New Economics Papers
on Agricultural Economics
Issue of 2010‒10‒02
eighteen papers chosen by

  1. Innovations in Financing Food Security By Llanto, Gilberto M.; Badiola, Jocelyn Alma R.
  2. The Effects of Conservation Reserve Program Participation on Later Land Use By Sarah Jacobson
  3. Impact of supply of money on food prices in India: A causality analysis By Tiwari, Aviral
  4. The potential impact of the EU-ACP economic partnership Agreement: A case study of the Ugandan horticulture sector By Economic Policy Research Centre
  5. Price and Brand Competition between Differentiated Retailers: A Structural Econometric Model By Dubois, Pierre; Jodar-Rosell, Sandra
  6. The Cost of Redistributive Land Reform in the Philippines: Assessment of PD 27 and RA 6657 (CARL) By Ballesteros, Marife Magno
  7. 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 Anil Markandya; Wan-Jung Chou
  8. Stability of Risk Preference Measures: Results from a Field Experiment on French Farmers By Couture, Stéphane; Reynaud, Arnaud
  9. Extending Labour Inspections to the Informal Sector and Agriculture By Priya Deshingkar
  10. Does Urban Proximity Enhance Agricultural Productivity in China? By Chloe DUVIVIER
  11. Modelling Agricultural Public R&D Cofinancing Within A Principal-Agent Framework. The case of an Italian region By Valentina Cristiana MATERIA; Roberto ESPOSTI
  12. The Environment and Directed Technical Change By Daron Acemoglu; Philippe Aghion; Leonardo Bursztyn; David Hemous
  13. Poverty and Land Redistribution: Quasi-Experimental Evidence from South Africa's LRAD program By Malcolm Keswell; Michael Carter
  14. Sharing the Cost of Global Warming By Leroux, Justin; de Villemeur, Étienne
  15. Economic Assessment of Forest Ecosystem Services Losses: Cost of Policy Inaction By Aline Chiabai; Chiara Travisi; Anil Markandya; Helen Ding; Paulo Nunes
  16. Investment in Cellulosic Biofuel Refineries: Do Renewable Identification Numbers Matter? By Ruiqing Miao; David A. Hennessy; Bruce A. Babcock
  17. Biodiversity Valuation in Developing Countries: A Focus on Small Island Developing States (SIDS) By Sonja S. Teelucksingh; Paulo A.L.D. Nunes

  1. By: Llanto, Gilberto M.; Badiola, Jocelyn Alma R.
    Abstract: A recent publication of the UN Food and Agricultural Organization (FAO) has highlighted the food insecurity problem facing the globe: food production will have to increase by 70 percent in 2050 to keep up with a global population that is projected to grow from 6 billion to 9 billion. There has to be more investments in agriculture to improve productivity, which will be critical to the goal of achieving food security. There is scope for governments and the private sector cooperation in food production. The paper discusses innovative financing schemes geared to food production and identifies policy gaps, that is, areas where governments could intervene to enhance the workings of the market.
    Keywords: Philippines, innovative financing schemes, food insecurity, value chain financing, covariant risks, risk management tools, index-based insurance, warehouse receipts lending, trade finance
    Date: 2010
  2. By: Sarah Jacobson (Williams College)
    Abstract: I use a treatment effect framework to investigate whether participation in the Conservation Reserve Program (CRP) changes a parcel’s later land use. The CRP, which pays farmers to retire agricultural land, is the United States’ largest conservation program. The program has several goals, including protecting the environment and improving the long-term productivity of farmland. I compare samples of CRP land to samples of non-CRP land to find the causal effect of CRP participation on land use outcome, using regression and matching techniques. By comparing land that exits the CRP to the best counterfactual land (land that faced similar transition costs and probably had similar unobservable qualities), I find that CRP participation makes land 21-28% more likely to be farmed after program exit than it would otherwise have been. This is unsurprising if the CRP improves low-quality land, because that makes the land more attractive to farm. This long-term effect comports with the agricultural goals of the program, but may counteract the environmental benefits of the program. I also find that farmed ex-CRP land is more likely to adopt conservation practices than the most similar land that had not been in the CRP. However, this may not be a result of CRP participation.
    Keywords: Conservation Reserve Program, land use, environmental policy, farm policy
    Date: 2010–04
  3. By: Tiwari, Aviral
    Abstract: This study attempts to investigate the direction of casualty between food prices and money supply in the static and dynamic framework. We found that narrow measure of money supply (M1) Granger causes food inflation while broad measure of money supply (M3) does not in the static framework. This implies that money supply (M1) is not neutral in determining food prices in the long run in the Indian context. From the dynamic framework of analysis we found that any one innovation in the broad measure of money supply (M3) will have positive impact on the food inflation for next three years.
    Keywords: Food Prices. Money Supply. Granger-causality
    JEL: Q11 E51 C31
    Date: 2010–06–09
  4. By: Economic Policy Research Centre
    Abstract: Uganda has had formal trade ties with Europe since 1973 when, together with several other commonwealth countries, it signed the Lomé Convention. However, trade relations between Europe and Africa started much earlier, in 1957, at first covering 18 francophone countries and six European countries. The Lomé Conventions granted countries like Uganda non-reciprocal trade preferences with the European Community (EC) and later European Union (EU)...Ugandaâs current and potential exports to the EU include traditionally sensitive agricultural products such as: maize, sugar, coffee, cotton, bananas, milk and dairy products, animal products, fruit and vegetable products, and oil seed products. The risks from the EPAs can be summarized into three categories. First, that the country will lose its competitive and/or comparative advantages because it cannot match the competitiveness of European producers and/or the EU and national support offered to European producers. Second, compared to many countries in the region, Uganda has already endured many years of political and economic turmoil. The country has had less than two decades of economic stability and may not be ready to be exposed to competition with much more resilient economies. Third, Ugandaâs economy is natural-resource based. For example, biodiversity services contributed about US$1 billion to the national economy in 1999. Thus, before liberalizing the trade opportunity with the EU there is a need to reflect on the consequences to the countryâs sustainable development. For this study, the consequences to sustainable development are described in light of the countryâs commitments to biodiversity conservation as well as the subsequent impacts on livelihoods of the poor who have a high dependence on the countryâs biodiversity resources...
    Keywords: EPRC, Horticulture trade, Trade agreements, Agribusiness, Agricultural Finance, Community/Rural/Urban Development, Environmental Economics and Policy, Financial Economics, Institutional and Behavioral Economics, International Development, Marketing, Political Economy, Production Economics, Productivity Analysis, Public Economics,
    Date: 2010–05
  5. By: Dubois, Pierre; Jodar-Rosell, Sandra
    Abstract: We develop a model of competition between retailer chains with a structural estimation of the demand and supply in the supermarket industry in France. In the model, supermarkets compete in price and brand offer over all food products to attract consumers, in particular through the share of private labels versus national brands across all their products. Private labels can serve as a differentiation tool for the retailers in order to soften price competition. They may affect the marginal costs of all products for the retailer because of eventual quality differences and also by helping retailers to obtain better conditions from their manufacturers. Differentiation is taken into account by estimating a discrete-continuous choice model of demand where outlet choice and total expenditures are determined endogenously. On the supply side, we consider a simultaneous competition game in brand offer and price between retailers to identify marginal costs. After estimation by simulated maximum likelihood, the structural estimates allow to simulate the effect on the equilibrium behavior of retailer chains of a demand shock through an increase in transportation costs for consumers and a merger between two retailer chains.
    JEL: L13 L22 L81
    Date: 2010–04
  6. By: Ballesteros, Marife Magno
    Abstract: <p>This paper examines the cost of implementing redistributive land reform in the Philippines. Land redistribution has become the core feature of land reform in the country since 1972 with the approval of PD 27. The coverage of the program was expanded to all agricultural lands under RA 6657 or CARL of 1988. Consequently, funding for land reform increased significantly as government chose to fully subsidize land acquisition, distribution, and transfers. From 1972 to 2008, the cost to implement the program has been rising in real terms both in absolute and relative values. The substantial increases in unit cost have been traced to administrative expense and compensation to landowners. Landowners’ compensation (LOC) is a major cost item specifically as land reform shifted from a confiscatory scheme to market land valuation. But the impact of market valuation has not been reflected in the initial years of CARP. It appears that most lands acquired in the early years of CARP are marginal lands thus the lower valuation compared to PD 27 which covered mostly irrigated lands with yields higher than average. The impact of market valuation on LOC has been felt in Phase II of CARP when the program started covering lands planted to higher value crops.</p> <p>Over time, land reform has become a major burden to taxpayers and fully subsidizing the program is not tenable due to fiscal constraints and a growing consensus among scholars that land reform as a strategy to agriculture development has become passé. These same issues are likely to face the extension of CARP in the next five years. Government has to seriously consider alternative ways to land redistribution and alternative programs to achieve land equity and poverty reduction. The paper suggests the following strategies: (1) facilitate negotiated land reform specifically for high value crops; (2) a leaner and rationalized DAR bureaucracy; and (3) effective land tax policy.</p>
    Keywords: public expenditures, Philippines, land reform
    Date: 2010
  7. By: Anil Markandya (University of Bath, UK and Basque Centre for Climate Change); Wan-Jung Chou (University of Bath)
    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: Eastern Europe, Environmental Record, Public Health
    JEL: N34 N54 I18
    Date: 2010–05
  8. By: Couture, Stéphane; Reynaud, Arnaud
    Abstract: We compare three different elicitation methods for measuring risk attitudes of French farmers in a field experiment setting. We consider two experiments based on the lottery choices initially proposed by Holt and Laury (2002) and by Eckel and Grossman (2002,2008), a risk-taking psychological questionnaire and a self-reporting of perceived risk attitudes for different domains. The main empirical results from this within-subject study are the following. First, within the class of lottery choices, risk preference measures are affected by the type of mechanism used. In particular, farmers appear to be more risk averse using the Eckel and Grossman lottery than using the Holt and Laury one. However attitudes towards risk are significantly correlated across lotteries which means that the ranking of risk preferences seems to be preserved. Second, risk preferences appear to be context-dependent. French farmers are highly risk averse for decisions belonging to financial and ethical domains. They report a higher willingness to take risk for professional decisions. Lastly, using the psychological questionnaire, we find that the risk attitude elicited through lottery choices often correlates with risk attitude toward investments. These findings contribute to the literature which addresses the stability of risk preferences across elicitation methods.
    Keywords: Risk preferences, psychological economics, field experiment, experimental economics
    JEL: C91 D8 J16 Q12
    Date: 2010–05–03
  9. By: Priya Deshingkar
    Abstract: Labour inspections could, in theory, improve labour standards and help countries move towards decent work goals and the elimination of chronic poverty. But, in practice, inspections are either not conducted or do not result in penalties for those who break the law. Using the case of India, and examining labour contracts and standards in selected informal agricultural and non-agricultural occupations, the author identifies the reasons for this state of affairs: corrupt and under-resourced labour departments; subcontracting arrangements where employer–employee relationships are difficult to prove; little political commitment to improving labour standards; and poor coverage of new categories of work by existing labour laws. The paper also documents how, in the absence of an effective labour inspection machinery, civil society organisations and the media have successfully mobilised consumers and NGOs in the West to put pressure on suppliers in global value chains to improve labour standards and eliminate child labour. [Working Paper No. 154]
    Keywords: India Labour inspections labour regulation informal sector agricultural labour
    Date: 2010
  10. By: Chloe DUVIVIER
    Abstract: We study whether rural areas close to urban centers enjoy a more productive agricultural sector than remote ones. We try to answer three questions: (1) Do rural areas close to urban centers and remote areas share the same agricultural technology? (2) Are rural areas close to urban center technically more efficient? (3) Do they enjoy a faster technical progress? The empirical examination is realized at the county level on a sample covering three provinces of the south-east of China from 2002 to 2007. Several interesting results are obtained. On the one hand, the type of agricultural technology adopted varies with the distance between the rural area and the urban center. On the other hand, urban proximity has a positive effect on agricultural productivity. Finally, our results confirm a previous finding: the most important component of total factor productivity growth in China is technical progress, whereas technical efficiency decreases it.
    Keywords: Agricultural productivity, urban proximity, latent class stochastic frontier model, technical change.
    JEL: R11 Q10 O18 O13
    Date: 2010
  11. By: Valentina Cristiana MATERIA (Universita' Politecnica delle Marche, Dipartimento di Economia); Roberto ESPOSTI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: This paper analyses how a public institution chooses the optimal contract (cofinancing rate) in funding agricultural R&D research projects. A theoretical model is developed within a principal-agent framework taking into account the asymmetric information both players have to handle. The researcher (the agent) initially does not know the cofinancing granted by the funding institution (the principal). This latter, in turn, only observes some objective features of the researchers and of the selected research projects and, ex post, the research outcome, but not the agent's actual effort on the project. The principal uses the available information to offer the cofinancing rate (the contract) that, under specific contractual clauses, induces the agent's effort that maximizes principal's utility. The model eventually assumes the form of a Stackelberg-type game. An empirically testable relation is also derived from the theoretical model and is then applied to the agricultural R&D programme funded by the Italian region Emilia-Romagna over years 2001-2006.
    Keywords: Censored-Normal Regression, Principal-Agent Problem, Public R&D Funding, Stackelberg-type game
    JEL: O32 Q16
    Date: 2010–09
  12. By: Daron Acemoglu (Massachusetts Institute of Technology and Canadian Institute for Advanced Research); Philippe Aghion (Harvard University, Stockholm School of Economics and Canadian Institute for Advanced Research); Leonardo Bursztyn (Harvard University); David Hemous (Harvard University)
    Abstract: This paper introduces endogenous and directed technical change in a growth model with environmental constraints. 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. 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 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.
    Keywords: Environment, Exhaustible Resources, Directed Technological Change, Innovation
    Date: 2010–07
  13. By: Malcolm Keswell; Michael Carter
    Abstract: We estimate the impact on consumption of South Africa's Land Redistribution for Agricultural Development (LRAD) program, which provides capital and other forms of assistance to beneficiaries to enable market-assisted transfers of property rights from large landowners to the rural poor. Counterfactual outcomes are derived by screening out applicants with low probability of admission into the program, and then non-parametrically matching beneficiaries to applicants that are still in the pipeline to receive assistance. We find that land transfers associated with LRAD lead to very strong benefits for program participants. Accounting for heterogeneity in the length of exposure to the program, we estimate treatment effects of the program that peak at approximately 275 Rand per capita monthly consumption. Assuming a discount rate of 5%, this estimate translates to a discounted gain in monthly per capita consumption of about 50% after three years of exposure to the program.
    Keywords: Land Reform, Poverty, Impact Evaluation
    JEL: O10 O12 O13
    Date: 2010
  14. By: Leroux, Justin (HEC Montréal, CIRANO and CIRPEE); de Villemeur, Étienne (Toulouse School of Economics (IDEI & GREMAQ))
    Abstract: Due to meteorological factors, the distribution of the environmental damage due to climate change bears no relationship to that of global emissions. We argue in favor of offsetting this discrepancy, and propose a "global insurance scheme" to be fincanced according to countries responsibility for climate change. Because GHG decay very slowly, we argue that the actual burden of global warming should be shared on the basis of cumulated emissions, raher than sharing the expected costs of actual emissions as in a Pigovian taxation scheme. We characterize new versions of two well-known cost-sharing schemes by adapting the responsibility theory of Bossert and Fleurbaey (1996) to a context with externalities.
    JEL: D62 D63 Q54
    Date: 2010–07
  15. By: Aline Chiabai; Chiara Travisi; Anil Markandya; Helen Ding; Paulo Nunes
    Abstract: This paper presents a bottom-up methodological framework for estimating some of the key ecosystem services provided by forests biomes worldwide. We consider the provision of wood and non-wood forest products, recreation and passive use, and the forests’ contribution to climate regulation in terms of carbon sequestration capacity. The valuation framework derives per hectare estimates by applying meta-analysis, value transfer and scaling up procedures in order to control for the existing heterogeneities across world regions and forest biomes. The first part of the study estimates stock values per hectare for each forest ecosystem service in the baseline year 2000 and in the year 2050. Carbon stocks represent, in general, the highest value per hectare, followed by provisioning services, passive use and recreational values. The second part provides an estimation of the welfare loss (or gain) associated with policy inaction in the period 2000-2050 leading to a change in the forest area. Welfare results are mixed and require a careful interpretation. In different world regions, no policy initiative can results in both gains and losses, which appear to be sensitive to the use of lower or upper bounds values per hectare.<br />
    Keywords: forest ecosystem goods and services; Millennium Ecosystem Assessment; value-transfer, meta-analysis; market and non-market valuation
    Date: 2010–09
  16. By: Ruiqing Miao; David A. Hennessy (Center for Agricultural and Rural Development (CARD)); Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC))
    Abstract: A floor and trade policy in Renewable Identification Numbers (RINs) is the market mechanism by which U.S. biofuel consumption mandates are met. A conceptual model is developed to study the impact of RINs on stimulating investment in cellulosic biofuel refineries. In a two-period framework, we compare the first-period investment level (FIL) in three scenarios: (1) laissez-faire, (2) RINs under a nonwaivable mandate (NWM) policy, and (3) RINs under a waivable mandate (WM) policy. Results show that when firm-level marginal costs are constants, then RINs under WM policy do not stimulate FIL but they do increase the expected profit of more efficient investors. When firm-level marginal costs are not constants, however, RINs under WM policy stimulate FIL. RINs under NWM policy may or may not stimulate FIL, depending on the distribution of second-period cellulosic biofuel prices and on firm-level marginal costs. Key words: cellulosic biofuels, investment, Renewable Identification Numbers, waivable mandate
    JEL: D24 L52 Q48
    Date: 2010–09
  17. By: Sonja S. Teelucksingh (Fondazione Eni Enrico Mattei and University of the West Indies); Paulo A.L.D. Nunes (Fondazione Eni Enrico Mattei and Ca’ Foscari University of Venice)
    Abstract: The Millennium Development Goals explicitly recognise “sustainable development” as a target. A step towards this is a greater understanding of the significant role of biodiversity in rural communities of developing countries who depend most on the ecosystem goods and services and who as a result may suffer most from its continued degradation. Understanding the input of biodiversity in developing countries to the provision of the ecosystem goods and services (EGS) that are essential to their human well-being is seen as a significant first step in sustainable development, and environmental valuation is a necessary tool for achieving this objective. However, valuing biodiversity in a developing country context can be an intricate affair. While economic valuation literature yields a range of tried and tested methodological techniques for measuring biodiversity, the question remains as to whether these generalised techniques are capable of revealing the complexities of local environmental use in developing countries. A heterogeneous group, “developing countries” can be characterised by a range of factors existing in different intensities that can (1) impact the ways in which local communities interact with their environmental resources (2) impact the efficacy of the methodological and data collection process (3) impact the values obtained from the application of valuation techniques and (4) impact the implementation, success and sustainability of policy and management prescriptions. This paper attempts to address these issues by discussing the main characteristics of developing countries that can impact the biodiversity valuation process and, with specific reference to Small Island Developing States (SIDS), discussing how knowledge of these characteristics can assist the valuation process to better reveal the complex interaction between biodiversity and human welfare in a developing country context.
    Keywords: Biodiversity, Developing Countries, Small Island Developing States
    JEL: Q01 Q57
    Date: 2010–09
  18. By: Arrington, Kendra; Dennis, Jennifer; Mazzocco, Michael
    Abstract: cluster analysis, consumers, farmersâ market, primary data, surveys
    Keywords: Agribusiness,
    Date: 2010–06

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