New Economics Papers
on Agricultural Economics
Issue of 2013‒05‒19
eighteen papers chosen by

  1. An Overview of Agricultural Credit and Crop Insurance in Bihar By Singh, R.K.P.; Singh, K.M.
  2. Is EU Support to Malawi Agriculture Effective? By Wouter Zant
  3. How does Market Access affect Smallholder Behavior? The Case of Tobacco Marketing in Malawi By Wouter Zant
  4. Does Migration Raise Agricultural Investment? An Empirical Analysis for Rural Mexico By Marcus Böhme
  5. Non-linear Price Transmission between Biofuels, Fuels and Food Commodities By Ladislav Kristoufek; Karel Janda; David Zilberman
  6. The Impact of Insurance Provision on Households’ Production and Financial Decisions By Cai, Jing
  7. Modelling the Effects of Oil Prices on Global Fertilizer Prices and Volatility By Ping-Yu Chen; Chia-Lin Chang; Chi-Chung Chen; Michael McAleer
  8. Gross Capital Formation and GDP growth in Indian Agriculture Sector By marimuthu, sivakumar
  9. Public Good Contributions Among Coffee Farmers in Costa Rica: Cooperativists and Private Market Participants. By Hopfensitz, Astrid; Miquel-Florensa, Pepita
  11. Climate change impacts on the water services in Costa Rica: a production function for the hydroenergy sector By Elisa Sainz de Murieta; Aline Chiabai
  12. Stochastic viability of the coastal fishery in French Guiana By A.A. Cisse; L. Doyen; F. Blanchard; J.C. Pereau
  13. Economic Effects of Global Warming under By Da Rocha, José María; Gutiérrez Huerta, María José; Villasante, Sebastián
  14. Transboundary Externalities and Property Rights: An International River Pollution Model By Gerard van der Laan; Nigel Moes
  15. Composite Valuation of Immaterial Damage in Flooding: Value of Statistical Life, Value of Statistical Evacuation and Value of Statistical Injury By Marija Bockarjova; Piet Rietveld; Erik T. Verhoef
  16. Integrated assessment of the coastal fishery production systems in French Guiana By Abdoul Ahad Cisse; Fabian Blanchard; Olivier Guyader
  17. Optimal Learning on Climate Change: Why Climate Skeptics should reduce Emissions By Sweder van Wijnbergen; Tim Willems
  18. Individuals’ Preventive Behavioral Response to Changes in Malaria Risks and Government Interventions: Evidence from six African countries By Gabriel Picone; Robyn Kibler; Benedicte Apouey

  1. By: Singh, R.K.P.; Singh, K.M.
    Abstract: Bihar has a large agrarian economy of over Rs 250 billion with more than 80 percent of rural population subsisting on farming. Agricultural work force increased more than two-fold from 126 lakh in 1981 to 265 lakh in 2006 whereas net sown area declined by about one lakh hectares and gross cropped area has been stagnating at 80 lakh hectares during the period. Due to increase in number of agricultural labour force in Bihar, per agricultural worker annual real productivity (at 1980 prices) has declined from Rs 1977.00 in 1980-81 to Rs 1278.00 in 2005-06. Among the major states in India, Bihar is at the lowest ladder in terms of proportion of institutional loan to total loan disbursement to farmers. The high indebtedness to money lenders may be an important reason for indifferent attitude of farmers towards lending institutions, resulting in low investment and low productivity in Bihar. An assessment of the situation at ground level indicates that recourse to non-institutional credit continues to dominate as far as rural areas and agriculture sector are concerned. The study recommends interest rate on co-operative agricultural loans be reduced to 3 per cent in Bihar for benefit of farmers. It will motivate farmers to approach cooperatives for agricultural loans who are still not inclined to contact commercial bank branches. Agricultural insurance offers protection against losses caused by fluctuations in the output of a crop from one year to another or from one crop season to another. Its objective is to stimulate and support the production of principal crops in the country. Providing financial support to farmers in the event of crop failure, it makes farmers credit-worthy for the next crop season. It has been observed that the majority of small and marginal farmers, as well as tenant farmers and farm laborers bear the brunt of crop failure. However, the performance of National Agricultural Insurance Scheme has also been unsatisfactory in Bihar. Despite change in form of crop insurance scheme and establishment of Agricultural Insurance Company Ltd. the regional disparities in crop insurance still persist. It is accordingly recommended that a campaign be launched in rural areas to create awareness among farmers about crop insurance involving, inter alia, non-loan taking farmers because a large number of farmers are still not in a position to avail crop loan facility from institutional agencies in Bihar.
    Keywords: Agricultural credit, Crop insurance, Weather-based insurance Bihar, India
    JEL: Q1 Q14 Q18
    Date: 2013–01–09
  2. By: Wouter Zant (VU University Amsterdam)
    Abstract: We measure the impact of the Farmers Income Diversification Program (FIDP), an EU funded program implemented in Malawi from late 2005 onwards, aiming at increasing agricultural productivity, diversification, value addition, commercialization and trade of subsistence farmers. The geographical spread of the implementation of FIDP is exploited to identify its impact. Computations are based on annual data by Extension Planning Area, 198 in total, fully covering Malawi, for the period 2003-04 to 2009-10. The estimations support a statistically significant impact of FIDP on agricultural productivity, with increases reaching 20% to 24% relative to base period levels, with a lag of at least one year after the start of the program and increasing over the years. Evidence on diversification of crop income is less strong but still suggests increases ranging from 5% to 10%. Results are robust for instrumental variables, synthetic controls, clustering of standard errors and inclusion of additional covariates.
    Keywords: agricultural policy, impact evaluation, subsistence farming, Malawi, Africa
    JEL: F35 O13 O55 Q11 Q13
    Date: 2012–09–07
  3. By: Wouter Zant (VU University Amsterdam)
    Abstract: Transaction costs play a key role in the behaviour of smallholders in developing countries. We exploit the quasi experimental design of the introduction of an additional tobacco auction floor in Malawi in order to investigate the impact of a reduction in transaction costs and improved market access on yield and underlying smallholder's decisions on production and area of tobacco, the major cash crop in Malawi. Estimations are based on annual data by Extension Planning Area, 198 in total, fully covering Malawi, for 2003-04 to 2009-10. The estimation results support a statistically significant positive impact of the introduction of a new auction floor on tobacco yield and production of smallholders. Yield increases over the years to 21-25% above base year level. Smallholder production increases are of a similar size with a larger variation, ranging from 12% to 30%. The evidence further suggests that smallholder area is not affected. Results are shown to be robust after controlling for rainfall, fertilizer use, tobacco prices, maize prices and after including the lagged dependent variable.
    Keywords: transaction costs, market access, subsistence, food & cash crops, Malawi, Africa
    JEL: D23 O13 O55 Q11 Q13
    Date: 2012–09–03
  4. By: Marcus Böhme
    Abstract: The effect of remittances on capital accumulation remains a contested topic. This paper uses a panel data set from rural Mexico to investigate the impact of remittances on agriculture and livestock investments. After controlling for the endogeneity of migration through an instrumental variable estimation our empirical results show that international migration has a significantly positive effect on the accumulated agricultural assets but not on livestock capital. This suggests that households use the capital obtained from international migration only to overcome liquidity constraints for subsistence production whereas migration itself seems to be the superior investment option compared to other productive activities such as livestock husbandry
    Keywords: migration, investment, Mexico, agriculture
    JEL: D1 J6 O1
    Date: 2013–05
  5. By: Ladislav Kristoufek; Karel Janda; David Zilberman
    Abstract: For the biofuel markets and related commodities, we study their price transmission, which is in fact equivalent to studying price cross-elasticities. Importantly, we focus on the price dependence of the price transmission mechanism. Several methodological caveats are discussed. Specifically, we combine the memory robust feasible generalized least squares estimation with two-stage least squares to control for endogeneity bias and inconsistency. We find that both ethanol and biodiesel prices are responsive to their production factors (ethanol to corn, and biodiesel to German diesel). The strength of transmission between both significant pairs increased remarkably during the food crisis of 2007/2008. Causality tests further show that price changes in production factors lead the changes in biofuels even after controlling for price effects.
    Keywords: biofuels; price transmission; price cross-elasticity; causality;
    JEL: C22 Q16 Q42
    Date: 2013–02
  6. By: Cai, Jing
    Abstract: Taking advantage of a natural experiment and a rich household-level panel dataset, this paper tests the impact of an agricultural insurance program on household level production, borrowing, and saving. The empirical strategy includes both difference-in-difference and triple difference estimations. I find that, first, introducing insurance increases the production area of insured crops by around 20% and decreases production diversification; second, provision of insurance raises the credit demand by 25%; third, it decreases household saving by more than 30%; fourth, the effect of insurance on borrowing persists in the long-run, while the effect on saving is significant only in the medium-run; and fifth, the impact of insurance is greater on larger farmers and on households with lower migration remittance.
    Keywords: Insurance; Production; Borrowing; Saving
    JEL: D14 G21 G22 O16 Q12
    Date: 2013–05–09
  7. By: Ping-Yu Chen (National Chung Hsing University, Taiwan); Chia-Lin Chang (National Chung Hsing University, Taiwan); Chi-Chung Chen (National Chung Hsing University, Taiwan); Michael McAleer (Erasmus University Rotterdam, Kyoto University, Japan, and Complutense University of Madrid, Spain)
    Abstract: The main purpose of this paper is to evaluate the effect of crude oil price on global fertilizer prices in both the mean and volatility. The endogenous structural breakpoint unit root test, ARDL model, and alternative volatility models, including GARCH, EGARCH, and GJR models, are used to investigate the relationship between crude oil price and six global fertilizer prices. The empirical results from ARDL show that most fertilizer prices are significantly affected by the crude oil price while the volatility of global fertilizer prices and crude oil price from March to December 2008 are higher than in other periods.
    Keywords: Fertilizer Price, Oil Price, Volatility
    JEL: Q14 C22 C58
    Date: 2013–01–25
  8. By: marimuthu, sivakumar
    Abstract: Nevertheless the share of agriculture sector in the GDP has declined in the recent past; agriculture is the backbone and engine of the Indian economy. Agriculture continues play a vital role in the development of India. More than 60 per cent of the people, especially rural Indians, still depends agriculture sector for their subsistence and most of the industries also depend upon agriculture for their raw materials. Any developmental activity needs investment; like that GDP growth needs investment. On the other hand, any investment has to yield some benefit. Hence it is imperative to measure the effectiveness or yield of any investment. In this perspective, the Gross Capital Formation (GCF) and the Gross Domestic Product (GDP) change in Indian agriculture sector study is getting importance.
    Keywords: India, Agriculture, GDP, Gross Capital Formation, ICOR
    JEL: O13 Q14
    Date: 2013–05–13
  9. By: Hopfensitz, Astrid (TSE); Miquel-Florensa, Pepita (TSE)
    Abstract: We present an experimental lab-in-the-field study on co?ee farmers in Costa Rica, to investigate the importance of real world institutions on abstract game behavior. Farmers participated in experimental public-good games with partners drawn either from their own or di?erent from their own background (members of a cooperative or free market traders). While free market participants are largely uninfluenced in their decisions by the identity of their partners, cooperativists strongly react to it. Behavior of cooperativists in the experiment is predicted through real world behavior, experience and motivations. Specifically, labels that create additional institutional constraints (Fair Trade, Rainforest alliance) influence behavior.
    Keywords: Trust – Digit Ratio – Testosterone – Strategy Detection – Betrayal Aversion
    JEL: C92 O13 Q13
    Date: 2013–04–26
  10. By: Beghin, John C.; Li, Yuan
    Abstract: We build a parsimonious partial equilibrium political-economy model for a tradable good associated with a negative externality mitigated by a single quality standard. The policy-maker solves for the standard that maximizes a weighted sum of welfare measures reflecting rent-seeking activities. Derived comparative statics are ambiguous but provide useful guidance for the econometric specification. We empirically implement the derived reduced form to econometrically investigate the determinants of protectionism in maximum residue limits affecting food trade among a large number of countries. Protectionism is measured using an index of stringency of MRLs relative to Codex international standards as in Li and Beghin (2012). Higher-income countries tend to protect their domestic market and their consumers’ health more than lower income countries do; MRL stringency and tariffs are substitute policy instruments; the impact of democratization on strictness of MRLs shows a inverted u-shaped pattern; and the quality of governmental institutions increases MRL protection.  
    Keywords: political economy; NTMs; Non-tariff measures; MRL; endogenous; NTBs; food trade; maximum residue limits
    JEL: F13 Q17 Q18
    Date: 2013–05–08
  11. By: Elisa Sainz de Murieta; Aline Chiabai
    Abstract: The case study presented in this section aims to estimate the economic value of the water services used for hydropower in tropical forests in Costa Rica, and to assess the expected economic impact due to climate change. The model developed allows estimating the economic impacts of climate change on the hydroelectric sector, using the association between bio-physical data, technical data related to the plants and economic inputs. A production function is used for this purpose which relates the quantity of water available (runoff) with the energy generated by the selected plants, based on a sample of 40 plants. <br /> Results show a significant reduction in the hydropower production in all future scenarios, estimated between 41 and 43% for Costa Rica. This translates in a considerable reduction in the expected revenues of the hydroelectric sector in Costa Rica under all climate change scenarios considered, but with lower reductions in the B1 scenario, which incorporates sustainability criteria. Taking into account future technological changes, the model shows that it would be necessary to double the installed capacity of all plants to get an increase in annual revenue that ranges from 3-18%. With an increase in the installed capacity of about 50%, economic losses would be reduced by 12% in all the scenarios.
    Date: 2013–04
  12. By: A.A. Cisse (CEREGMIA, Université des Antilles et de la Guyane); L. Doyen (CNRS, CERSP, MNHN, Paris, France); F. Blanchard (Ifremer, Unité Biodiversité Halieutique de Guyane); J.C. Pereau (GRETHA UMR 5113n Pessac, France)
    Abstract: This paper presents an application of stochastic viability approach in a tropical small scale fishery context, offering a theoretical and empirical model of ecosystem-based fishery management. A multi-species and multi-fleet bio-economic model integrating Lotka-Volterra trophic dynamics as well as production and profit assessments is applied to the French Guiana coastal fishery. This case study is interesting as consistent time series data are available with data collection system set up since 2006. The dynamic model is calibrated with thirteen species and four fleets using monthly catch and effort data from 2006 to 2010. We compare different management strategies relying on different combinations of fishing effort, from the viewpoints of both biodiversity preservation and socio-economic performance, assuming fixed landing prices and fixed costs. The risk for the fishery to mismatch the potential local fish demand growth is pointed out, as well as the loss of species which cannot be avoided without closure.
    Date: 2013–03
  13. By: Da Rocha, José María; Gutiérrez Huerta, María José; Villasante, Sebastián
    Abstract: Global warming of the oceans is expected to alter the environmental conditions that determine the growth of a fishery resource. Most climate change studies are based on models and scenarios that focus on economic growth, or they concentrate on simulating the potential losses or cost to fisheries due to climate change. However, analysis that addresses model optimization problems to better understand of the complex dynamics of climate change and marine ecosystems is still lacking. In this paper a simple algorithm to compute transitional dynamics in order to quantify the effect of climate change on the European sardine fishery is presented. The model results indicate that global warming will not necessarily lead to a monotonic decrease in the expected biomass levels. Our results show that if the resource is exploited optimally then in the short run, increases in the surface temperature of the fishery ground are compatible with higher expected biomass and economic profit.
    Keywords: stock growth uncertainty, European sardine fishery,, global warming
    Date: 2013
  14. By: Gerard van der Laan (VU University Amsterdam); Nigel Moes (VU University Amsterdam)
    Abstract: In this paper we study international river pollution problems. We introduce a model in which the agents (countries) located along a river derive benefit while causing pollution, but also incur environmental costs of experiencing pollution from all upstream agents. We find that total pollution in the model decreases when the agents decide to cooperate. The resulting gain in social welfare can be distributed among the agents based on the property rights over the river. Using principles from international water law we suggest 'fair' ways of distributing the property rights and therefore the cooperative gain.
    Keywords: international river, pollution, externality, property rights, value
    JEL: C70 D60 Q53
    Date: 2012–01–19
  15. By: Marija Bockarjova (VU University Amsterdam); Piet Rietveld (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam)
    Abstract: This paper enriches existing valuation literature in a number of ways by presenting context-specific estimates of immaterial damage. First, it offers an estimation of value of statistical life (VOSL) in the context of a natural hazard (flooding). Next, as one of the contributions, alongside with less biased estimate of VOSL (euro 6.8 mln) it also provides estimates of the value of statistical injury (VOSI, euro 92,000), and of the value of statistical evacuation (VOSE, euro 2,400). Our estimated indicators are plausible and stay robust throughout various estimations. For flood protection policy in the Netherlands, a higher value of VOSL forthcoming from this research would imply 'underprotection' under current conditions. Another important finding concerns the composition of the total value of immaterial damages, where value of fatalities or value of evacuation may dominate depending on the prevailing floor risk circumstances. This implies that, first, VOSL is not an adequate proxy for immaterial damages since it understates prospective benefits of designated protective measures. Second, spatially differentiated composition of immaterial damages should be explicitly considered to guide policy decisions.
    Keywords: cost-benefit analysis, natural hazard, flood risk, stated preferences, choice experiment
    JEL: C01 C33 C83 C90 D12 D61 Q51 Q54
    Date: 2012–04–26
  16. By: Abdoul Ahad Cisse (CEREGMIA, Université des Antilles et de la Guyane); Fabian Blanchard (IFREMER, Unité Biodiversité Halieutique de Guyane); Olivier Guyader (Ifremer, Unité d'Economie Maritime, Plouzane, France)
    Abstract: Like many cases of tropical small-scale fisheries, the French Guiana coastal fishery is characterized by the high fish biodiversity of its ecosystem, the weak selectivity of the fleets exploiting the resources and the heterogeneity of the vessels in terms of size and fishing techniques. We use Rapfish method [Pitcher & Preikshot, 2001] to assess sustainability within 11 fishery systems in the ecological, economic, social and technological fields through 27 attributes. Overall results point out an average performance in the scale of sustainability. Comparisons made among the FSs show a gradient of sustainability performance from the west coast to the east coast. Several recommendations have been formulated to raise the current ‘sustainability’ status as for example the reduction of discards. This study is postulated as a complementary tool to bioeconomic model in order to define a sustainable management of the French Guiana costal fishery.
    Date: 2013–03
  17. By: Sweder van Wijnbergen (University of Amsterdam); Tim Willems (Oxford University)
    Abstract: Climate skeptics argue that the possibility that global warming is exogenous implies that we should not take additional action towards reducing greenhouse gas emissions until we know more. However this paper shows that even climate skeptics have an incentive to reduce emissions: such a change of direction facilitates their learning process on the causes of global warming. Since the optimal policy action depends on these causes, they are valuable to know. Although an increase in emissions would also ease learning, that option is shown to be inferior because emitting greenhouse gases is irreversible. Consequently the policy implications of the different positions in the global warming debate turn out to coincide - thereby diminishing the relevance of this debate from a policy perspective. Uncertainty is no reason for inaction.
    Keywords: climate policy, global warming, climate skepticism, active learning, irreversibilities
    JEL: D83 Q54 Q58
    Date: 2012–08–20
  18. By: Gabriel Picone (Department of Economics, University of South Florida); Robyn Kibler (Department of Economics, University of South Florida); Benedicte Apouey (Paris School of Economics, CNRS)
    Abstract: This paper analyzes the importance of malaria prevalence, malaria ecology, and indoor residual spraying on the probability of sleeping under an insecticide-treated net (ITN) in six African countries. Using individual data on ITN usage combined with the malaria prevalence and ecology data for the area where the person lives, we show that malaria prevalence and ecology have positive effects on ITN usage. However, ITN usage is inelastic with respect to malaria prevalence, with elasticity of 0.181 for children under 5 and of 0.223 for adult women. We also find that indoor residual spraying does not crowd out ITN usage.
    Keywords: Malaria prevalence elasticity, ITN usage, public intervations
    JEL: I12 I15 I18 H4
    Date: 2013–02

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