New Economics Papers
on Agricultural Economics
Issue of 2009‒10‒31
twenty papers chosen by

  1. Managing Knowledge, Creating Networks andTriggering Innovations for Sustainable Agriculture By Anil K Gupta
  2. Costing Water Quality Improvements with auction mechanisms: case studies for the Great Barrier Reef in Australia By John Rolfe; Jill Windle
  3. Determinants of Small-Scale Farmer inclusion in Emerging Modern Agrifood Markets: A Study of the Dairy Industry in India By Vijay Paul Sharma; Kalpesh Kumar; Raj Vir Singh
  4. Are there industrial and agricultural convergence clubs in China? By Pääkkönen, Jenni
  5. Are U.S. Corn and Soybeans Becoming More Drought Tolerant? By Tian Yu; Bruce A. Babcock
  6. European Policies towards Palm Oil - Sorting Out some Facts By Gernot Pehnelt; Christoph Vietze
  7. Measuring potential gains from specialization under non-convex technologies By Stéphane Blancard; Jean-Philippe Boussemart; Hervé Leleu
  8. Eastern Europe and the former Soviet Union since the fall of the Berlin Wall: Review of the changes in the environment and natural resources By Markandya, Anil; Chou, Wan Jung
  9. Los pobres y la globalización de los alimentos y la agricultura: By von Braun, Joachim; Diaz-Bonilla, Eugenio
  10. Rethinking the Priorities for Indian Agricultural Research, Institutions and Policy: Learning from the Grassroots By Anil K Gupta
  11. Groundwater Irrigation in India: Gains, Costs and Risks By Vasant P. Gandhi,N.V. Namboodiri
  12. Agricultural Dualism, Incidence of Child Labour and Subsidy Policies By Dwibedi, Jayanta; Chaudhuri, Sarbajit
  13. Mega projects in India Environmental and Land Acquisition Issues in the Road Sector By G. Raghuram,Samantha Bastian,Satyam Shivam Sundaram
  14. Nonlinear Price Transmission in Wheat Export Prices By Ghoshray, Atanu
  15. The WTO: Theory and Practice By Kyle Bagwell; Robert W. Staiger
  16. Biofuel subsidies: an open-economy analysis By Subhayu Bandyopadhyay; Sumon Bhaumik; Howard J. Wall
  17. Valuation of Marine Ecosystem Threshold Effects: Application of Choice Experiments to Value Algal Bloom in the Black Sea Coast of Bulgaria By Taylor, Timothy; Longo, A.
  18. The Environment and Directed Technical Change By Daron Acemoglu; Philippe Aghion; Leonardo Bursztyn; David Hemous
  19. The Values of Natural and Constructed Wetlands: A Meta-Analysis By Andrea Ghermandi; Jeroen C.J.M. van den Bergh; Luke M. Brander; Henri L.F. de Groot; Paulo A.L.D. Nunes
  20. Institutions and the environment: the case for a historical political economy By Ali DOUAI (GREThA UMR CNRS 5113); Matthieu MONTALBAN (GREThA UMR CNRS 5113)

  1. By: Anil K Gupta
    Abstract: Conventional agricultural extension approaches have ceased to be of much effect in transforming agricultural productivity and meeting the goals of sustainable natural resource management. Multi agency approach using multimedia, multi language and multi channel is imperative. Ministry of Agriculture has realized the need for transition but the models for the purpose remain to be developed.
    Date: 2009–03–12
  2. By: John Rolfe (Faculty of Business and Informatics, Central Queensland University.); Jill Windle (Centre for Environmental Management at Central Queensland University)
    Abstract: Australian governments continue to commit significant resources to the protection of the Great Barrier Reef, with funding for Reef Rescue aimed at reducing the impacts of agricultural production on water quality. A key challenge for policy makers is to identify where funding can be efficiently allocated, as information about both the costs and benefits of different proposals is limited. While there is adequate information about the costs of different inputs for reducing water quality, there is much more limited information about the costs of achieving different outputs.The use of water quality tenders to reveal the opportunity costs of changing agricultural practices can help policy makers to understand the potential costs of misallocating public resources and to design better ways of achieving water quality improvements. This role of water quality tenders to reveal opportunity costs is demonstrated by reporting four pilot applications to improve water quality into the Great Barrier Reef in Australia. The results demonstrate the potential for opportunity costs to vary substantially between agricultural producers, and across industries, catchments and pollutants.
    Keywords: auctions, conservation tenders, market based instruments, water quality
    Date: 2009–08
  3. By: Vijay Paul Sharma; Kalpesh Kumar; Raj Vir Singh
    Abstract: In response to structural transformations taking place in the Indian dairy sector mainly in processing segment this paper examines determinants of market channel choices of milk producers based on a survey of 390 farm households in 2007. It also attempts to investigate what impacts these market channel choices may have on farmers' income and technology adoption. A two-stage multinomial logit model is employed to investigate determinants and effects of market channel choices of milk producers. While modern marketing channels have emerged in the Indian dairy sector, the traditional sector is still dominant. Farmers sell nearly 85 per cent of milk to traditional channels. The share of the modern organized sector is growing but at a slow pace. The dominance of the traditional channel is an indication of a very competitive and cost-effective traditional market in linking producers and consumers. It is possible that high transaction costs also act as a barrier. However, issues of hygiene and quality of milk being sold through traditional channels require attention. Results indicate that small dairy farmers and the poor are mostly excluded from modern private sector channels. Household's socio-economic variables (farm size, age and education) are important determinants of marketing channel choice in the case of the modern private sector. Large farmers have better opportunity to participate in modern private channels. Market infrastructure such as road, provision of veterinary services, distance from milk collection centre, markets, milk collection centres, price risks, etc. have significant effect on farmers' marketing choices. The second stage results of the Heckman model show that education, membership of producers' association/cooperatives, provision of veterinary services, and farm size have significant impact on cooperative marketing channel farmers' income while in the case of modern private sector, education and price risk have significant impact on income.
    Date: 2009–02–06
  4. By: Pääkkönen, Jenni (BOFIT)
    Abstract: This paper discusses growth differentials of Chinese provinces geared to agricultural activities and those focusing on industrial production over three decades of economic reform. Following trade theory and endogenous growth theory, we suggest that the fundamental differences between regions arise from their resource allocations at the start of reforms. Thus, capital-abundant regions have tended to specialize in industrial production, while the labor-abundant regions have concentrated on labor-intensive production (agriculture). Many of China's agricultural provinces suffer from oversupplies of labor, which has led large numbers of people to migrate within the country to work in non-farming sectors of economy. We show that provinces with high shares of industrial production (the industrial club) have converged, and that agricultural provinces shifting to industrial production have been catching up to initially industrialized provinces. Provinces that have stayed with an agricultural strategy (the agricultural club) show no evidence of convergence and appear to have been left behind in terms of economic development.
    Keywords: growth; agriculture; convergence
    JEL: O17 O40 O57
    Date: 2009–10–21
  5. By: Tian Yu; Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC))
    Abstract: An objective drought index that measures the dry and hot conditions adversely affecting crop yields is used in a regression analysis to test whether corn and soybeans have become more drought tolerant. Results indicate that corn yield losses, whether measured in quantity terms or as a percentage of mean yield, have decreased. The null hypothesis that the absolute level of soybean yield losses due to drought has not changed cannot be rejected. But yield losses in percentage terms have decreased over time. Because drought is the primary cause of yield loss in the U.S. crop insurance program and because U.S. crop insurance rates assume that percentage of yield losses are constant over time, these results indicate that U.S. crop insurance rates in the Corn Belt are too high. Key words: corn, crop insurance rates, drought tolerance, soybean, yield risk
    Date: 2009–10
  6. By: Gernot Pehnelt (GlobEcon); Christoph Vietze (Friedrich Schiller University Jena, School of Economics and Business Administration)
    Abstract: This paper analyses the role of palm oil and its sustainability from different perspectives. We consider the role of palm oil within the GHG context. We discuss the impact of palm oil on biodiversity and analyse how palm oil can contribute to economic growth and development in tropical countries. Finally, based on this analysis, we assess the current concerns about and politics towards palm oil with special focus on the EU. Palm oil is a low-energy and low-fertilizer crop that offers much higher yields per hectare than other oil crops. Furthermore, if the energy obtained by the residuals in the production process is used properly, the energy balance of palm oil production is much more favourable compared to other biofuels. Overall, palm oil turns out to be much more efficient than other oil crops and therefore offers significant advantages within the context of GHG savings. Contrary to some recent campaigns and the perception among European citizens, oil palm plantings are not a major contributor to deforestation in tropical countries. Deforestation associated with oil palm plantings is much less significant than postulated by some recent campaigns. Furthermore, biodiversity in oil palm plantations is much higher than in most monocultures in the EU. Palm oil is an important driver of economic development and growth in tropical countries and contributes to the reduction of poverty and hunger in the developing world. The EU Renewable Energy Directive is discriminatory from the outset and the GHG saving values and their interpretation are based on wrong assumptions and faulty calculations. Therefore, the EU should reshape its policies towards palm oil, conduct objective and non-discriminatory calculations regarding the GHG emissions saving values and support palm oil imports from developing countries rather than restricting them. Together with certain initiatives to further enhance energy efficiency and to protect precious habitats combined with strategies to strengthen property rights and encourage efficient land use and successful strategies of agricultural development, this would not only prevent political conflicts and trade disputes in conjunction with the issue of palm oil but also foster economic growth and development, reduce poverty and - not least - contribute to the ambitious GHG emissions savings goals on a fair and reasonable basis.
    Keywords: Renewable Energy, Palm Oil, Biodiversity, Sustainable Development, Environmental Policy
    JEL: F14 F18 O13 Q01 Q15 Q27 Q56 Q57
    Date: 2009–10–28
  7. By: Stéphane Blancard (ENESAD, UMR CESAER); Jean-Philippe Boussemart (University of Lille 3, LEM-CNRS (UMR 8179), IESEG School of Management); Hervé Leleu (LEM-CNRS (UMR 8179), IÉSEG School of Management)
    Abstract: In this paper, the Free Coordination Hull (FCH) approach developed by Green and Cook (2004) is combined with the Free Disposal Hull (FDH) model to detect potential gains from specialization. As a non-convex approach that allows both directly observed and summed decision making units (DMUs) to define the production technology, FCH is the relevant model for analyzing optimal reapportionment of activity among smaller and more specialized units. Indeed the convexity assumption in more traditional Data Envelopment Analysis (DEA) models precludes the possibility of detecting potential gains from specialization and can only reveal economies of scope. Therefore non-convex technologies are required to model diseconomies of scope. Based on FDH and FCH technologies, an overall efficiency measure is decomposed into three components, namely technical, size and specialization efficiencies. A database of French farms for the year 2003 is used for illustration. Results indicate that input inefficiency in the agricultural sector is driven mainly by lack of specialization, which represents about 50% of overall inefficiency.
    Keywords: specialization; free coordination hull; free disposal hull; agriculture
    Date: 2009–03
  8. By: Markandya, Anil; Chou, Wan Jung
    Abstract: This paper reviews the environmental record of the transition countries of Eastern Europe and Central Asia since the fall of the Berlin Wall, with a focus on areas of key concern to public policy at the present time. With the impacts of environment on public health being given the highest priority, we examined several associated health indicators at the national level, as well as looking at important environmental issues at the local level. In this respect, we focus on environmental problems related to air and water quality, land contamination, and solid waste management. Despite showing a highly differentiated performance across the region, the results suggest that inadequate environmental management seen in several of the transition countries in the past 20 years has put people’s health and livelihood under huge threats. Moreover, this paper looks at the development of policy responses and resources, i.e. environmental expenditures, in these countries, during the process of transiting from centrally planned economies to market-based one. Similarly, we identify various degrees of progress across the region. The findings reinforce the need for better coherence between national environmental expenditure and international environmental assistance, as well as the actual enforcement of national regulations and international agreements in those non-EU transition countries.
    Keywords: transition countries; environmental issues; public health; land contamination; air pollution; water pollution; policy; environmental expenditure
    Date: 2009
  9. By: von Braun, Joachim; Diaz-Bonilla, Eugenio
    Abstract: El sistema agroalimentario mundial está experimentando una creciente globalización. A medida que la mayoría de los habitantes del mundo se trasladan a las ciudades y los que residen en zonas rurales y están conectados con la infraestructura adoptan estilos de vida urbanizados, el consumo de alimentos se vuelve más variado y más parecido en todo el mundo. La industria de la elaboración de alimentos y la de la venta al por menor ahora tienen un alcance mundial, y los agricultores especializan cada vez más su producción, lo que conduce a cambios en insumos como agua, semillas, alimentos para animales y equipamiento técnico, y, finalmente, a una nueva organización del sistema alimentario.
    Keywords: Food supply, Developing countries, Rural poor, Globalization,
    Date: 2009
  10. By: Anil K Gupta
    Abstract: Sometimes having succeeded in a mission, we fail because we tend to persist with the same strategy even when times have changed. The success, thus, becomes the reason for failure. Indian agriculture research has been an outstanding success in terms of achieving food self-reliance and converting a perennially importing country to an exporting country. But, the trend in the last decade has been disappointing and reasons are not far to seek. I will take this opportunity to reflect on the three decades of my engagement with the agricultural research community so that some new pointers can be identified. I will also share the lessons learnt from the grassroots innovators and traditional knowledge holders through Honey Bee Network activities in the last two decades. It is possible that some of my views cause discomfort. But, it is with great respect that I submit these ideas. The agricultural research community has always considered me as an insider and therefore the liberty that they have allowed me to take with the ideas. The interface of science and society, which has become a bit weaker in recent years, was taken as a matter of deep concern and commitment. It is a privilege for me to share my views in Dr B P Pal's memory. I hope to help in triggering some thoughts towards revitalisation of our institutions, policy making approach and our relationship with the common people and their creativity.
    Date: 2009–03–12
  11. By: Vasant P. Gandhi,N.V. Namboodiri
    Abstract: Groundwater has rapidly emerged to occupy a dominant place in India.'s agriculture and food security in the recent years. It has become the main source of growth in irrigated area over the past 3 decades, and it now accounts for over 60 percent of the irrigated area in the country. It is estimated that now over 70 percent of India.'s food grain production comes from irrigated agriculture, in which groundwater plays a major role. Since the development of groundwater irrigation has not largely been government or policy driven . has happened gradually through highly decentralized private activity, this revolution has often gone largely unrecognized.
    Date: 2009–03–31
  12. By: Dwibedi, Jayanta; Chaudhuri, Sarbajit
    Abstract: This paper purports to examine the validity of the common belief that in a developing economy the backward agricultural sector should be subsidized as poorer group of the working population are employed in this sector that send their children out to work out of sheer poverty. A three-sector general equilibrium framework with agricultural dualism and child labour has been employed for the purpose of analysis. It finds that a price subsidy policy to backward agricultural sector is likely to aggravate the child labour incidence while a credit subsidy to advanced agriculture may be effective in reducing the gravity of the problem in the economy. The paper, therefore, questions the desirability of assisting backward agriculture for eradicating child labour in the society.
    Keywords: Child labour; general equilibrium; agricultural dualism; subsidy policy.
    JEL: J13 J10 O17 D10
    Date: 2009–06–15
  13. By: G. Raghuram,Samantha Bastian,Satyam Shivam Sundaram
    Abstract: Mega projects (primarily infrastructure) receive a sizable investment (~10%) of the gross fixed capital formation in India. Environmental clearances and land acquisitions have been the two major reasons for delays in the projects. However, there has been a steady increase in the proportion of projects running on schedule and a sharp decline in the proportion of projects with cost overruns. These accomplishments have been achieved due to better financing, project management, and reform in the regulatory frameworks related to environmental and land acquisition aspects.
    Date: 2009–03–16
  14. By: Ghoshray, Atanu
    Abstract: This paper attempts to model the price relationship between the major exporters of wheat. The motivation of such research is to reveal whether prices are integrated and whether potential nonlinearities in price adjustment exist. Given the perception that transactions costs may be highly variable in the wheat market, the paper aims to test for the presence of cointegration in the presence of smooth transition adjustment. The results conclude that the further the prices deviate from each other, the larger will be the arbitrage and substitution that will drive the prices close to each other. However, the results suggest that the arbitrage will be limited as the various wheat prices employed in this study may be linked to highly variable transactions costs or some other form of imperfect competition.
    Keywords: Cointegration; ESTAR; Wheat; Price Adjustment
    Date: 2009
  15. By: Kyle Bagwell; Robert W. Staiger
    Abstract: We consider the purpose and design of the World Trade Organization (WTO) and its predecessor, GATT. We review recent developments in the relevant theoretical and empirical literature. And we describe the GATT/WTO architecture and briefly trace its historical antecedents. We suggest that the existing literature provides a useful framework for understanding and interpreting central features of the design and practice of the GATT/WTO, and we identify key unresolved issues.
    JEL: F02 F13
    Date: 2009–10
  16. By: Subhayu Bandyopadhyay; Sumon Bhaumik; Howard J. Wall
    Abstract: We present a general equilibrium analysis of biofuel subsidies in an open-economy context. In the small-country case, when a Pigouvian tax on conventional fuels such as crude is in place, the optimal biofuel subsidy is zero. When the tax on crude is not available as a policy option, however, a second-best biofuel subsidy (or tax) is optimal. In the large-country case, the optimal tax on crude departs from its standard Pigouvian level and a biofuel subsidy is optimal. A biofuel subsidy spurs global demand for food and confers a terms-of-trade benefit to the food-exporting nation. This might encourage the food-exporting nation to use a subsidy even if it raises global crude use. The food importer has no such incentive for subsidization. Terms-of-trade effects wash out between trading nations; hence, any policy intervention by the two trading nations that raises crude use must be jointly suboptimal.
    Keywords: Macroeconomics ; Economic conditions
    Date: 2009
  17. By: Taylor, Timothy; Longo, A.
    Abstract: Algal bloom arises in part from anthropogenic emissions of nutrients into the coastal zone. Increased interest in water quality in coastal and marine areas stemming from the Water Framework Directive and the Marine Strategy Framework Directive leads to important questions in terms of policies to address nutrient loadings. This paper presents the results from a choice experiment for the valuation of algal blooms in Varna Bay, Bulgaria. Varna Bay is an important tourist destination and a large port city on the Black Sea coast of Bulgaria. Algal bloom events have been experienced frequently in this area. A choice experiment questionnaire was developed to be applied in Varna Bay. The key attributes used were visibility, duration of bloom and the amount of congestion on the beach. The amount of bloom is found to be important - respondents are willing to pay for a program that entails 1 week of algal bloom about 33 Leva (s.e. 8.09) when there is high visibility; 21 Leva (s.e. 5.75) with medium visibility and 9 Leva (s.e. 3.48) with low visibility. Respondents are willing to pay more for programs that offer shorter duration of algal bloom. The marginal price for one metre of extra space between the respondent and the nearest person is equal to 0.38 Leva.
    Keywords: marine ecosystem; threshold effects;
    Date: 2009
  18. By: Daron Acemoglu; Philippe Aghion; Leonardo Bursztyn; David Hemous
    Abstract: This paper introduces endogenous and directed technical change in a growth model with environmental constraints and limited resources. A unique final good is produced by combining inputs from two sectors. One of these sectors uses "dirty" machines and thus creates environmental degradation. Research can be directed to improving the technology of machines in either sector. We characterize dynamic tax policies that achieve sustainable growth or maximize intertemporal welfare, as a function of the degree of substitutability between clean and dirty inputs, environmental and resource stocks, and cross-country technological spillovers. We show that: (i) in the case where the inputs are sufficiently substitutable, sustainable long-run growth can be achieved with temporary taxation of dirty innovation and production; (ii) optimal policy involves both "carbon taxes" and research subsidies, so that excessive use of carbon taxes is avoided; (iii) delay in intervention is costly: the sooner and the stronger is the policy response, the shorter is the slow growth transition phase; (iv) the use of an exhaustible resource in dirty input production helps the switch to clean innovation under laissez-faire when the two inputs are substitutes. Under reasonable parameter values (corresponding to those used in existing models with exogenous technology) and with sufficient substitutability between inputs, it is optimal to redirect technical change towards clean technologies immediately and optimal environmental regulation need not reduce long-run growth. We also show that in a two-country extension, even though optimal environmental policy involves global policy coordination, when the two inputs are sufficiently substitutable environmental regulation only in the North may be sufficient to avoid a global disaster.
    JEL: C65 O30 O31 O33
    Date: 2009–10
  19. By: Andrea Ghermandi (Zuckerberg Institute for Water Research, Ben-Gurion University of the Negev, Israel); Jeroen C.J.M. van den Bergh (Universitat Autonoma de Barcelona); Luke M. Brander (Institute for Environmental Studies); Henri L.F. de Groot (VU University Amsterdam); Paulo A.L.D. Nunes (Fondazione Eni Enrico Mattei)
    Abstract: The values of goods and services provided by natural and constructed wetlands are examined through a meta-analysis of 418 observations of the economic value of 186 wetlands. Water quality improvement, non-consumptive recreation, and provision of natural habitat and biodiversity turn out to be highly valued services. Substitution effects are observed through the negative correlation between values and proximity to other wetlands. Values are found to increase with anthropogenic pressure. Constructed wetlands are highly valued for biodiversity enhancement, water quality improvement, and flood control. This study provides a substantially new contribution in relation to previous meta-analyses of the wetland valuation literature.
    Keywords: constructed ecosystems; economic valuation; constructed wetlands; meta-regression; wetland values
    JEL: C81 Q24
    Date: 2009–09–17
  20. By: Ali DOUAI (GREThA UMR CNRS 5113); Matthieu MONTALBAN (GREThA UMR CNRS 5113)
    Abstract: This paper provides a critical review of the ‘state of the art’ of institutional analysis applied essentially by social-ecological economists in the environmental domain. It highlights both areas of strength and issues where there is still room for improvement in analytical terms, by construing these approaches in the context of a general taxonomy of institutionalisms – widely used in politics and applied here in the economic realm. This provides the rationale for re-construing a number of related issues drawn from the core insights of a historical institutionalist approach to human-nature.
    Keywords: Ecological economics, institutional analysis, socio-economy, regulation
    JEL: Q01 Q57 B52 P16
    Date: 2009

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