nep-agr New Economics Papers
on Agricultural Economics
Issue of 2016‒07‒16
twenty papers chosen by

  1. State-contingent analysis of farmers’ response to weather variability: Irrigated dairy farming in the Murray Valley, Australia By Mallawaarachchi, Thilak; Nauges, Céline; Quiggin, John; Sanders, Orion
  2. Returns to fertilizer use: does it pay enough? Some new evidence from Sub-Saharan Africa By Koussoubé, Estelle; Nauges, Céline
  3. How Productive is Rural Infrastructure? Evidence on Some Agricultural Crops in Colombia By Ignacio Lozano-Espitia; Lina Ma. Ramírez-Villegas
  4. Protecting Health or Protecting Imports? Evidence from EU Non-Tariff Barriers By Kareem, Fatima Olanike; Martinez-Zarzoso, Inmaculada; Brümmer, Bernhard
  5. Land Inequality or Productivity: What Mattered in Southern Vietnam after 1975? By Minh-Tam T. Bui and Arayah Preechametta
  6. Drought and Groundwater Management By Eirik S. Amundsen; Frank Jensen
  7. Cash for Carbon: A Randomized Controlled Trial of Payments for Ecosystem Services to Reduce Deforestation By Seema Jayachandran; Joost de Laat; Eric F. Lambin; Charlotte Y. Stanton
  8. Modelling Market Linkages along the Vertical Supply Chain: Price Transmission and Volatility Spillovers in the U.S. Pork Industry By Zheng, Yanan, Jr.
  9. Who Weans with Commodity Price Shocks? Rice Prices and Breastfeeding in the Philippines By Abrigo, Michael R.M.
  10. Designing a Payment for Ecosystem Services Scheme for the Sardukhola Watershed in Nepal By Rajesh K Rai; Priya Shyamsundar; Laxmi Dutt Bhatta; Mani Nepal
  11. Land Rights and Women's Empowerment in Rural Peru: Insights from Item Response Theory By Montenegro, María; Mohapatra, Sandeep; Swallow, Brent
  12. Bush Encroachment Mapping for Africa: Multi-scale analysis with remote sensing and GIS By Graw, Valerie; Oldenburg, Carsten; Dubovyk, Olena
  13. Investigating the carbon leakage effect on the environmental Kuznets curve using luminosity data By Steinkraus, Arne
  14. Finance and System of Provision of Water; The Case of Istanbul By Gaye Yilmaz; Ozlem Celik
  15. The Role of El Niño Southern Oscillation in Commodity Price Movement and Predictability By Ubilava, David
  16. Strengthening insurance partnerships in the face of climate change – insights from an agent-based model of flood insurance in the UK By Florence Crick; Katie Jenkins; Swenja Surminski
  17. Cost-constrained measures of environmental efficiency: a material balance approach By Aldanondo, Ana M.; Casasnovas, Valero L.; Almansa, M. Carmen
  18. Cash Transfers and Gender: A closer look at the Zambian Child Grant Programme By Luisa Natali; Amber Peterman; UNICEF Office of Research - Innocenti
  19. Mitigating Global Warming : A Real Options Approach By Marc CHESNEY; Pierre LASSERRE; Bruno TROJA
  20. Land use predictions on a regular grid at different scales and with easily accessible covariates By Chakir, Raja; Laurent, Thibault; Ruiz-Gazen, Anne; Thomas-Agnan, Christine; Vignes, Céline

  1. By: Mallawaarachchi, Thilak; Nauges, Céline; Quiggin, John; Sanders, Orion
    Abstract: The agricultural sector is commonly regarded as one of the most vulnerable to climate change. Current understanding of the impact of climate change on this sector relies on the underlying assumptions about farmers’ possible responses to weather variability, including changes in crop choice, input combinations and land management practices. Many previous analyses rely on the implicit (and restrictive) assumption that farmers operate under a fixed technology set across different states of nature. This assumption, represented through stochastic production or profit functions, is commonly made but seldom tested, and may understate farmers’ responses to climate change if state-contingent production technologies are, in reality, more flexible. The potential for farmers to adapt production technologies in response to unforeseen events is at the core of the state-contingent approach. Advanced in Chambers and Quiggin (2000), the theory contends that producers can manage uncertainty through the allocation of productive inputs to different states of nature. In this article we test the assumption that farmers’ observed behaviour is consistent with the state-contingent production theory using farm-level data from Australia. More precisely, we estimate the milk production technology for a sample of irrigated dairy farms from the southern Murray–Darling Basin over the period from 2006-07 to 2009-10.
    Keywords: dairy industry; Murray–Darling basin; state-contingent theory; weather variability
    Date: 2016–07
  2. By: Koussoubé, Estelle; Nauges, Céline
    Abstract: The low level of modern inputs adoption by African farmers is considered to be a major impediment to food security and poverty reduction in Sub-Saharan Africa. The government of Burkina Faso, following the example of a number of other countries in the region, launched a subsidy program in 2008 to encourage farmers’ uptake of chemical fertilizers and foster cereal production. This article explores the importance of fertilizer profitability in explaining the relative, apparent low use of chemical fertilizers by farmers in Burkina Faso. Using largescale plot data, we estimate maize yield response to nitrogen to be 19 kg/ha on average and to vary with soil characteristics. Profitability, which we measure through the calculation of a marginal value cost ratio, is estimated at 1.4 on those plots which received fertilizers, with significant variations across regions. For those plots on which fertilizers were not applied, we predict that fertilizers should have been profitable in most cases under the current level of subsidized fertilizer prices. These findings suggest that the low uptake of chemical fertilizers might have been driven by factors other than profitability, including insufficient supply of subsidized fertilizers to farmers in need. Our results also call for increasing the availability of credit to farmers in order to encourage adoption of chemical fertilizers. Finally, our results also show that not taking into account the endogeneity of nitrogen use in the yield equation may produce biased estimates of the maize yield response to nitrogen.
    Keywords: Burkina Faso; fertilizers; maize yield; subsidization program; technology adoption.
    Date: 2016–07
  3. By: Ignacio Lozano-Espitia (Banco de la República de Colombia); Lina Ma. Ramírez-Villegas (Banco de la República de Colombia)
    Abstract: This paper evaluates the role of rural infrastructure on the performance of some agricultural crops in Colombia. The study utilizes geo-referenced cross sectional data of four crops, coffee, rice, beans and plantains, collected for the majority of municipalities. Using genetic matching models, we find that both having access to irrigation and drainage systems and better infrastructure for marketing –rural roads and nearby retail and wholesale centers– significantly increase crop yield as well as planted and harvested areas. Results are robust to a suitable set of matching algorithms. The positive and significant impact on agricultural development provides support to reorient agricultural policy towards the supply of public goods that pushes up productivity. Classification JEL: H41, Q12, Q15, R42, C21
    Keywords: Public Goods, Agricultural Productivity, Irrigation System, Road Maintenance, Treatment Effect Models
    Date: 2016–06
  4. By: Kareem, Fatima Olanike; Martinez-Zarzoso, Inmaculada; Brümmer, Bernhard
    Abstract: Non-tariff measures such as food safety standards are used to achieve the non-trade objective of protecting consumers’ health and safety. However, they can also be used as a trade protection tool to drive a price wedge between domestic and foreign producers. This study investigates the protectionist intent of EU food safety standards using a sample of EU food imported from African countries with a specific focus on tomatoes and citrus fruits. We formalize what protectionism is by comparing EU standards to the internationally scientific referenced benchmarks regulated jointly by both the Food and Agricultural Organization and the World Health Organization. Our results show that the EU tomato sector is less dependent on imports and is overprotected by more stringent standards relative to the international benchmarks. Conversely, we find that the EU orange and lime and lemon sectors are heavily import dependent and are under-protected relative to the international standards. These results largely support the hypothesis that heavily import dependent sectors are less protected.
    Keywords: Trade Protectionism, Non-tariff barriers, Food Safety Standards, Food exports, Agricultural and Food Policy, Health Economics and Policy, International Development, International Relations/Trade, Political Economy, F13, F14, L15, P16, Q17, Q18,
    Date: 2016–07
  5. By: Minh-Tam T. Bui and Arayah Preechametta
    Abstract: Land redistribution and agricultural collective production were the key components of agrarian reforms implemented by the Vietnamese Communist Party in the south of the country after 1975. Land inequality was serious in the region under the Republic of Vietnam's regime. The new government struggled with agricultural collectivisation contributing to the decline in rice productivity. This study explains the persistence of a market-based agricultural production in the southern economy under the new political regime. Beside the economic reasons and arguments of local peasants' everyday politics cited in the literature, we argue that the de facto political power of the middle-class landowners was an important factor impeding the performance of agricultural cooperatives. It also implies that agricultural productivity was more vital than land inequality during the study period. We apply the model of Acemoglu and Robinson explaining how de facto political power helps elites to maintain their economic institutions in spite of a political change.
    Keywords: land inequality, agrarian reform, collectivisation, de facto political power, Vietnam
    Date: 2016–07–01
  6. By: Eirik S. Amundsen (Department of Economics, the University of Bergen; Department of Food and Resource Economics, University of Copenhagen); Frank Jensen (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: This paper considers the problem of a water management authority faced with the threat of a drought that hits at an uncertain date. Three management policies are investigated: i) a laissez-faire (open-access) policy of automatic adjustment through a zero marginal private net benefit condition, ii) a policy of optimal dynamic management ignoring the threat of the drought and relying on automatic adjustments through a zero marginal social net benefit condition, iii) an economically optimal dynamic policy taking account of the threat of a drought. In particular, we show that the optimal pre-drought steady-state equilibrium stock size of water under policy iii) is smaller than under policy ii) and, hence, a precautionary stock size should not be built up prior to the drought.
    Keywords: drought, groundwater management, uncertainty
    JEL: Q20 Q22
    Date: 2016–06
  7. By: Seema Jayachandran; Joost de Laat; Eric F. Lambin; Charlotte Y. Stanton
    Abstract: This paper evaluates a Payments for Ecosystem Services (PES) program in western Uganda that offered forest-owning households cash payments if they conserved their forest. The program was implemented as a randomized trial in 121 villages, 60 of which received the program for two years. The PES program reduced deforestation and forest degradation: Tree cover, measured using high-resolution satellite imagery, declined by 2% to 5% in treatment villages compared to 7% to 10% in control villages during the study period. We find no evidence of shifting of tree-cutting to nearby land. We then use the estimated effect size and the "social cost of carbon" to value the delayed carbon dioxide emissions, and compare this benefit to the program's cost.
    JEL: O10 O13 Q23 Q54
    Date: 2016–06
  8. By: Zheng, Yanan, Jr.
    Abstract: This paper assesses the linkages among farm, wholesale and retail markets along the U.S. pork supply chain by analyzing their price transmissions and volatility spillovers. Data used in the analysis include monthly farm, wholesale and retail price for pork, covering the period of January 2000 through December 2014. Engle and Grager’s cointegration technique was adopted to examine long run price relationships for each pair of markets, while an asymmetric VAR-BEKK-GARCH model was followed to investigate whether asymmetry plays a role in short-run price adjustments and volatility spillovers. Key findings of this study include: (1) the presence of long-run relationship in all three pairs of markets; (2) asymmetric short-run price adjustments in retail and farm markets; (3) asymmetry in wholesale price volatility, wholesale price will be more volatile when confront with positive shocks; (4) bi-directional volatility spillovers in all three pairs of markets; and (5) asymmetric spillover effects to wholesale and farm markets, with price instabilities being more sensitive to the joint shocks that move in different directions.
    Keywords: asymmetry, price transmission, vertical supply chain, asymmetric, Agribusiness, Agricultural and Food Policy,
    Date: 2016–06–28
  9. By: Abrigo, Michael R.M.
    Abstract: Commodity market fluctuations have been linked with a number of adult outcomes. Recent evidence on the lasting impact of early life conditions, however, suggests that the e ffects on children may be important as well. Using large spatio-temporal variations in rice prices in the Philippines as a natural experiment, the study estimates the eff ect of increasing food prices on parental behavior regarding an inexpensive yet time-intensive child investment: breastmilk feeding. It documents a countercyclical relationship between breastfeeding duration and rice prices, which may be a consequence of poorer health and induced labor force participation among mothers. Results highlight that even food producers may not be insulated against food price inflation.
    Keywords: Philippines, food prices, breastfeeding, child investments
    Date: 2016
  10. By: Rajesh K Rai; Priya Shyamsundar; Laxmi Dutt Bhatta; Mani Nepal
    Abstract: This study was undertaken in the Sardukhola sub-watershed of eastern Nepal to illustrate how local policy instruments can be used to supplement government water supply. We discuss a strategy for using Payments for Ecosystem Services (PES) to meet water demand in Dharan Municipality in Nepal. A rigorous process was followed in designing the PES scheme. Following focus group discussions, a Choice Experiment was carried out to determine the preferences of municipal water users. In addition, upstream households were interviewed to understand their requirements to participate in a watershed management program. Finally, we used a series of formal and informal stakeholder consultations to help validate household survey findings and develop an institutional framework for implementing PES. Our analysisindicates that water quality is the most important attribute preferred by water users and that upstream households require incentives to decrease domestic livestock grazing, change agricultural practices and reduce open defecation. Results suggest that developing a PES scheme would be socially acceptable and financially feasible and may contribute to a flow of USD 118,000 per year from water users for watershed management. In concurrence with local stakeholders, we propose a tri-partite institutional structure to implement PES. We note that a national PES policy would make it easier to initiate such integrated and market-oriented approaches for enhancing drinking water supply.
    Keywords: Choice experiment, willingness-to-pay, water quality, water users, upstream, watershed management
  11. By: Montenegro, María; Mohapatra, Sandeep; Swallow, Brent
    Abstract: Women’s land rights are increasingly advocated as an empowerment tool to spur development outcomes. However, empirical evidence of this relationship is limited. In this study we use data from peasant communities in rural Peru to explore the effect of the intra-household allocation of inherited land on women’s empowerment. Empowerment is modeled as a latent variable measured by different influence indicators using a Generalized Structural Equation approach. We draw on Item Response Theory (IRT) to estimate difficulty and discrimination parameters which can inform policymakers about the impact of empowerment policies on women’s types of influences within their households. The empirical approach is consistent with empowerment’s latent and multidimensional nature and pays attention to endogeneity issues often present in other empirical studies. We find that although women’s land rights increase empowerment, the intra-household allocation of land determines the magnitude of this impact.
    Keywords: Women's empowerment, item response theory, structural equation modeling, land rights, International Development, Land Economics/Use,
    Date: 2016
  12. By: Graw, Valerie; Oldenburg, Carsten; Dubovyk, Olena
    Abstract: Bush encroachment (BE) describes a global problem severely affecting savanna ecosystems in Africa. Invasive species and woody vegetation spread out in areas where they are not naturally occurring and suppress endemic vegetation, mainly grasses. Livestock is directly affected by decreasing grasslands and inedible invasive species which are a result of the process of BE. For many small scale farmers in developing countries livestock represents a type of insurance particular in times of crop failure and droughts. Among that, BE is also becoming an increasing problem for crop production. Studies on the mapping of BE have so far only focused on smaller regions using high-resolution data and aerial photography. But they rarely provide information that goes beyond the local or national level. In our project, we aimed at a continental-wide assessment of BE. For this, we developed a process chain using a multi-scale approach to detect woody vegetation for the African continent. The resulted map was calibrated with field data provided by field surveys and experts in Southern and Eastern Africa. Supervised classification linked field data of woody vegetation, known as BE, to the respective pixel of multi-scale remote sensing data. The regression technique was based on random forests, a machine learning classification and regression approach programmed in R. Hotpots of woody vegetation were further overlaid with significant increasing Normalized Difference Vegetation Index (NDVI) trends which can refer to BE. Secondly, the probability of BE occurrence based on possible identified causes such as fire occurrence, mean annual precipitation rates, soil moisture, cattle density and CO2 emissions was analyzed. By this, possible areas for BE occurrence based on their pre-conditions and risk factors were identified. This approach includes multiple datasets derived from earth observation data to detect BE – a severe and ongoing global problem – at the continental level. Within the study´s duration of seven months, a method to upscale field data to a larger level could be developed. Nevertheless, improvement is needed to provide a reliable continental map on BE. Especially the integration of more field data will be needed which is currently under consideration. The identification of woody vegetation and the probability of its occurrence can help to prevent further ecosystem degradation. Moreover, sustainable land management strategies in these areas can be focused to support pastoralists and their livelihoods in rural areas.
    Keywords: bush encroachment, remote sensing, multi-scale analysis, probability map, random forests, regression trees, Land Economics/Use, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods,
    Date: 2016–07
  13. By: Steinkraus, Arne
    Abstract: This paper studies the effect of carbon leakage on the environmental Kuznets curve (EKC) using satellite nighttime light data. I show that nighttime lighting is an important variable for estimating carbon dioxide emissions that is superior to other existing indicators and covers all countries in the world. I find evidence of an inverted-U shaped relationship between light and, thus, greenhouse gas emissions and income, with a turning point at approximately US $50,000. However, the relationship is primarily driven by changes in the structure of international trade, implying strong carbon leakage effects. Consequently, environmental regulations that become operative in only one part of the world may fail without global coordination.
    Keywords: Environmental Kuznets Curve,Carbon Leakage,Nighttime Lighting
    JEL: F18 F64 Q50
    Date: 2016
  14. By: Gaye Yilmaz (Bogazici University and Middle Eastern Technical University, Department of Political Science and Public Administration); Ozlem Celik (Bogazici University and Middle Eastern Technical University, Department of Political Science and Public Administration)
    Abstract: Unlike many other metropolises around the world, water supply in Instanbul has been subject to commercial practices since the 19th century. The difference today, however, it is in the stage of a privatisation process of water resources, rather than the provision of water itself to the consumers. The role of the state at different levels still has an important and major role in the provision of water. Even if the water resources are started to be privatised, the financialisation of water provision is quite limited. That is why this paper focuses on the changing finance tools and the changing role of the state in water provision in Istanbul in a historical context.
    Keywords: Istandbul, water provision, SoP, Systems of Provision.
    JEL: H4 G28 L95 P16 Q25 R38
    Date: 2016–04–30
  15. By: Ubilava, David
    Abstract: How are commodity prices related to the El Niño Southern Oscillation (ENSO) cycle, and has this relationship altered over time? Despite overwhelming evidence suggesting an important role played by the ENSO in global commodity production, the relationship between this climate anomaly and prices is not a trivial corollary, and requires careful investigation. To account for potentially complex dynamics in the ENSO–price relationship, this study applies a time– varying smooth transition autoregressive (TV–STAR) modeling framework to monthly series of the sea surface temperature anomalies in the Niño3.4 region and 46 primary commodity prices spanning the January 1982 – December 2015 period. The findings suggest apparent linkages between ENSO shocks and a set of agricultural commodities, as well as forestry commodities and metals. An unexpected deviation in ENSO results in two-to-five percentage point change in prices, while up to 30 percent of price variation in the selected commodities can be attributed to ENSO shocks in the intermediate and long run. Importantly, there are benefits to regime– dependent modeling, which in some instances facilitates unveiling causal linkages that may have been camouflaged in a linear setting. Several commodity prices also reveal evidence of structural change, and in those instances, the ENSO effect appears to have been mitigated over time, suggesting some adaptive response to the known economic consequences of this climate anomaly.
    Keywords: Commodity Prices; El Niño Southern Oscillation; Nonlinear Dynamics; Structural Change; Time–Varying Smooth Transition Autoregression
    Date: 2016–06
  16. By: Florence Crick; Katie Jenkins; Swenja Surminski
    Abstract: Multisectoral partnerships are increasingly being mentioned as a mechanism to deliver and improve disaster risk management. Yet, partnerships are not a panacea and more research is required to understand the role that they can play in disaster risk management and particularly in disaster risk reduction. In this paper, we investigate how partnerships can incentivise flood risk reduction by focusing on the UK public-private partnership on flood insurance. Developing the right flood insurance arrangements to incentivise flood risk reduction and adaptation to climate change is a key challenge. While expectations of the insurance industry have traditionally been high when it comes to flood risk management, the insurance industry alone will not provide the solution to the management of rising flood risks due to climate change and socio-economic development. In addition, faced with these risks insurance partnerships can no longer afford to focus only on the risk transfer function. The case of flood insurance in the UK illustrates these challenges: even national government and industry together cannot fully address these risks and other actors need to be involved to create strong incentives for risk reduction. Our paper investigates this for the specific issue of surface water flood risk in London. Using an agent-based model we investigate how other agents could strengthen the insurance partnership by maintaining affordable insurance premiums and reducing flood risk and test this for the new Flood Re scheme. Our findings are relevant for wider discussions on the potential of insurance schemes to incentivise flood risk management and climate adaptation not just in the UK but also internationally.
    Date: 2016–06
  17. By: Aldanondo, Ana M.; Casasnovas, Valero L.; Almansa, M. Carmen
    Abstract: Joint cost-environmental efficiency analysis based on the material balance principle (MBP) has an important short-coming, in that the measures of allocative efficiency it produces do not fully integrate environmental and economic outcomes. Their limitation lies in their failure to take into account some decision-making units (DMU) use a combination of inputs that is more environmentally-harmful than that of the least-cost unit, or, more rarely, more costly than that of the least-polluting unit. Input substitution can therefore bring both environmental and economic benefits. This paper develops a method for differentiating between environmental allocative efficiency gains that involve an economic trade-off and those that do not. Drawing insight from the literature on multi-criteria analysis, we extend the MBP approach to new measures of cost-constrained environmental efficiency using data envelopment analysis (DEA). The proposed approach is illustrated by an application geared to assessing the efficiency of a sample of greenhouse horticultural production units in Almeria, Spain. The results for this case show that it is possible to increase environmental allocative efficiency by up to 34 % on average without incurring additional costs.
    Keywords: Cross constrained cost-environmental efficiency, material balance condition, nitrogen pollution, green house horticulture
    JEL: C61 D24 Q12 Q50
    Date: 2016–07–11
  18. By: Luisa Natali; Amber Peterman; UNICEF Office of Research - Innocenti
    Abstract: In 2010, the Zambian Ministry of Community Development, Mother and Child Health began implementation of the Child Grant Programme with the goals of reducing extreme poverty and breaking the inter-generational cycle of poverty. The impact of the grant was explored across a range of outcomes for women over the medium term (two to four years). One of the difficult aspects of assessing this evidence is the myriad of indicators used to measure ‘empowerment’. For example, researchers have used indicators ranging from women’s intra-household decision-making to social networks, land or asset ownership, and interpret all these as ‘empowerment’, making it difficult to draw conclusions. The analysis is complemented with qualitative data to understand the meaning women and men place on empowerment in the rural communities. Although more evidence is needed to understand how cash transfers can empower women in Africa, women’s savings and participation in small businesses were seen to have increased, giving them more autonomy over cash and improving their financial standing.
    Keywords: cash transfers; women's empowerment; zambia;
    Date: 2016
  19. By: Marc CHESNEY; Pierre LASSERRE; Bruno TROJA
    Abstract: Mitigation and adaptation represent two solutions to the issue of global warming. While mitigation aims at reducing CO2 emissions and preventing climate change, adaptation encompasses a broad scope of techniques used to reduce the impacts of climate change once they have occurred. Both have direct costs on a country’s Gross Domestic Product, but costs also arise from temperature increases due to inaction. This paper introduces a tipping point in a real options model and analyzes optimal investment choices in mitigation and their timing.
    Keywords: adaptation, mitigation, real options, delay, tipping point, climate change, CO2, gross domestic product
    Date: 2016
  20. By: Chakir, Raja; Laurent, Thibault; Ruiz-Gazen, Anne; Thomas-Agnan, Christine; Vignes, Céline
    Abstract: We propose in this paper models that allow to predict land use (urban, agriculture, forests, natural grasslands and soil) at the points of the Teruti-Lucas survey from easily accessible covariates. Our approach involves two steps : first we model land use at the Teruti Lucas point level and second, we propose a method to aggregate land use on regular meshes. The model of the first stage provides fine level predictions. The second step aggregates these predictions on the tiles of the mesh comparing several methods. We are considering various regular meshes of the territory to study the prediction quality depending on the resolution. We show that with easily accessible variables we have an acceptable prediction quality at the point level and that the quality of prediction is improved from the very first stage of aggregation.
    Keywords: land use models, Teruti-Lucas survey, classication tree
    JEL: C21 C25 Q15 R14
    Date: 2016–07

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