New Economics Papers
on Agricultural Economics
Issue of 2011‒09‒05
24 papers chosen by

  1. Economic and institutional efficiency of the National Agricultural Advisory Servicesâ Programme: The case of Iganga District, By Okoboi, Godfrey; Muwanika, Fred; Nyende, Majidu; Mugisha, Xavier
  2. Farmer Participation in Supermarket Channels, Production Technology, and Efficiency: The Case of Vegetables in Kenya By Rao, Elizaphan J.O.; Brummer, Bernhard; Qaim, Matin
  3. Are Zambian Farmers Not Harvesting All Their Maize? By Shipekesa, Arthur M.; Jayne, T.S.
  4. World Rice Outlook International Rice Baseline Projections, 2011-2020 By Wailes, Eric J.; Chavez, Eddie C.
  5. Land Use Change Impacts of Biofuels: Near-VAR Evidence from the US By Giuseppe Piroli; Pavel Ciaian; d'Artis Kancs
  6. The impact of WTO agricultural trade rules on food security and development: an examination of proposed additional flexibilities for developing countries By Alan Matthews
  7. Revitalizing Zambiaâs Agricultural Marketing Information Centre (Amic) By Gage, Daria
  8. Revisiting the Role of Education for Agricultural Productivity By Malte Reimers; Stephan Klasen
  9. Dynamic Pathways into and out of Poverty: A Case of Small Holder Farmers in Zambia By Banda, Diana J.; Hamukwala, Priscilla; Haggblade, Steven; Chapoto, Antony
  11. Climate change, rural livelihoods and agriculture (focus on food security) in Asia-Pacific region By S. Mahendra Dev
  12. Major lessons for the CAP reform from the New Member States' perspective By Möllers, Judith; Csaki, Csaba; Buchenrieder, Gertrud
  13. Analyzing Farmer Participation Intentions and Enrollment Rates for the Average Crop Revenue Election (ACRE) Program By Mitchell, Paul D.; Rejesus, Roderick M.; Coble, Keith H.; Knight, Thomas O.
  14. Nicaragua: Without structural changes there´ll be no sustainable reduction of rural poverty By Perez, Francisco J.
  15. Transparency, Appropriability and the Early State By Mayshar, Joram; Moav, Omer; Neeman, Zvika
  16. Global Market Shocks and Poverty in Vietnam: The Case of Rice By Coxhead, Ian; Linh, Vu Hoang; Le, Dong Tam
  17. A Detailed Analysis of the Productivity Performance of the Canadian Primary Agriculture Sector By Ricardo de Avillez
  18. Non-tariff barriers in EAC customs union: implications for trade between Uganda and other EAC countries By Okumu, Luke; Nyankori, J.C. Okuk
  19. Recalculating Default Values for Palm Oil By Gernot Pehnelt; Christoph Vietze
  20. Advertising Expenditure and Consumer Prices By Ferdinand Rauch
  21. Deforestation as an externality problem to be solved efficiently and fairly By Charles Figuières; Estelle Midler
  22. A Detailed Analysis of the Productivity Performance of the Canadian Food Manufacturing Subsector By Chris Ross
  23. Pricing Chinese rain: a multi-site multi-period equilibrium pricing model for rainfall derivatives By Wolfgang Härdle; Maria Osipenko
  24. Separating Environmental Efficiency into Production and Abatement Efficiency – A Nonparametric Model with Application to U.S. Power Plants By Hampf, Benjamin

  1. By: Okoboi, Godfrey; Muwanika, Fred; Nyende, Majidu; Mugisha, Xavier
    Abstract: This paper examines the technical and institutional efficiency of the National Agricultural Advisory Services (NAADS) programme implementation in Iganga district. The Cost Effective Analysis (CEA) and stochastic frontier analysis methods were used to examine technical efficiency while expenditure tracking and FGD methods were applied to assess institutional efficiency. The analysis demonstrates that NAADS interventions have not had a significant impact on the output, productivity and income of the farmers in Iganga district. Moreover, NAADS programme faces implementation weaknesses such as nepotism that affects the selection of beneficiaries as well as enterprises, to the extent that some farmers are apathetic about the success or failure of NAADS Programme. Other observed weaknesses in NAADS implementation include late disbursement of funds, very low counterpart funding by the local government and the farmers, and poor monitoring and evaluation (M&E) of the programme. Based on the results, we suggest a major review of the implementation process of NAADS programme in general and Iganga district NAADS in particular.
    Keywords: NAADS, Expenditure tracking, EPRC, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Crop Production/Industries, Farm Management, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Land Economics/Use, Livestock Production/Industries,
    Date: 2011–06
  2. By: Rao, Elizaphan J.O.; Brummer, Bernhard; Qaim, Matin
    Abstract: Supermarkets are gaining ground in the agri-food systems of many developing countries. While recent research has analyzed income effects in the small farm sector, impacts on productivity and efficiency have hardly been studied. We use a meta-frontier approach and combine this with propensity score matching to estimate treatment effects among vegetable farmers in Kenya. Participation in supermarket channels increases farm productivity in terms of meta-technology ratios by 45%. We also find positive and significant impacts on technical efficiency and scale efficiency. Supermarket expansion therefore presents opportunities for agricultural growth in the small farm sector, which is crucial for poverty reduction in Africa.
    Keywords: Supermarkets, technical efficiency, scale efficiency, meta-frontier, meta-technology ratio, sample selection, Kenya, International Development, Marketing, Production Economics, Productivity Analysis, D24, L23, O12, Q12, Q16,
    Date: 2011–08
  3. By: Shipekesa, Arthur M.; Jayne, T.S.
    Abstract: 1. According to nationally representative Crop Forecast Survey data, over the past 10 years farmers have harvested between 55 and 90 percent of the area that they planted to maize. 2. In the 2009/10 and 2010/11 crop years, over 80 percent of the maize area planted by small- and medium-scale farmers was harvested, mainly due to favorable weather. 3. In 2010/11, the ratio of harvested to planted maize area was highest in Luapula, Northern and Eastern (all over 90%), and lowest in Western (56%) and Southern Province (70%). 4. The main reasons provided by Zambian farmers for not harvesting all their area planted to maize are: (i) wilting due to drought (50.6%); (ii) crop failure due to lack of fertilizer (25.6%); and (iii) floods, heavy rains, and water logging (12.2%). 5. More effective extension of moisture conserving and flood protecting agronomic practices to farmers may substantially promote maize production and yields in Zambia.
    Keywords: Zambia, maize, Agricultural and Food Policy, Food Security and Poverty,
    Date: 2011–07
  4. By: Wailes, Eric J.; Chavez, Eddie C.
    Keywords: International rice, baseline projections, policy, Arkansas Global Rice Model, Agricultural and Food Policy, International Development, C02, F01, F14, F17, Q17, Q18, R11,
    Date: 2011–08
  5. By: Giuseppe Piroli; Pavel Ciaian; d'Artis Kancs
    Abstract: The present paper studies the land use change impacts of biofuels. We test the theoretical hypothesis, which say that biofuels cause changes in land use both directly and indirectly, by applying time-series analytical mechanisms to five major traded agricultural commodities, the cultivated area of agricultural land, and the crude oil price. Our data consists of yearly observations extending from 1950 to 2007 for the US. The empirical findings confirm that prices for crude oil and cultivated agricultural land are interdependent: an increase in oil price by 1 dollar/barrel increases land use between 45 and 56 thousand hectares.
    Keywords: Near-VAR, energy, bioenergy, prices, land use, biofuel support policies.
    JEL: C14 C22 C51 D58 Q11 Q13 Q42
    Date: 2011–08–11
  6. By: Alan Matthews (Trinity College Dublin)
    Date: 2011–08
  7. By: Gage, Daria
    Abstract: 1. Public sector agricultural market information systems (MIS) can provide useful information to farmers, uninformed traders, and policy makers. While private information networks offer a valuable service to select clients, only a well-functioning public MIS can redress information asymmetries among marketing actors that can inhibit competition. 2. The second core mission of a public MIS should be to organize and manage data in such a way that government decision-makers and civil society organizations can accurately diagnose and even anticipate emerging market problems and respond to them in a timely manner. 3. Zambiaâs AMIC suffers from a range of weaknesses all along the supply chain for price information. Data collection and transmission is irregular and unreliable, data management is unstructured and lacks strategic oversight, and dissemination is entirely supply-driven. 4. The primary reasons for AMICâs weak performance are competing priorities and a misguided incentive structure for staff at the national, provincial, and most importantly at the district level, where the viability of the collection process depends on reciprocity between price collectors and traders. 5. The draft Agricultural Marketing Act, which will be sent to Parliament in the 2012 budget cycle, provides an opportunity to re-establish AMICâs mission and importance.
    Keywords: agricultural market information systems, Zambia, Agricultural and Food Policy, Research and Development/Tech Change/Emerging Technologies,
    Date: 2011–07
  8. By: Malte Reimers (Georg-August-University Göttingen); Stephan Klasen (Georg-August-University Göttingen)
    Abstract: While the majority of micro studies finds that rural education increases agricultural productivity, various recent cross-country regressions analysing the determinants of agricultural productivity were only able to detect insignificant or even surprising negative effects of schooling. In this paper, we argue and show that this failure to find a positive impact of education in the international context is rather a data problem related to the use of enrolment and literacy indicators. Using a panel of 95 developing and middle-income countries from 1961 to 2002 together with the newest version of the Barro-Lee educational attainment dataset, we show that education indeed has a highly significant, positive effect on agricultural productivity which is robust to changes in the control variables and in the econometric methods applied. Distinguishing between different levels of education further reveals that only primary and secondary schooling have significant positive impacts while tertiary education remains insignificant. Finally, the effect of education is estimated separately for countries with different income levels. Results indicate that the coefficient of the education variable remains insignificant for countries from the poorest three income quintiles, while it is positive and highly significant for the richest two quintiles. This finding can be interpreted as support for the prominent argument claiming that education leads to higher agricultural productivity only in the presence of rapid technical change where education will help farmers to adjust more readily to the new opportunities.
    Keywords: Agricultural productivity; agricultural production function; cross‐country regression; education; human capital
    JEL: I20 O13 O15 O47 Q10
    Date: 2011–08–26
  9. By: Banda, Diana J.; Hamukwala, Priscilla; Haggblade, Steven; Chapoto, Antony
    Abstract: The study surveyed 127 households from Central, Eastern, Luapula, Northern, and Southern Provinces of Zambia. The primary objective was to explore life-trajectory patterns and key drivers of welfare change. Households were classified based on long term poverty dynamics i.e., how they perceived their welfare compared to that of their parents with the major focus being on households that were better off (BO) than both the parents (parents of head and spouse) and those that were worse off (WO) than both parents were. Poverty was mainly defined from the communities' own perspectives and entailed exploring reasons perceived by participants for decline or improvement in peopleâs well-being in their communities. The hypotheses that factors such as household endowments, key decisions made, household location, and shocks experienced by households have an impact on householdâs welfare dynamics were tested. Several approaches were used including semi-structured interviews at household level and Focus Group Discussions (FGDs).
    Keywords: Zambia, poverty, Small Holder Farmers, Agricultural and Food Policy, Food Security and Poverty,
    Date: 2011–08
  10. By: Edison, Andy Mulyana; Jie, Ferry; Parton, Kevin A.
    Abstract: Farmersâ supply responsiveness planting rice in Jambi Province was estimated using Meta- Profit analysis function. The objective of study is to analyze rice farmersâ supply response. Research was conducted in Jambi Province in the year of 2010. Result showed that farmersâ profit planting rice increased because its price increased. Furthermore, its share decreased when its labour wage increased. This implied to farmers to plant rice because rice was relatively more profitable than other plants. The result showed that farmers tended to pushed risk in planting decision. As expexted that irrigation index was also the important significant factor. Following it found that its profit planting rice increased in wet season. This results were consistent with the fact that the water availability was important factor to plant rice. The consistency of previous result, it found that profit to plant rice was the positive determination with irrigation index. This implied that government policy in agriculture had positive impact on technological adoption. The analysis production function suggested that labour and fertilizer elasticities higher than zero significantly. Production rice elasticity by considering the number of labour used was a little bit lower than fertilizer. As expected, it found that rice production elasticity by considering irrigation index was bigger than zero significantly.
    Keywords: Crop Production/Industries,
    Date: 2011
  11. By: S. Mahendra Dev (Indira Gandhi Institute of Development Research)
    Abstract: Climate change is a major challenge for agriculture, food security and rural livelihoods for billions of people including the poor in the Asia-Pacific region. Agriculture is the sector most vulnerable to climate change due to its high dependence on climate and weather and because people involved in agriculture tend to be poorer compared with urban residents. More than 60 per cent of the population is directly or indirectly relying on agriculture as a source of livelihood in this region. Agriculture is part of the problem and part of the solution. Asian agriculture sector is already facing many problems relating to sustainability. To those already daunting challenges, climate change adds further pressure on agriculture adversely affecting the poor. The climate change is already making adversely impact on the lives of the population particularly the poor. It is already evident in a number of ways. Consistent warming trends and more frequent and intense extreme weather events such as droughts, cyclones, floods, and hailstorms have been observed across Asia and the Pacific in recent decades. The objective of this paper is to identify climate change related threats and vulnerabilities associated with agriculture as a sector and agriculture as people's livelihoods (exposure, sensitivity, adaptive capacity). The paper analyses the connections between the nature of human action as drivers of threats as well as opportunities for sustainable agriculture and better human development outcomes. Broadly, it examines the impact of climate change on rural livelihoods, agriculture, food security. It discusses the options for adaptation and mitigation and requirements for implementation at local, national and international level of these measures.
    Keywords: climate change, adaptation, mitigation, Asia-Pacific region, agriculture
    JEL: Q10 Q54 R11
    Date: 2011–08
  12. By: Möllers, Judith; Csaki, Csaba; Buchenrieder, Gertrud
    Abstract: The current discussion regarding the reform of the Common Agricultural Policy (CAP) is challenging due to the varying needs and interests of the old and new member states (NMS) of the European Union (EU). The NMS still display tremendous disparities in most structural and socio-economic indicators compared to the EU15 average, implying that further sectoral restructuring is needed. The Structural Change in Agriculture and Rural Livelihoods (SCARLED) project, which ran from 2007 until 2010, offers rich empirical insights with a specific focus on these processes in the NMS. This policy brief summarises the projectʼs main policyrelevant results. SCARLED offers three key lessons for CAP reform. First, it claims that the current, uniform CAP only partially addresses the needs of NMS. Second, the regionʼs agriculture still requires support to enhance competitiveness, albeit for a limited time. Third, the issue of small, subsistence-based farms in the region needs to be recognised. However, approaches aiming at poverty alleviation in such subsistence-based households, but also in landless rural households, need to look beyond the agricultural sector. The wider rural economy and improving education, as well as rural-urban linkages, need to be included in any povertyrelated policy approach, be it at the national or the EU level. --
    Date: 2011
  13. By: Mitchell, Paul D. (University of WI); Rejesus, Roderick M. (NC State University); Coble, Keith H. (MI State University); Knight, Thomas O. (TX Tech University)
    Abstract: The 2008 Farm Bill created the Average Crop Revenue Election (ACRE) program as a new commodity support program. Using a multinomial logit model to analyze a mail survey administered before the ACRE sign-up deadline, we identify factors driving farmer intentions regarding ACRE participation. Using a two-limit Tobit model to analyze actual county-level ACRE enrollment rates, we assess the effect of similar factors on actual farmer decisions. Results suggest that primary crops, risk perceptions, risk aversion, and program complexity were important factors. Farmer beliefs and attitudes also played key roles and were evolving during the months before the ACRE deadline.
    Date: 2011–08
  14. By: Perez, Francisco J.
    Abstract: This is a contribution of the ENVIO-NITLAPAN. The author is member of the scientific council of the RCASAE, and he is a senior researcher of the CAU NITLAPAN.
    Keywords: Poverty Reduction Strategies, Agriculture and Development, Food Security and Poverty, E24, E23, D43, D72,
    Date: 2011–08–15
  15. By: Mayshar, Joram; Moav, Omer; Neeman, Zvika
    Abstract: We propose a general theory that explains the extent of the state and accounts for related institutions as byproducts of the state's extractive technology. We posit further that this extractive technology is determined by the transparency of the production technology. This theory is applied to examine two principal phases in the evolution of the early state. First, we argue that the common explanation of the emergence of the state as a consequence of the availability of food surplus due to the Neolithic Revolution is flawed, since it ignores Malthusian considerations. In contrast, we suggest that what led to the emergence of the state was a transformation of the tax technology that was induced by the greater transparency of the new farming technology. We then apply our theory to explain key institutional features that distinguished ancient Egypt from ancient Mesopotamia, and, in particular, to explain their different land tenure regimes.
    Keywords: Appropriability; Institutions; Land Tenure; The Early State; Transparency
    JEL: D02 D82 H10 O43
    Date: 2011–08
  16. By: Coxhead, Ian (University of WI); Linh, Vu Hoang (National University of Hanoi); Le, Dong Tam (University of WI)
    Abstract: World food prices have experienced dramatic increases in recent years. These "shocks" affect food importers and exporters alike. Vietnam is a major exporter of rice, and rice is also a key item in domestic production, employment and consumption. Accordingly, rice price shocks from the world market have general equilibrium impacts and as such, their implications for household welfare are not known ex ante. In this paper we first present a simple framework for understanding the direct and indirect welfare effects of a global market shock of this kind. Second, we quantify the transmission of the price shock from global indicator prices to domestic markets. Third, we then we use an applied general equilibrium (AGE) model to simulate the effects of domestic price changes in more detail. Fourth, a recursive mapping to a large nationally representative living standards survey permits us to identify in detail the ceteris paribus effects of the shock on household incomes and welfare. In this analysis, interregional and intersectoral adjustments in the labor market emerge as key channels transmitting the effects of global price shocks across sectors and among households.
    JEL: D58 I32 Q17
    Date: 2011–07
  17. By: Ricardo de Avillez
    Abstract: In contrast to the significant slowdown in aggregate productivity growth in Canada since 2000, the labour productivity performance of the primary agriculture sector has been strong. The objective of this study is to shed light on the factors behind the sector's success. This report provides an overview of the productivity performance of the Canadian agriculture sector over the 1961-2007 period, discussing both long-term trends and recent developments. Labour productivity and MFP estimates for the period are analyzed, as well as land and intermediate input productivity. The main drivers of productivity growth in the sector are identified and examined. Finally, policy suggestions are discussed.
    Keywords: primary agriculture, labour productivity, multi-factor productivity, land productivity, intermediate input productivity
    JEL: O47 D24 J24 L79 L66 Q18
    Date: 2011–08
  18. By: Okumu, Luke; Nyankori, J.C. Okuk
    Abstract: A key objective for the adoption of East African Community (EAC) Customs Union was to enhance economic gains through elimination of tariffs and non-tariff barriers (NTBs) within the member states. This study has established that several NTBs continue to exist, and some have persisted. The NTBs that have persisted for more than three years include a long list of customs documentation requirements, cumbersome formalities, and limited testing and certification arrangements. Other NTBs that still exist include: un-standardized weighbridges; several road blocks; lack of recognition of individual countryâs standards; and the existence of several un-harmonised standards. The simulation results of spatial equilibrium model of maize trade with and without NTBs show that at the EAC level there are positive production, trade and welfare implications attributable to elimination of NTBs in intra-regional maize trade. The gains are greatest in trade and production in Uganda compared to Kenya and Tanzania. To eliminate the existing NTBs and to reduce the possibility of new ones being created, first and foremost, the EAC countries need to design effective mechanisms for identifying and verifying information about NTBs and ensuring their elimination. This will require giving the EAC Secretariat the mandate to compel individual countries to eliminate any identified NTB and to ensure that no new ones are created. Second, policy and legislative decisions made by, for example, Council of Ministers should be communicated in time for effective implementation...
    Keywords: Non-tariff barriers, East African Community, EPRC, Uganda, Agribusiness, Agricultural Finance, Community/Rural/Urban Development, Consumer/Household Economics, Financial Economics, Industrial Organization, Labor and Human Capital, Productivity Analysis, Public Economics,
    Date: 2010–12
  19. By: Gernot Pehnelt (GlobEcon); Christoph Vietze (Friedrich-Schiller-University Jena, Germany)
    Abstract: On 05 December 2010, the Renewable Energy Directive (RED) came into force in the EU. Member States are still working to fully transpose the Directive into national law and establish a framework for achieving their legally binding greenhouse gas (GHG) emission reductions. However, governments got off to a slow start as debate continues on the validity of the directives foundations including the default values used to measure the sustainability of biofuels. Only sustainable biofuels can be counted towards Member State targets. This, as a matter of principle, makes sense with respect to the very aim of renewable energy policies. On the other hand, the vague and distortive formulation and values regarding what is to be classified as "sustainable" have negatively impacted the perception of the underlying scientific base and methodologies as well as the reliability in the European biofuels sector. This uncertainty and the ongoing controversial debates are affecting investment and progress in the biofuel sector not just in Europe but all over the world. Producers of soybeans in the US, sugarcane in Brazil and palm oil in Malaysia and Indonesia as well as European importers and end-users of these products have all been sharply critical of the default values, citing significant variations in calculations that undermine the credibility of the values contained in the Directive. Given the remarkable difference between the calculation of carbon reduction performance of palm oil based biofuel by the EU and a range of scientific studies which we documented in an earlier paper (Pehnelt and Vietze 2009), we are re-calculating GHG emissions saving potentials for palm oil biodiesel in order to further assess the carbon footprint of palm oil to overcome the lack of transparency in existing publications on the issue and EU regulations governing the biofuel feed-stocks. The aim of this paper is to calculate realistic and transparent scenario based CO2-emission values for the GHG emission savings of palm oil fuel compared with fossil fuel. Using the calculation scheme proposed by the Renewable Energy Directive (RED), we derive a more realistic overall default value for palm oil diesel by using current input and output data of biofuel production (e.g. in South-East Asia) and documenting every single step in detail. We calculate different scenarios in which reliable data on the production conditions (and the regarding emission values during the production chain) of palm oil diesel are used. Our conservative calculations based on the Joint Research Centre's (JEC 2011) background data and current publications on palm oil production result in GHG emissions saving potentials of palm oil based biodiesel fairly above the 35% threshold. We cannot reproduce the EU's GHG saving values for palm oil. Rather, our results confirm the higher values obtained by other studies mentioned in our last paper (Pehnelt and Vietze 2009) and elsewhere in this study. Our results indicate default values for the GHG emission savings potential of palm oil biodiesel not only way beyond the 19 percent default value published in RED but also beyond the 35 percent threshold. Our findings conclude that the more accurate default value for palm oil feedstock for electricity generation to be 52%, and for transportation biodiesel between 38.5% and 41%, depending on the fossil fuel comparator. Our results confirm the findings by other studies and challenge the official default values published in RED. As indicated by lawsuits filed by environmental NGOs against the Commission for greater transparency related to the assessment of biofuels, the process has been severely lacking in full disclosure of metrics used to achieve the values contained in the Renewable Energy Directive. As a result, the reliability of the Directive to support the EU's low-carbon ambitions is being undermined, exposing the EU and Commission to charges of trade discrimination and limiting the ability of Member States to achieve their legally binding GHG emission reductions. This analysis demonstrates that a full review of the values contained in the Directive should be undertaken and the values revised to ensure their accuracy, and raises questions as to the method that the values were originally established. Were outside parties consulted, including the industries directly affected by the assessments in the Directive? Were these values peer reviewed? In light of grievances expressed by producers throughout the world, including US soybean growers, Brazilian sugarcane farmers, and Malaysian and Indonesian palm growers, ensuring the Directive does not discriminate against imports is critical to the long-term efforts in the EU to reduce GHG emissions.
    Keywords: Biofuel, Palm Oil, Biodiesel, RED, Renewable Energy Directive, Default Values, GHG-emissions
    JEL: F14 F18 O13 Q01 Q15 Q27 Q56 Q57
    Date: 2011–09–01
  20. By: Ferdinand Rauch
    Abstract: This paper studies the effect of a change in the marginal costs of advertising on advertising expenditures of firms and consumer prices across industries. It makes use of a unique policy change that caused a decrease of the taxation on advertising expenditures in parts of Austria and a simultaneous increase in other parts. Advertising expenditures move immediately in the opposite direction to the marginal costs of advertising. Simultaneously the price reaction to advertising is negative in some industries (food, education) and positive in other industries (alcohol, tobacco, transportation, hotels and restaurants), depending on the information content of advertising. The paper reconciles these findings using a model that contains informative and persuasive forces of advertising.
    Keywords: Advertising, taxation of advertising, effects of advertising
    JEL: H25 M37
    Date: 2011–08
  21. By: Charles Figuières; Estelle Midler
    Abstract: The international community recently agreed on a mechanism called REDD+ to reduce deforestation in tropical countries. However the mechanism, by its very nature, has no reason to induce a Pareto optimal reduction of deforestation. The aim of this article is to propose an alternative class of mechanisms for negative externalities that implements Pareto optimal outcomes as Nash Subgame Perfect Equilibria, and that satisfies some fairness properties, in particular two original axioms of environmental responsibility. Outcomes are individually rational and the scheme does take into account environmental responsibility in the sense of our two axioms. However, envy freeness, even in a weak form adapted to the deforestation problem, turns out to be hard to achieve without dropping the other properties.
    Date: 2011–08
  22. By: Chris Ross
    Abstract: This report analyzes labour productivity, multifactor productivity and input trends in Canadian food manufacturing since 1961, with a focus on the entire time period and developments since 2000. It is found that the subsector experienced labour productivity growth stronger than the business sector over both the long and short term, but has outperformed manufacturing only in the more recent period. Labour productivity growth is decomposed into capital intensity and multifactor productivity growth, which are found to have contributed to growth almost equally, and labour composition growth accounted for less than 15 per cent over the 1961-2007 period. Underlying drivers of growth are identified and trends in technology, capacity utilization, human capital, economies of scale, machinery and equipment, international trade, and regulation are explored. Policy implications for fostering labour productivity growth based on the drivers are outlined. Finally, a conclusion summarizes the key findings of the paper.
    Keywords: labour productivity, multifactor productivity, input trends, food manufacturing, capital intensity, multifactor productivity growth, labour composition
    JEL: O47 D24 J24 L66 Q18
    Date: 2011–08
  23. By: Wolfgang Härdle; Maria Osipenko
    Abstract: Many industries are exposed to weather risk which they can transfer on financial markets via weather derivatives. Equilibrium models based on partial market clearing became a useful tool for pricing such kind of financial instruments. In a multi-period equilibrium pricing model agents rebalance their portfolio of weather bonds and a risk free asset in each period such that they maximize the expected utility of their incomes constituted by possibly weather dependent profits and payoffs of portfolio positions. We extend the model to a multisite version and apply it to pricing rainfall derivatives for Chinese provinces. By simulating realistic market conditions with two agent types, farmers with profits highly exposed to weather risk and a financial investor diversifying her financial portfolio, we obtain equilibrium prices for weather derivatives on cumulative monthly rainfall. Dynamic portfolio optimization under market clearing and utility indifference of these representative agents determines equilibrium quantity and price for rainfall derivatives.
    Keywords: rainfall derivatives, equilibrium pricing, space-time Markov model
    JEL: C22 C51 G13
    Date: 2011–08
  24. By: Hampf, Benjamin
    Abstract: In this paper we present a new approach to evaluate the environmental efficiency of decision making units. We propose a model that describes a two-stage process consisting of a production and an end-of-pipe abatement stage with the environmental efficiency being determined by the efficiency of both stages. Taking the dependencies between the two stages into account, we show how nonparametric methods can be used to measure environmental efficiency and to decompose it into production and abatement efficiency. For an empirical illustration we apply our model to an analysis of U.S. power plants.
    Keywords: nonparametric efficiency analysis, pollution abatement, network DEA, materials balance condition, fosil-fueled power plants
    Date: 2011–08

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.