policy presented the symposium, “Future Food Scarcities? Global Causes, Local Consequences.†Leaders from the food industry, academia and the public sector discussed the causes and consequences of rising food prices and their impact on food supplies, food companies, consumption, health and public policy in the United States and around the globe.
    Keywords: Food Security and Poverty,
    Date: 2008–10
  4. By: Jeffrey LaFrance; Rulon Pope; Richard Just (School of Economic Sciences, Washington State University)
    Abstract: A structural inter-temporal model of agricultural asset arbitrage equilibrium is developed and applied to agriculture in the North-Central region of the U.S. The data is consistent with a unifying level of risk aversion. The levels of risk aversion are more plausible than previous estimates for agriculture. However, the standard arbitrage equilibrium is rejected; perhaps this is due to the period and the shortness of the period studied.
    Keywords: arbitrage, risk aversion, agriculture
    JEL: G11 Q12
    Date: 2008–12
  5. By: Bussolo, Maurizio; De Hoyos, Rafael; Medvedev, Denis
    Abstract: This paper assesses the potential impacts of the removal of agriculture trade distortions using a newly developed dataset and methodological approach for evaluating the global poverty and inequality effects of policy reforms. It finds that liberalization of agriculture and food could increase global extreme poverty (US$1 a day) by 0.2 percent and lower moderate poverty (US$2 a day) by 0.3 percent. Beneath these small aggregate changes, most countries witness a substantial reduction in poverty while South Asia-where half of the world's poor reside-experiences an increase in extreme poverty incidence due to high rates of protection afforded to unskilled-intensive agricultural sectors. The distributional changes are likely to be mild, but exhibit a strong regional pattern. Inequality is likely to fall in regions such as Latin America, which are characterized by high initial inequality, and rise in regions like South Asia, characterized by low initial inequality.
    Keywords: Economic Theory&Research,Rural Poverty Reduction,Population Policies,Inequality,Achieving Shared Growth
    Date: 2009–03–01
  6. By: Currie, Janet; DellaVigna, Stefano; Moretti, Enrico; Pathania, Vikram
    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.
    Keywords: Food Consumption/Nutrition/Food Safety, Health Economics and Policy,
    Date: 2009–02
  7. By: Stelios Rozakis (Agricultural Economics and Rural Development Department, Agricultural University of Athens); Akin Kazakci (LAMSADE, Universite de Paris X-Dauphine); Jean-Claude Sourie (Production Economics Group, S²A²E², INRA-Grignon)
    Abstract: "A sector model presented in this article, uses about 200 representative French cereal-oriented farms to estimate policy impacts by means of mathematical modeling. Usually, such models suppose that farmers intend to maximize expected gross margin. This rationality hypothesis however seems hardly justifiable, especially these days, when gross margin variability due to European Common Agricultural Policy changes may become significant. Increasing uncertainty introduces bounded rationality to the decision problem so that crop gross margins may be better approximated by interval rather than by expected (precise) values. The initial LP problem is specified as an “Interval Linear Programming (ILP)”. We assume that farmers tend to decide upon their surface allocation prudently in order to get through with minimum loss, which is precisely the rationale underlying the minimization of maximum regret decision criterion. Recent advances in operations research, namely Mausser and Laguna algorithms, are exploited to implement the min-max regret criterion to arable agriculture ILP. The validation against observed crop mix proved that as uncertainty increases about 40% of the farmers adopt the min-max regret decision rule instead of the gross margin maximization."
    Keywords: Interval Linear Programming, Min-Max Regret, Common Agricultural Policy, Arable cropping, France
    JEL: C61 D81 Q18
    Date: 2009
  8. By: Drichoutis, Andreas (Dept. of Agricultural Economics and Rural Development, Agricultural University of Athens); Lazaridis, Panagiotis (Dept. of Agricultural Economics and Rural Development, Agricultural University of Athens); Nayga, Rodolfo (Dept. of Agricultural Economics and Agribusiness, University of Arkansas)
    Abstract: Due to the dramatic rise of several diet-related chronic diseases, nutrition information search behaviours have received significant interest from both the scientific and non-scientific literature. No other known paper in economics, however, has examined from a theoretical perspective the acquisition of nutrition information as a health enhancing activity. We modify the standard health capital model (Grossman, 1972) to allow the time spent on nutrition information search to be considered within the context of a time allocation decision. We then collected extensive primary data based on the theoretical model and used these to test the model.
    Keywords: nutrition information, food labels, health production
    JEL: D1 I1
    Date: 2009
  9. By: Evers, Hans-Dieter; Benedikter, Simon
    Abstract: The lower Mekong Delta, one of the largest river deltas in Asia, is a landscape shaped by the waters of the Mekong River that flows, as last part of its long way from the Tibetan Plateau to the South Chinese Sea, through a dense river and canal network in the Southwest of Vietnam. People in this area are, traditionally, exposed to a water-shaped environment and have lived for generations in adaptation to their natural surrounding without much human interference into the complex natural hydraulic system of the delta. However, this has changed dramatically during recent decades when hydraulic management started to become a key issue for the development of the lower Mekong Delta constantly, in particular with respect to the agricultural sector, which is the backbone of the delta’s economy. After the Second Indochinese War ended in 1975 the delta started to shift from human adaption to human control, transforming itself into what Wittfogel has described as a hydraulic society. This was mainly due to the new socialist government’s policy of rapid agricultural extension and growing endeavours in hydraulic management for fostering irrigated rice production. By now, in many places of the delta hydraulic works such as additional canals, dykes and sluices have been set up, constructed for regulating water flows. Technical innovations in hydraulic management and agricultural production have not only had significant impact on the delta’s environment and ecology, but also have triggered social transformation, in particular the appearance of new social groups struggling for access to resources and power. This paper intends to analyzes recent trends of social development and water management in the Mekong Delta from a scientific approach that is based on two social theories, firstly “strategic group analysis”, and secondly selected core aspects of Wittfogel’s social theory of “hydraulic society”. By presenting recently collected data, it is illustrated how the Mekong Delta has been transformed into a modern hydraulic society, in which certain strategic groups emerged as a consequence of growing activities in hydraulic management and agricultural-based economic growth. More specifically, the paper aims to give an overview of strategic group development in the delta by putting a strong focus on the process of forming a state bureaucracy of hydraulic management and the appearance of hydraulic construction companies as its clients. The paper shows how the strategic alliance between both groups has increased the chances for mutually appropriating government funds spent on hydraulic works and how this has caused ecologically and socially far-reaching impacts for the Mekong Delta.
    Keywords: Vietnam; Mekong Delta; strategic groups; hydraulic society; social transformation and power; water management; hydraulic bureaucracy
    JEL: D73 Q25 A14
    Date: 2009–02–10
  10. By: Rimal, Arbindra; Onyango, Benjamin; Miljkovic, Dragan; Hallman, William
    Abstract: A clear understanding of consumers’ perception and attitude toward food risk and their behavior to food recall is important in order to develop an effective crisis management program at the firm level as well as at the government level. This study will develop food risk profiles of US consumers based on their perceived food safety risk and attitude toward food safety. The role of media usage in shaping the risk profile will be examined. The preliminary results suggest that the risk profiles of households were shaped by media usage. While the “accountables†were more likely to search internet or get news from internet, the “conservatives†usually watched news on local TV.
    Keywords: Agribusiness, Food Consumption/Nutrition/Food Safety,
    Date: 2008–12–21
  11. By: Lucie Bottega (LAMETA, Université de Montpellier 1); Jenny De Freitas (Universitat de les Illes Balears)
    Abstract: This paper studies the welfare implications of different institutions certifying environmental quality supplied by a monopoly. The monopolist can voluntarily certify the quality of the product through an eco-label provided either by an NGO or a for-proft private certifier (PC). The NGO and the PC may use advertisement to promote the label. We compare the NGO and PC regimes with the regime where the regulator imposes a minimum quality standard. The presence of a private certifier in the market decreases the scope for public intervention. The availability of green advertisement reinforces the above result.
    Keywords: Environmental quality, certification, green advertisement, NGO, self-regulation.
    JEL: D62 L15 L31 L51 Q50
    Date: 2009
  12. By: Awudu Abdulai; Linda Ramcke
    Abstract: This paper explores the interrelations between economic growth, international trade and environmental degradation both theoretically and empirically. Panel data from developed and developing countries for the period of 1980 to 2003 is used and previous critique, especially on the econometric specification, is embedded. In particular, it is not assumed that there is a single link for all countries. Several environmental factors and one sustainability indicator are analyzed for the full sample, regions and income groups. The results indicate that there is an Environmental Kuznets Curve (EKC) for most pollutants, but with several reservations. None of the various hypotheses that concern the link between trade and environmental degradation can be entirely confirmed. If anything, there is modest support for the Pollution Haven Hypothesis (PHH). In addition, there are signs that trade liberalization might be beneficial to sustainable development for rich countries, but harmful to poor ones. However, a sustainable development path is particularly important for developing countries, as the poor are most exposed and vulnerable to the health and productivity losses associated with a degraded environment. Given that developing countries do not usually have the institutional capacities to set up the appropriate environmental policies, it is on developed countries to take the lead in addressing environmental degradation issues and assisting developing countries
    Keywords: sustainable development, Pollution Haven Hypothesis, Environmental Kuznets curve, Adjusted Net Saving
    JEL: F18 Q56
    Date: 2009–03
  13. By: Andrea M. Leiter; Arno Parolini; Hannes Winner
    Abstract: This paper contributes to the empirical literature on the relationship between environmental regulation and firm behavior. In particular, we ask whether and how strongly investment decisions of firms respond to stringency in environmental regulation. Environmental stringency is measured as (i) an industry's total current expenditure on environmental protection, and (ii) a country's revenue from environmental taxes. Focusing on European industry level data between 1995 and 2005, we estimate the differential impact of environmental stringency on four types of investment: gross investment in tangible goods, in new buildings, in machinery, and in `productive' investment (investment in tangible goods minus investment in abatement technologies). Both environmental variables enter positively, and their quadratic terms exhibit significantly negative parameter estimates. This, in turn, indicates a positive but diminishing impact of environmental regulation on investment.
    Keywords: Investment, environmental regulation, pollution abatement costs
    JEL: D92 H23 Q52
    Date: 2009–03
  14. By: Kousky, Carolyn (Resources for the Future); Kunreuther, Howard C.
    Abstract: This paper examines the history of St. Louis, Missouri in coping with flood risk over the past 15 years, with a focus on flood insurance. Six challenges to the continued management of riverine flood risk are identified and discussed. They are (1) many property owners don’t buy flood insurance, (2) people underestimate flood risk, (3) we need better flood maps, (4) we have a “love affair” with levees, (5) flood risk is increasing over time, and (6) we take deep pride in rebuilding after a disaster. Recommendations for how to improve flood risk management in light of these challenges are offered. Focused attention is given to the possibility of long-term flood insurance contracts tied to long-term loans for risk-mitigating activities in overcoming the six challenges.
    Keywords: disaster insurance, National Flood Insurance Program, risk, floods
    JEL: Q54 G22
    Date: 2009–03–03
  15. By: Jeffrey LaFrance; Rulon Pope (School of Economic Sciences, Washington State University)
    Abstract: Duality methods for incomplete systems of consumer demand equations are adapted to the dual structure of variable cost functions in joint production. This allows the identification of necessary and sufficient restrictions on technology and cost so that the conditional factor demands can be written as functions of input prices, fixed inputs, and cost. These are observable when the variable inputs are chosen and committed to production, hence the identified restrictions allow ex ante conditional demands to be studied using observable data. This class of production technologies is consistent with all von Neumann-Morgenstern utility functions when ex post production is uncertain.
    Keywords: Joint production, variable cost, duality theory
    JEL: C3 D2 D8
    Date: 2008–12
  16. By: Diersen, Matthew (South Dakota State University); Dodson, Tia (South Dakota State University)
    Date: 2009–02
  17. By: Jeffrey LaFrance; Rulon Pope (School of Economic Sciences, Washington State University)
    Abstract: This chapter presents the indirect preferences for all full rank Gorman and Lewbel demand systems. Each member in this class of demand models is a Generalized Quadratic Expenditure System (GQES). This representation allows applied researchers to choose a small number of price indices and a function of income to specify any exactly aggregable demand system, without the need to revisit the questions of integrability of the demand equations or the implied form and structure of indirect preferences. This characterization also allows for the calculation of exact welfare measures for consumers, either in the aggregate or for specific classes of individuals, and other valuations of interest to applied researchers.
    Keywords: Aggregation, demand systems, functional form, integrability, rank
    JEL: D12 E21
    Date: 2008–12
  18. By: Laure Latruffe; Stefan Mann
    Abstract: This paper contributes to the research about the relationship between off-farm employment and public support, by taking the issue upside down: does off-farm employment give an advantage to farms regarding the level of public support? Our hypothesis is that a higher degree of decoupling enables part-time farms to capture more easily direct payments than full-time farms. To test this, we compare the largely decoupled direct payment system in Switzerland in 2004, and the rather production-oriented payment system in France in 2003. Results show that Switzerland’s policy favoured farmers with an off-farm employment, while the French direct payment system had the opposite effect.
    Keywords: direct payments, distribution, part-time farming, Switzerland, France
    JEL: Q12 Q18
    Date: 2009

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