New Economics Papers
on Agricultural Economics
Issue of 2012‒03‒28
23 papers chosen by

  1. Price Analysis, Risk Assessment, and Insurance for Organic Crops By Singerman, Ariel; Hart, Chad E.; Lence, Sergio H.
  2. Agriculture-nutrition linkages and policies in India By S. Mahendra Dev
  3. Agricultural Supply Response and Smallholders Market Participation – the Case of Cambodia By Md. Shafiul Azam; Katsushi S. Imai; Raghav Gaiha
  4. Climate Change, Agriculture, and Food Security in Tanzania By Arndt, Channing; Strzepek, Ken; Thurlow, James
  5. Environmental and socio-economic consequences of forest carbon payments in Bolivia: Results of the OSIRIS-Bolivia model By Lykke Andersen; Jonah Busch; Elizabeth Curran; Juan Carlos Ledezma; Joaquín Mayorga; Mélissa Bellier
  6. Climate Variability and Agricultural Productivity in MENA region By Drine, Imed
  7. Environmental and Gender Impacts of Land Tenure Regularization in Africa By Ayalew Ali, Daniel; Goldstein, Markus
  8. Agriculture and Trade Opportunities for Tanzania: Past Volatility and Future Climate Change By Ahmed, Syud Amer; Hertel, Thomas W.; Martin, William J.
  9. Estimating the effects of aggregate agricultural growth on the distribution of expenditures By Ligon, Ethan A.; Sadoulet, Elisabeth
  10. Agricultural Supply Response and Smallholders Market Participation: the Case of Cambodia By Md Shafiul Azam, Katsushi Imai, Raghav Gaiha; Katsushi Imai; Raghav Gaiha
  11. Aid and Agency in Africa: Explaining Food Disbursements Across Ethiopian Households, 1994-2004 By Broussard, Nzinga H; Dercon, Stefan; Somanathan, Rohini
  12. Biofuels: Review of Policies and Impacts By Janda, Karel; Kristoufek, Ladislav; Zilberman, David
  13. The prospects of developing Biofuels in Mali By Dorothée Boccanfuso; Massa Coulibaly; Govinda R. Timilsina; Luc Savard
  14. The Regulation of Land Markets: Evidence from Tenancy Reform in India By Besley, Timothy J.; Leight, Jessica; Pande, Rohini; Rao, Vijayendra
  15. Poverty and Land Distribution: Evidence from a Natural Experiment By Keswell, Malcolm
  16. Protectionism Indices for Non-Tariff Measures: An Application to Maximum Residue Levels By Li, Yuan; Beghin, John C.
  17. Aiding Conflict: The Impact of U.S. Food Aid on Civil War By Nunn, Nathan; Qian, Nancy
  18. Political Connections and Social Networks in Targeted Transfer Programs: Evidence from Rural Ethiopia By Caeyers, Bet; Dercon, Stefan
  19. Risk and aversion in the integrated assessment of climate change By Crost, Benjamin; Traeger, Christian P.
  20. Measuring the Carbon Content of the South African Economy By Arndt, Channing; Makrelov, Konstantin; Thurlow, James
  21. Contingent Valuation of Community Forestry Programs in Ethiopia: Observing Preference Anomalies in Double-Bounded CVM By Dambala Gelo; Steven F Koch
  22. Heterogeneity, Demand for Insurance and Adverse Selection By Spinnewijn, Johannes
  23. A Stochastic Simulation Approach to Estimating the Economic Impacts of Climate Change in Bangladesh By Thurlow, James; Yu, Winston

  1. By: Singerman, Ariel; Hart, Chad E.; Lence, Sergio H.
    Abstract: The Agricultural Risk Protection Act of 2000 recognized organic farming as a“good farming practice,†making federal crop insurance coverage available for organiccrops, and taking into account the idiosyncrasies of the organic production system. Inaddition to the production risks covered for conventional producers, organic farmerswho sign up for coverage are compensated for production losses from damage due toinsects, disease, and/or weeds. However, the incorporation of organic production intothe crop insurance rating structure has been limited. Organic producers are charged anarbitrary 5% premium surcharge over conventional crop insurance. The actuarialfairness of this premium is, at least, questionable. In addition, in the case of crop failure,organic farmers receive compensation based on the prices of conventionally producedcrops. Thus, price premiums that organic producers are able to obtain in the market arenot compensated for under the current insurance policy structure.The Food, Conservation and Energy Act of 2008, which amends part of theFederal Crop Insurance Act, was written to investigate some of these claims, requiringthe U.S. Department of Agriculture to examine the currently offered federal cropinsurance coverage for organic crops as described in the organic policy provisions of theAct (Title XII). Such provisions established the need to review, among other things, theunderwriting risk and loss experience of organic crops; determine whether significant,consistent, or systematic variations in loss history exist between organic and nonorganicproduction; and modify the coverage for organic crops in accordance with the results.Here we present the major findings of three analyses we performed on keyelements of the insurance of organic crops—prices, yields, and revenue—in an effort tocontribute to the design of an organic crop insurance policy that covers organicproducers according to their idiosyncratic risks.
    Keywords: crop insurance; organic agriculture
    JEL: Q11 Q12
    Date: 2011–08–21
  2. By: S. Mahendra Dev (Indira Gandhi Institute of Development Research)
    Abstract: This paper looks at some key entry points for agriculture to influence nutrition and suggests policies for nutrition-sensitive agricultural development, within the current policy framework. In addition, it reviews three key agriculture-food programs for their nutrition sensitivity at the policy level, using a convergence framework. The three key entry points for agriculture-nutrition linkages are: inclusive agriculture growth, food prices, and women in agriculture. It provides policy options for strengthening the linkages between agriculture and nutrition.
    Keywords: Agricultural growth, nutrition, women empowerment, food prices, convergence
    JEL: Q10 Q11 Q18 I10 J16
    Date: 2012–02
  3. By: Md. Shafiul Azam (Economics, School of Social Sciences, University of Manchester, UK); Katsushi S. Imai (Economics, School of Social Sciences, University of Manchester, UK & Research Institute for Economics and Business Administration, Kobe University, Japan); Raghav Gaiha (Faculty of Management Studies, University of Delhi, India)
    Abstract: This paper explores the key causal factors behind agricultural supply response and farmers' market participation decisions in Cambodia. A stylized farm household model with market imperfections is considered and a two-step decision making process is outlined. Farmers decide, first, whether or not to participate in the market and then they decide how much to sell. The model is estimated using a Heckman type regression model. We compute the unconditional marginal effects for the full sample as well as for the samples for the small and large holders separately. Non-price factors such as risk, technology and rural infrastructure are important determinants of commercialization of agriculture in Cambodia. The marginal effects for the small and large holders differ substantially both in quantitative and qualitative terms. This suggests differential treatment in terms of intervention and incentives for small and large holders would be more effective to promote market access.
    Keywords: Agriculture, Supply response, Farm household model, Market participation, Switching model, Cambodia
    JEL: Q12 Q13 Q15 C24
    Date: 2012–03
  4. By: Arndt, Channing; Strzepek, Ken; Thurlow, James
    Abstract: The consequences of climate change for agriculture and food security in developing countries are of serious concern. Due to their reliance on rain-fed agriculture both as a source of income and consumption, many low-income countries are generally considered to be most vulnerable to climate change. Here, we estimate the impact of climate change on food security in Tanzania. Representative climate projections are used in calibrated crop models to predict crop yield changes for 110 districts in Tanzania. These results are in turn imposed on a highly-disaggregated, dynamic economy-wide model of Tanzania. We find that, relative to a no climate change baseline and considering domestic agricultural production as the principal channel of impact, food security in Tanzania appears likely to deteriorate as a consequence of climate change. The analysis points to a high degree of diversity of outcomes (including some favourable outcomes) across climate scenarios, sectors, and regions. The economic modelling indicates that markets have the potential to smooth outcomes on households across regions and income groups, though noteworthy differences in impacts across households persist both by region and by income category.
    Keywords: climate change; agriculture; food security; crop model; CGE model; Tanzania
    Date: 2011
  5. By: Lykke Andersen (Institute for Advanced Development Studies); Jonah Busch (Conservation International – Arlington, Virginia); Elizabeth Curran (CEEMA-INESAD, San Francisco, California); Juan Carlos Ledezma (Conservation International – Bolivia); Joaquín Mayorga (CEEMA-INESAD, San Francisco, California); Mélissa Bellier (University of Montesquieu Bordeaux IV, France)
    Abstract: Bolivia has significant potential to abate climate change by reducing deforestation. This opportunity presents economic and environmental tradeoffs. While these tradeoffs have been hotly debated, they have as yet been the subject of little quantitative analysis. We introduce the OSIRIS-Bolivia model to provide a quantitative basis for decision-making. OSIRIS-Bolivia is an Excel-based tool for analyzing the potential effects of incentive payments to reduce emissions from deforestation (REDD) in Bolivia. It is based on a spatial econometric model of deforestation in Bolivia during the period 2001-2005, and uses information on forest cover, deforestation rates, geographical conditions, and drivers of deforestation, including agricultural opportunity costs, for more than 120,000 pixels covering the whole country. OSIRIS-Bolivia is based on a partial equilibrium model in which reductions in deforestation in one region reduce the supply of agricultural products to the domestic market, which in turn causes an increase in the price of agricultural products, making conversion of land to agriculture more attractive and thus stimulating an increase in deforestation in other regions (leakage). The model can help answer questions such as: Where in Bolivia are carbon incentive payments most likely to result in reduced deforestation? Who are most likely to benefit from REDD? How much money will it take to reduce deforestation by a given amount? To what extent might transaction costs or preferences for agricultural income undermine the goals of the REDD program?
    Keywords: Deforestation, REDD, environmental impacts, socio-economic impacts
    JEL: Q21 Q56
    Date: 2011–12
  6. By: Drine, Imed
    Abstract: The Middle East and North Africa (MENA) region is particularly vulnerable to climate change. The severity of climate-change impacts is related to the geographic and ecological particularity of the region. The majority of countries in the MENA region belong to the hydraulic poor regions located between the tempered region of the Northern hemisphere and the inter-tropical region, characterized by scarcity and spatial and temporal rainfall variability. This paper describes, first, the interaction between climate changes, agriculture and food security in the MENA region. Second, an empirical model is used to test the impact of climate variability on agricultural productivity. Our results suggest that lower precipitation, heat waves and drought are the main causes of decreasing agricultural productivity in the region.
    Keywords: agricultural productivity, climate change, MENA region, Malmquist productivity
    Date: 2011
  7. By: Ayalew Ali, Daniel; Goldstein, Markus
    Abstract: Although recent developments greatly increased interest in African land tenure, few models to address these issues at the required scale have been identified or evaluated. Rwanda.s nation-wide land tenure regularization programme is of great interest. A discontinuity design with spatial fixed effects that is used to evaluate the pilot for this programme points to three main effects; namely, (i) improved land access for legally married women and better recordation of inheritance rights; (ii) significant and large investment impacts that are particularly pronounced for women; and (iii) a reduction in land market activity rather than distress sales. Implications for programme design and policy are discussed.
    Keywords: gender, agricultural investment, land administration, Rwanda
    Date: 2011
  8. By: Ahmed, Syud Amer; Hertel, Thomas W.; Martin, William J.
    Abstract: Given global heterogeneity in climate-induced agricultural variability, Tanzania has the potential to substantially increase its maize exports to other countries. If global maize production is lower than usual due to supply shocks in major exporting regions, Tanzania may be able to export more maize at higher prices, even if it also experiences below-trend productivity. Diverse destinations for exports can allow for enhanced trading opportunities when negative supply shocks affect the partnersâ.. usual import sources. Future climate predictions suggest that some of Tanzaniaâ..s trading partners will experience severe dry conditions that may reduce agricultural production in years when Tanzania is only mildly affected. Tanzania could thus export grain to countries as climate change increases the likelihood of severe precipitation deficits in other countries while simultaneously decreasing the likelihood of severe precipitation deficits in Tanzania. Trade restrictions, like export bans, prevent Tanzania from taking advantage of these opportunities, foregoing significant economic benefits.
    Keywords: climate change, volatility, Tanzania, trade, export ban, agriculture
    Date: 2011
  9. By: Ligon, Ethan A.; Sadoulet, Elisabeth
    Keywords: Agricultural and Resource Economics
    Date: 2011–02–01
  10. By: Md Shafiul Azam, Katsushi Imai, Raghav Gaiha; Katsushi Imai; Raghav Gaiha
    Date: 2012
  11. By: Broussard, Nzinga H; Dercon, Stefan; Somanathan, Rohini
    Abstract: We study the distribution of food aid in Ethiopia between 1994 and 2004 using data from the Ethiopian Rural Household Survey. Over this period village leaders had considerable discretion in disbursing aid subject to official guidelines and periodic monitoring. We use a principal-agent model and household panel data for approximately 940 households to understand biases in the allocation of aid. The model shows that correlations between aid and observed measures of need are not a good measure of targeting because agents have incentives to distort allocations within targeted classes. Consistent with the model, we find that the aid recipients match official criteria but disbursements are negatively correlated with determinants of need that are not easily observable by monitoring agencies, namely pre-aid consumption, self-reported power and involvement in village-level organizations. Our results suggest informal structures of power within African villages influence the extent to which food aid insulates some of the world's poorest families from agricultural shocks but also that policy guidelines do constrain permissible deviations from need-based allocations.
    Keywords: Africa; food aid; political economy
    JEL: H53 I38 O11
    Date: 2012–02
  12. By: Janda, Karel; Kristoufek, Ladislav; Zilberman, David
    Abstract: This paper provides an overview of the environmental, economical, and policy considerations related to biofuels. While the biofuel production and consumption exhibited significant increase over the first decade of the new millennium, this and further increases in biofuel production are driven primarily by government policies. Currently available first generation biofuels are with a few exceptions not economically viable in the absence of fiscal incentives or high oil prices. Also the environmental impacts of biofuels as an alternative to fossil fuels are quite ambiguous. The review of the most recent economic models dealing with biofuels and their economic impacts provides a distinction between structural and reduced form models. The review ofreduced models is structured toward the time series analysis approach to thedependencies between prices of feedstock, biofuels, and fossil fuels.
    Keywords: Agriculture, Agriculture Operations, and Related Sciences, biofuels, ethanol, biodiesel
    Date: 2011–10–23
  13. By: Dorothée Boccanfuso (Département d’économique and GRÉDI, Université de Sherbrooke); Massa Coulibaly (GREAT - Groupe de recherche en économie appliquée et théorique); Govinda R. Timilsina (The World Bank); Luc Savard (Département d’économique and GRÉDI, Université de Sherbrooke)
    Abstract: A biofuels race has emerged because of the increasing cost of oil. In parallel, a growing concern for environmental protection has been observed. The expansion of biofuel production has occurs concurrently with raising prices of the foodstuffs. Developing countries like Mali have seen this situation as an opportunity to reduce its dependency on oil imports and generate gains from biofuel production. This development strategy could put pressure on food security in the country. The government of Mali has developed a strategy to promote biofuels production particularly with jatropha. The economic and environmental stakes around this strategy are far from being negligible. In this paper, we provide an analysis of this sector with opportunities and risk of developing this sector.
    Keywords: Biofuels, agriculture
    JEL: D58 D31 I32 Q17
    Date: 2012–02
  14. By: Besley, Timothy J.; Leight, Jessica; Pande, Rohini; Rao, Vijayendra
    Abstract: While the regulation of tenancy arrangements is widespread in the developing world, evidence on how such regulation influences the long-run allocation of land and labor remains limited. To provide such evidence, this paper exploits quasi-random assignment of linguistically similar areas to different South Indian states and historical variation in landownership across social groups. Roughly thirty years after the bulk of tenancy reform occurred, areas that witnessed greater regulation of tenancy have lower land inequality and higher wages and agricultural labor supply. We argue that stricter regulations reduced the rents landowners can extract from tenants and thus increased land sales to relatively richer and more productive middle caste tenants; this is reflected in aggregate productivity gains. At the same time, tenancy regulations reduced landowner willingness to rent, adversely impacting low caste households who lacked access to credit markets. These groups experience greater landlessness, and are more likely to work as agricultural labor.
    Keywords: India; land markets; land reform; tenancy
    JEL: O12 Q12
    Date: 2012–01
  15. By: Keswell, Malcolm
    Abstract: While land reforms have long been motivated as a potential policy lever of rural growth and development, there is remarkably little evidence of the direct impacts of such reforms. In an effort to fill this lacunae, this paper examines South Africa's Land Redistribution for Agricultural Development (LRAD) program. We show that the implementation of this program operates as a natural experiment in which self-selected and administratively-filltered LRAD applicants receive land transfers at random points in time. This random exit from the application pipeline creates creates exogenous variation in treatment assignment as well as treatment duration. Exploiting both sources of exogenous variation, we estimate average and long-run treatment effects that imply a discounted gain in monthly per capita consumption of about fifty per cent after three years of exposure to the program.
    Keywords: land reform, poverty, impact evaluation
    Date: 2011
  16. By: Li, Yuan; Beghin, John C.
    Abstract: We propose aggregation indices of Non-Tariff Measures (NTMs) to quantify their protectionism relative to international standards. We apply the indices to national Maximum Residue Limit (MRL) regulations affecting agricultural and food trade and using a science-based criteria embodied in Codex Alimentarius international standards. The approach links two streams of the NTM literature, one concerned with the aggregation of various NTMs into meaningful indices, and the other attempting to evaluate the protectionism of NTMs. The data used in the application come from a large international dataset on veterinary and pesticide MRLs and CODEX MRL standards for a large set of countries.
    Keywords: Non-tariff measures; protectionism; MRL; NTMs; barriers; Maximum residue limit
    JEL: F13 Q17 Q18
    Date: 2012–03–14
  17. By: Nunn, Nathan; Qian, Nancy
    Abstract: This paper examines the effect of U.S. food aid on conflict in recipient countries. To establish a causal relationship, we exploit time variation in food aid caused by fluctuations in U.S. wheat production together with cross-sectional variation in a country's tendency to receive any food aid from the United States. Our estimates show that an increase in U.S. food aid increases the incidence, onset and duration of civil conflicts in recipient countries. Our results suggest that the effects are larger for smaller scale civil conflicts. No effect is found on interstate warfare.
    Keywords: Civil Conflict; Foreign Aid; Humanitarian Aid
    JEL: F34 F5
    Date: 2012–02
  18. By: Caeyers, Bet; Dercon, Stefan
    Abstract: Despite increasingly large scale social protection programs in Africa, we have limited evidence on the local political economy of their allocation. We investigate community-based processes for food aid allocation and the role of political and social networks, using the case of Ethiopia in the aftermath of a serious drought in 2002. Local political authorities are in charge of food transfers, in terms of free food aid or food-for-work programs. We find that although targeting is clearly imperfect, free food aid is responsive to need, as well as targeted to households with less access to support from relatives or friends. We also find a strong correlation with political connections: households with close associates in official positions have more than 12 % higher probability of obtaining free food than households that are not well connected. This effect is large: someone without political connections has the same probability of getting food aid than someone more than twice as rich, but with these connections. The correlation with political connections is specifically strong in the immediate aftermath of the drought. Payment for food-for-work is also about a third higher for those with political connections. Although these programs appear to be responsive to need, in future it is crucial to look more closely at the local political economy of these programs.
    Keywords: Africa; food aid; political economy; targeting; transfers
    JEL: H53 I38 O11
    Date: 2012–02
  19. By: Crost, Benjamin; Traeger, Christian P.
    Abstract: We analyze the impact of damage uncertainty on optimal mitigation policies in the integrated assessment of climate change. Usually, these models analyzeuncertainty by averaging deterministic paths. In contrast, we build a consistentmodel deriving optimal policy rules under persistent uncertainty. For this purpose,we construct a close relative of the DICE model in a recursive dynamic programming framework. Our recursive approach allows us to disentangle effects of risk, risk aversion, and aversion to intertemporal substitution. We analyze different ways how damage uncertainty can affect the DICE equations. We compare the optimal policies to those resulting from the wide-spread ex-ante uncertainty approach averaging deterministic paths.
    Keywords: climate change, uncertainty, integrated assessment, risk aversion, intertemporal substitution, recursive utility, dynamic programming, Agricultural and Resource Economics, Agriculture, Agriculture Operations, and Related Sciences, Natural Resources and Conservation
    Date: 2011–11–01
  20. By: Arndt, Channing; Makrelov, Konstantin; Thurlow, James
    Abstract: We estimate the carbon intensity of industries, products, and households in South Africa. Direct and indirect carbon usage is measured using multiplier methods that capture inter-industry linkages and multi-product supply chains. Carbon intensity is found to be high for exports but low for major employing sectors. Middle-income households are the most carbon-intensive consumers. These results suggest that carbon pricing policies (without border tax adjustments) would adversely affect export earnings, but should not disproportionately hurt workers or poorer households. 7per cent of emissions arise though marketing margins, implying that carbon pricing should be accompanied by supporting public policies and investments.
    Keywords: greenhouse gas emissions, carbon use, input-output analysis, South Africa
    Date: 2011
  21. By: Dambala Gelo; Steven F Koch
    Abstract: This study examines the potential for anomalous response behaviour effects within the context of double-bounded contingent valuation applied to community forestry programs in rural Ethiopia. Anomalous responses considered include shift effects, framing effects, anchoring effects, and others closely related to these. The results confirmed the presence of anomalous responses, especially shift and framing effects; anchoring effects are not uncovered. After controlling for these biases, the analysed community forestry program is shown to offer a welfare gain ranging from Ethiopian Birr (ETB) 20.14 to 22.80 annually, per household. In addition to uncovering limited welfare benefits, the results raise questions regarding the validity of previous double-bounded contingent valuation welfare estimates in developing countries, suggesting that future studies should control for incentive incompatibility and framing effects bias.
    Keywords: Double-bounded contingent valuation, shift bias, anchoring bias
    JEL: Q26 Q23 Q28
    Date: 2012
  22. By: Spinnewijn, Johannes
    Abstract: Recent empirical work finds that surprisingly little variation in the demand for insurance is explained by heterogeneity in risks. I distinguish between heterogeneity in risk preferences and risk perceptions underlying the unexplained variation. Heterogeneous risk perceptions induce a systematic difference between the revealed and actual value of insurance as a function of the insurance price. Using a sufficient statistics approach that accounts for this alternative source of heterogeneity, I find that the welfare conclusions regarding adversely selected markets are substantially different. The source of heterogeneity is also essential for the evaluation of different interventions intended to correct inefficiencies due to adverse selection like insurance subsidies and mandates, risk-adjusted pricing and information policies.
    Keywords: adverse selection; heterogeneity; risk perceptions; welfare and policy
    JEL: D60 D82 D83 G28
    Date: 2012–02
  23. By: Thurlow, James; Yu, Winston
    Abstract: Climate change assessments often inadequately address uncertainty when estimating damages. Using a dynamic economy-wide model of Bangladesh, we estimate and decompose damages from historical climate variability and future anthropogenic climate change. Our stochastic simulation approach avoids biases caused by non-linear damage functions and fixed occurrences of extreme events in historical data. Using ten climate projections, we find that future anthropogenic climate change damages until 2050 are, on average, one-fifth of those from historical climate variability. Climate change also alters the temporal distribution of damages and slows Bangladeshâ..s long- run shift (adaptation) into dry (winter) season rice production.
    Keywords: climate change, uncertainty, stochastic simulation, CGE model, agriculture, Bangladesh
    Date: 2011

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