nep-agr New Economics Papers
on Agricultural Economics
Issue of 2017‒05‒14
thirty-one papers chosen by

  1. Insuring against droughts: Evidence on agricultural intensification and index insurance demand from a randomized evaluation in rural Bangladesh: By Hill, Ruth Vargas; Kumar, Neha; Magnan, Nicholas; Makhija, Simrin; de Nicola, Francesca; Spielman, David J.; Ward, Patrick S.
  2. Can agricultural aspirations influence preferences for new technologies?: Cropping systems and preferences for high-efficiency irrigation in Punjab, Pakistan By Bell, Andrew R.; Ward, Patrick S.; Ashfaq, Muhammad; Davies, Stephen
  3. The rapid – but from a low base – uptake of agricultural mechanization in Ethiopia: Patterns, implications and challenges: By Berhane, Guush; Dereje, Mekdim; Minten, Bart; Tamru, Seneshaw
  4. Revitalized agriculture for balanced growth and resilient livelihoods: Toward a rural development strategy for Mon State: By Filipski, Mateusz J.; Nischan, Ulrike; Van Asselt, Joanna; Belton, Ben; Kennedy, Adam; Hein, Aung; Dorosh, Paul A.; Boughton, Duncan
  5. Agribusinesses, smallholder tenure security, and plot-level investments: Evidence from rural Tanzania By Kacana Sipangule
  6. A microeconometric analysis of climate change drivers for coffee crops transition to cacao in Mesoamerican countries By Sonia Quiroga; Cristina Suárez; Juan Diego Solís; Pablo Martínez-Juárez
  7. Competition in Agricultural Markets: An Experimental Approach By Casaburi, Lorenzo; Reed, Tristan
  8. Spatial price transmission and trade policies: new evidence for agricultural products from selected sub-Saharan African countries with high frequency data. By Susanne Fricke; Lodovico Muratori
  9. Market participation of smallholders and the role of the upstream segment: evidence from Guinea By CAMARA, Alhassane
  10. Decentralization and Efficiency of Subsidy Targeting: Evidence from Chiefs in Rural Malawi By Basurto, Pia; Dupas, Pascaline; Robinson, Jonathan
  11. Agricultural diversification in Nepal: Status, determinants, and its impact on rural poverty: By Thapa, Ganesh; Kumar, Anjani; Joshi, Pramod Kumar
  12. Land Property Rights and Agricultural Productivity: Evidence from Panama By Gabriel Ivan Fuentes Cordoba
  13. Probability Weighting and Input Use Intensity in a State-Contingent Framework By Holden , Stein T.; Quiggin, John
  14. Impact of India’s National Food Security Act on domestic and international rice markets: By Debnath, Deepayan; Babu, Suresh Chandra; Ghosh, Parijat; Helmer, Michael
  15. Options for suitable biofuel farming: Experience from Southern Africa By Graham von Maltitz
  16. Agricultural price evolution in drought versus non-drought affected areas in Ethiopia: An updated assessment using national producer data (January 2014 to January 2017) By Bachewe, Fantu Nisrane; Yimer, Feiruz; Minten, Bart
  17. The economic analysis of the forest transition By Edward Barbier; Philippe Delacote; Julien Wolfersberger
  18. Nutrition transition and the structure of global food demand: By Gouel, Christophe; Guimbard, Houssein
  19. Exploring farmers? selection of crop protection levels as an adaptation strategy to climate risks By Sonia Quiroga; Emilio Cerdá
  20. Consumer Response to Gastrointestinal Illness Perceived to Originate from Food Service Facilities By Erin S. Garnett; Stephanie R. Gretsch; Clair Null; Christine L. Moe
  21. Measuring postharvest losses at the farm level in Malawi: By Ambler, Kate; de Brauw, Alan; Godlonton, Susan
  22. Do Sovereign Wealth Funds Dampen the Negative Effects of Commodity Price Volatility? By Mohaddes, K.; Raissi, M.
  23. Risk as a limit or an opportunity to mitigate GHG emissions? The case of fertilisation in agriculture By Benjamin Dequiedt; Emmanuel Servonnat
  24. Reinventing the American Wine Industry: Marketing Strategies and the Construction of Wine Culture By Ai Hisano
  25. Agricultural Production Amid Conflict: Separating the Effects of Conflict into Shocks and Uncertainty By María Alejandra Arias; Ana María Ibáñez; Andres Zambrano
  26. Instrument Choice and Stranded Assets in the Transition to Clean Capital By Julie Rozenberg; Adrien Vogt-Schilb; Stephane Hallegatte
  27. Analysing Adoption of Soil Conservation Measures by Farmers in Darjeeling District, India By Chandan Singha
  28. Evaluation of the Fruit Tree Productivity Project in Morocco: Design Report By Evan Borkum; Anitha Sivasankaran; Jane Fortson; Kristen Velyvis; Christopher Ksoll; Elena Moroz; Matt Sloan
  29. The Welfare Economics of Dismantling Dairy Quota in a Confederation of States By G. Cornelis van Kooten
  30. Canada’s Trade Policy Options under Donald Trump: NAFTA’s rules of origin, Canada-U.S. security perimeter, and Canada’s geographical trade diversification opportunities By Patrick Georges
  31. Spatial-economic impacts of tourism on regional development: challenges for Europe By João Romão; Peter Nijkamp

  1. By: Hill, Ruth Vargas; Kumar, Neha; Magnan, Nicholas; Makhija, Simrin; de Nicola, Francesca; Spielman, David J.; Ward, Patrick S.
    Abstract: It is widely acknowledged that unmitigated risks provide a disincentive for otherwise optimal investments in modern farm inputs. Index insurance provides a means for managing risk without the burdens of asymmetric information and high transaction costs that plague traditional indemnity-based crop insurance programs. Yet many index insurance programs that have been piloted around the world have met with rather limited success, so the potential for insurance to foster more intensive agricultural production has yet to be realized. This study assesses both the demand for and the effectiveness of an innovative index insurance product designed to help smallholder farmers in Bangladesh manage risk to crop yields and the increased production costs associated with drought. Villages were randomized into either an insurance treatment or a comparison group, and discounts and rebates were randomly allocated across treatment villages to encourage insurance take-up and to allow for the estimation of the price elasticity of insurance demand. Among those offered insurance, we find insurance demand to be moderately price elastic, with discounts significantly more successful in stimulating demand than rebates. Farmers who are highly risk averse or sensitive to basis risk prefer a rebate to a discount, suggesting that the rebate may partially offset some of the implicit costs associated with insurance contract nonperformance. Having insurance yields both ex ante risk management effects and ex post income effects on agricultural input use. The risk management effects lead to increased expenditures on inputs during the aman rice-growing season, including expenditures for risky inputs such as fertilizers, as well as those for irrigation and pesticides. The income effects lead to increased seed expenditures during the boro rice-growing season, which may signal insured farmers’ higher rates of seed replacement, which broadens their access to technological improvements embodied in newer seeds as well as enhancing the genetic purity of cultivated seeds.
    Keywords: agriculture; investment; risk management; insurance; risk; weather hazards; drought; weather; climate; price elasticities; price formation; inputs; farm inputs; fertilizers; irrigation; pesticides; crops; yields; smallholders, index insurance; risk and uncertainty, O12 Microeconomic Analyses of Economic Development; O13 Economic Development: Agriculture, Natural Resources, Energy, Environment, Other Primary Product; Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets; G22 Insurance, Insurance Companies, Actuarial Studies,
    Date: 2017
  2. By: Bell, Andrew R.; Ward, Patrick S.; Ashfaq, Muhammad; Davies, Stephen
    Abstract: In the face of increasing environmental stresses, there is a critical need to improve water-use efficiency in many arid and semiarid agroclimatic zones. Drip irrigation is a high-efficiency irrigation technology that can improve water-use efficiency in currently irrigated areas and transform areas that are not otherwise irrigable in practice. Although adoption of drip irrigation is growing rapidly in India, adoption is low in neighboring Pakistan. The authors of this paper undertook a discrete choice experiment framed around the hypothetical subsidized purchase of a drip irrigation system in four districts of Punjab, Pakistan. The nonrepresentative sample of adopters and nonadopters in the study districts identified a clear increase in the valuation of drip systems in the first several years following adoption. This finding suggests that farmers may be unaware of the opportunities for the use of drip irrigation on their farms or the benefits that may accrue from such use. In addition, farmers’ aspirations for cropping systems under drip were better predictors of the valuation of drip systems than were current cropping patterns, implying that a different agricultural landscape might reasonably emerge under improved adoption of drip. Aspirations differed across the different agroecological zones and water regimes captured by this study. Aspirations to substitute wheat crops for fruits and vegetables were associated with a higher appreciation of the subsidy level, whereas aspirations to expand wheat were associated with a higher appreciation of the area covered by the drip initiative; together, these findings imply a degree of control over the extent of wheat production in the landscape via careful design of the drip subsidy program. Although the penetration of drip irrigation is not yet sufficient to draw inferences from a representative sample, these results suggest a number of ways in which drip irrigation may transform Pakistan’s agricultural landscape
    Keywords: trickle irrigation; irrigation systems; experimentation; water supply; water use efficiency, choice experiment; Punjab Irrigated-agriculture Productivity Improvement Project (PIPIP); drip irrigation,
    Date: 2017
  3. By: Berhane, Guush; Dereje, Mekdim; Minten, Bart; Tamru, Seneshaw
    Abstract: The uptake of agricultural mechanization in Ethiopia is low with less than one percent of agricultural plots plowed with a tractor. However, in recent years the uptake of agricultural machinery has accelerated. We note an impressive increase in imports of combine-harvesters and of tractors, seemingly associated with the increasing costs of agricultural labor and animal traction, substitutes for agricultural mechanization. We estimate that a quarter of the area in Ethiopia planted to wheat – the fourth most important cereal in the country – is currently harvested by combine-harvesters, and they are widely used in the major wheat growing zones in the southeast of the country in particular. Private mechanization service providers have rapidly emerged. Smallholders in these wheat growing zones rely heavily on agricultural machinery rental services for plowing, harrowing, or harvesting. We find that mechanization is associated with significantly lower labor use, and that the adoption of combine-harvesters – but not tractors – is significantly associated with higher yields, seemingly due to lower post-harvest losses. While further expansion of mechanization in the country is desired, given the environmental and financial cost of holding oxen and the higher yields linked with some forms of mechanization, it appears to be hampered by farm structures, particularly small farm sizes and consequent limits in scale; fragmented plots; crop diversity; physical constraints, such as presence of stones, steepness of fields, and soil types; and economic and financial constraints, including limited access to foreign exchange and credit and the still relatively low wages in less commercialized zones.
    Keywords: mechanization; agricultural development; smallholders; wheats, ,
    Date: 2017
  4. By: Filipski, Mateusz J.; Nischan, Ulrike; Van Asselt, Joanna; Belton, Ben; Kennedy, Adam; Hein, Aung; Dorosh, Paul A.; Boughton, Duncan
    Abstract: This report offers specific policy and investment options articulated around two broad areas: (1) stimulating growth in agriculture and sustainable management of fisheries and (2) providing public infrastructure and services that strengthen the enabling environment. A plan to stimulate growth in agriculture and fisheries, the first broad area, could be centered around the following set of goals: revitalize the rubber sector, develop high-value fresh products, improve rice productivity, modernize land and input markets, expand access to loans for machinery and seasonal input purchases, strengthen agricultural extension services to ensure dynamism in Mon State’s farm sector, improve management of marine capture fisheries, and facilitate expansion of aquaculture. The first part of the report details the challenges and potential solutions presented by each of these points. The second part of the report details options to create a growth-enabling environment through public infrastructure and services, centered around the following goals: improve the budgetary and fiscal process to enable locally driven public investment, improve access to and reliability of infrastructure, expand the formal credit market, promote productive investment by the private sector, strengthen regulatory frameworks for the construction sector, exploit the potential for the development of tourism, and improve the quality of and access to education and health services.
    Keywords: agricultural development; rural areas; rubber; rice; fisheries; irrigation; migration; infrastruction; income; off farm wages; horticultural crops
    Date: 2017
  5. By: Kacana Sipangule
    Abstract: The last decade has witnessed an increase in the interest in agricultural land in developing countries. While a great deal of attention has been paid to understanding the impacts of this increased interest in agricultural land, very little is known about how local smallholder communities are affected when agribusinesses decrease or cease their operations. A large number of agribusinesses that acquired agricultural land in many sub-Saharan African countries have reduced or ceased their operations in recent years. This paper introduces a new dimension to the literature by investigating how a decrease in the share of land held by an agribusiness in a village affects smallholder plot-level tenure security and investments in rural Tanzanian villages. Drawing on a panel of 5,101 plots, we find that a decrease in the share of land held by an agribusiness significantly increases the probability that a plot has tenure security. Moreover, our results reveal that a decrease in the share of land held by agribusinesses significantly raises the time spent on the plot. This result is primarily driven by the number of household members employed in the agricultural sector but not through changes in tenure security.
    Date: 2017
  6. By: Sonia Quiroga (University of Alcala); Cristina Suárez (Universidad de Alcalá); Juan Diego Solís (Universidad Nacional Autónoma de Nicaragua-León); Pablo Martínez-Juárez (Universidad de Alcalá)
    Abstract: Climate change will have a permanent impact over Mesoamerican agricultural sector. Present day crops such as coffee may not be enough to secure agricultural subsistence levels, therefore, the first stages of crop diversification are being observed in countries such as Nicaragua. Implementation of new crops such as cocoa may lead to new impacts over the environmental structure of the Mesoamerican ecosystem. These impacts may be of different, nature, but being diversification an already undergoing process attention must be paid to the underlying motivation and decision-making processes involved. This study analyses subjacent motivations and contexts that lead to the potential incorporation of cocoa crops in present-day Nicaraguan coffee farms. In order to achieve that, three main motivations were identified: climatic, economic and governmental. An econometric analyse was performed over the variables that affect farmers? motivations and decisions, in order first to analyse this decision-making process, and second, to understand how social and climatic evolution over the next decades will impact the context under which agricultural output is shaped. It was found that climatic perspectives are most closely affecting the smallholders? decision of incorporating cocoa plantations into their farms. Therefore, climate change will most certainly have a major role in the reshaping of agricultural structure in most of Nicaraguan geography. Moreover, results show a lower impact of market conditions and public subsidies over farmers? choices and decisions. These results favour the intuition that risk-reduction is a preferred strategy among Nicaraguan smallholders.
    Keywords: farmers perceptions analysis, climate risk adaptation, crop diversification, behavioural economics
    JEL: F64 C10 Q15
    Date: 2017–04
  7. By: Casaburi, Lorenzo; Reed, Tristan
    Abstract: This paper presents an experimental approach to measure competition in agricultural markets, based on the random allocation of subsidies to competing traders. We compare prices of subsidized and unsubsidized crop traders to recover the key market structure parameter in a standard model of imperfect competition. By combining the experimental results with quasi-experimental estimates of the pass-through rate, we also estimate market size, or the effective number of traders competing for farmers' supply. In the context of the Sierra Leone cocoa industry, our results point to a competitive agricultural trading sector and suggest that the market size is substantially larger than the village. The methodology developed in this paper uses purely individual-level treatment to shed light on market structure. This approach may be useful for the many cases in which market-level randomization is not feasible.
    Keywords: Agricultural markets; Competition; field experiments.; interlinked transactions; intermediaries
    JEL: F14 O13 Q13
    Date: 2017–04
  8. By: Susanne Fricke (Friedrich Schiller University Jena, Germany.); Lodovico Muratori (Department of Economics and Social Sciences, Sapienza University of Rome (IT).)
    Abstract: We assess the conjunctural impact of price insulating policies on spatial price transmission of maize, rice and wheat in Cameroon, Kenya and Tanzania in the period 2005-2015. We therefore separately estimate the impact of trade policies within two regimes of behaviour of the domestic price series: the first regime with an increasing trend of domestic prices and the second regime with a decreasing trend. We find a significant impact of trade policies in both price regimes. This is however much larger if prices are increasing. Our results show that trade policies were able to insulate the three analyzed countries from the price shocks on international markets during the food price spike crisis 2007/2008. Although the impact of these policy instruments proved to be relevant as a counter-cyclical measure during the food price spike crisis, these policies cannot be regarded as structural long-term solutions. This paper extends the existing literature on spatial price transmission in agricultural markets by estimating the impact of tariff and non-tariff trade policies using monthly data. Employing monthly data allows for a more precise assessment of short-lived movements in the analysed series, which could disappear due to a time aggregation bias at lower yearly frequencies. While monthly price series are provided in the GIEWS database, we obtain monthly ad-valorem equivalent tariff rates by a time disaggregation of the yearly effectively applied weighted average tariff rate from the WITS/UNCTAD-TRAINS database through the monthly trade policies from the FAO-FADPA. By presenting high frequency analyses and techniques that are able to detect non-linearities in the Data Generating Process (DGP), this study provides results which differ from what is stated in the standard literature (Anderson and Nelgen, 2012a) (Anderson and Nelgen, 2012b) (Anderson and Nelgen, 2012c).
    Keywords: spatial price transmission, staple crops, trade barriers, food price spikes.
    JEL: F14 O24 Q11 Q17
    Date: 2017–04
  9. By: CAMARA, Alhassane
    Abstract: Despite theoretical advances in analyses on smallholder participation, little attention is paid to the marketing of staple food grains and the role of factor market (upstream). In this study, we argue that participation does not depend only on a well-functioning output market (downstream), but also on efficient and low-costs production factors. In this context, transaction costs in output market are part of total costs including those in factors markets. Therefore, the decision (ex-ante) whether to participate or not in output market, is based on the effective margin associated to participation. The rational behavior is that market price of food grains must sufficiently overweight unit production costs to motivate smallholders to be market-oriented, otherwise they would prefer to meet their own consumption needs. Using national survey data of Guinea and focusing on the cereal sub-sector, results indicate that the expected margin is one of the main variable influencing positively the decision of being sellers. This is in line with the view that when the price of staple food is not favorable, then smallholders would consume their own production. Access to transportation equipment, adoption of technology and adherence to farmers’ organizations are determinant when promoting market participation. While this research, like previous studies, supports policies enhancing transportation infrastructures in rural areas, it also supports actions stressing on factor market (upstream) that (i) facilitate access to production shifters like fertilizers and improved seeds at lower costs; (ii) organize (formalize) rural labor market through the establishment of an institutional framework which promotes the creation of formal enforceable contracts including wages based on workers’ productivity.
    Keywords: market participation, transaction costs,staple food grains, smallholder, Guinea
    JEL: Q12 Q13 Q18
    Date: 2017–04
  10. By: Basurto, Pia; Dupas, Pascaline; Robinson, Jonathan
    Abstract: Developing countries spend vast sums on subsidies. Beneficiaries are typically selected via either a proxy-means test (PMT) or through a decentralized identification process led by local leaders. A decentralized allocation may offer informational advantages, but may be prone to elite capture. We study this tradeoff in the context of two large-scale subsidy programs in Malawi (for agricultural inputs and food) decentralized to traditional leaders ("chiefs") who are asked to target the needy. Using high-frequency household panel data on neediness and shocks, we find that nepotism exists but has only limited mistargeting consequences. Importantly, we find that chiefs target households with higher returns to farm inputs, generating an allocation that is more productively efficient than what could be achieved through a PMT. This could be welfare improving, since within-village redistribution is common.
    JEL: D73 I38 O12 Q12
    Date: 2017–04
  11. By: Thapa, Ganesh; Kumar, Anjani; Joshi, Pramod Kumar
    Abstract: As in many parts of the developing world, the share of high value crops in agricultural gross domestic product (AgGDP) has increased substantially in Nepal. We contribute to the literature on trends in agricultural development in the poorest countries by answering the research question on “Does transition from traditional to high-value agriculture reduce rural poverty in poor developing countries†? We also identified the drivers leading to this transition. The study uses survey data from three rounds of the nationally representative Nepal Living Standard Surveys: NLSS I (1994/1995), NLSS II (2004/2005) and NLSS III (2010/2011). Multi-level model was used to study the determinants of agricultural diversification. To estimate the causal impact of agricultural diversification on welfare measures, propensity score matching and instrumental variable techniques were used. Results indicate that there has been a rightward shift in the distribution of the share (percent) of high-value crops between 1995 and 2004 and between 2004 and 2010, respectively. The area as well as the shared by major cereals (paddy, maize, and wheat) is declining over years. However, it is increasing for high-value crops (potato, vegetables, spices/condiments, and fruits). The percentage increase in share of the high-value crops was higher in or adjacent to urbanized districts between 1995 and 2010. The factors positively associated with the agricultural diversification are female-headed households, caste, mother's education, net-buyer status, urban region, remittance, farm size, kitchen garden, improved seeds, telephone and refrigerator. We found positive impact of agricultural diversification towards high-value crops on rural poverty and monthly per capita consumption expenditure. However, for cereal crops grower, we find the negative impact on poverty and monthly per capita consumption expenditure.
    Keywords: poverty; rural areas; horticulture; diversification; agricultural development; welfare; households, high value agriculture; consumption expenditures,
    Date: 2017
  12. By: Gabriel Ivan Fuentes Cordoba
    Abstract: This study estimates the e ects of land property rights on agricul- tural productivity in Panama. By using district-level panel data from 1990 to 2010, I find that land privatization increases rice yield in agri- cultural labor-intensive districts, but does not have any significant impact in non-agricultural labor-intensive districts. Then, by using household-level data, I find that households with registered land titles are more likely to obtain an agricultural loan and undertake land- attached and land mobile investment. (JEL O13, O15)
    Date: 2017–03
  13. By: Holden , Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Quiggin, John (School of Economics, University of Queensland)
    Abstract: Climate risk represents an increasing threat to poor and vulnerable farmers in drought-prone areas of Africa. This study assesses the fertilizer adoption responses of food insecure farmers in Malawi, where Drought Tolerant (DT) maize was recently introduced. A field experiment, eliciting risk attitudes of farmers, is combined with a detailed farm household survey. A state-contingent production model with rank-dependent utility preferences is estimated. Over-weighting of small probabilities was associated with less use of fertilizer on all maize types and particularly so on the more risky improved maize types.
    Keywords: Climate risk; state-contingent production; subjective probability weighting; technology adoption; adaptation; maize; Drought Tolerant maize; fertilizer use
    JEL: C93 D03 O33 Q12 Q18
    Date: 2017–05–05
  14. By: Debnath, Deepayan; Babu, Suresh Chandra; Ghosh, Parijat; Helmer, Michael
    Abstract: Policy making in food security is at a crossroads in India, particularly for the rice crop. Whereas India has emerged has a leading rice exporter over the last two years, the government has also introduced a large food subsidy program called the National Food Security Act. The program requires that 33.6 million metric tons of rice per year be distributed to the marginalized rural and urban populations of the country. In this study, we analyze the long-term impact of India’s Food Security Act on its domestic rice market and the international market for rice. We specify and apply a structural demand-and-supply model to India’s rice market and link it with the world rice market, as part of a broad partial equilibrium modeling system of international agriculture commodity markets. We specifically focus on three different scenarios—subsidy as a price effect, subsidy as an inelastic income effect, and subsidy as an elastic income effect—under the broader framework of the National Food Security Act. We find that at the end of the projection period (the 2024/2025 crop year), as a result of the rice subsidy program, the consumption of rice increases significantly by 6,831 thousand metric ton (MT) in the case of the price effect while the inelastic income effect has little on production, consumption which increase by 265 thousand MT and 269 thousand MT, respectively and no impact on rice export of India.
    Keywords: models; food security; income; rice; forecasting; prices; markets; agricultural policies; food policies; subsidies, India rice model; national food security act; price effect; inelastic and elastic income effect, C15 Statistical Simulation Methods: General; C53 Forecasting Models, Simulation Methods; Q11 Agriculture: Aggregate Supply and Demand Analysis, Prices; Q17 Agriculture in International Trade; Q18 Agricultural Policy, Food Policy; Q31 Nonrenewable Resources and Conservation: Demand and Supply, Prices,
    Date: 2017
  15. By: Graham von Maltitz
    Abstract: Southern African countries’ interest in biofuel is due of its rural development potential. Finding models to optimize this benefit is therefore paramount. High-energy-density crops with low perishability allow farmers to grow small quantities on existing lands. Highly perishable, lowdensity crops such as sugarcane require tight integration between growers and mills. Models where growers have full ownership in the feedstock production facilities are possible, but this normally means that smallholder farmers need to work as a unit to achieve benefits of scale. Finding marketbased mechanisms to ensure sound and equitable returns for land and labour inputs is critical.
    Date: 2017
  16. By: Bachewe, Fantu Nisrane; Yimer, Feiruz; Minten, Bart
    Abstract: We analyze the evolution of crop and livestock producer prices and wages of unskilled laborers in Ethiopia between January 2014 and January 2017 to evaluate the effect of El Niño triggered droughts – which started in 2015 – that massively impacted parts of the country. The analyses reveal no evidence of widespread adverse price effects of the drought in cereal and labor markets. Real prices of major cereals were lower in January 2017 compared to three years earlier, especially for maize, sorghum, and wheat – the crops that are the major source of calories in areas that were most hit by drought. The decline in the cost of cereals in the food basket in January 2017 compared to three years earlier was estimated at 13.3 percent at the national level. Moreover, this decline in cereal costs was highest in areas most affected by the drought, possibly indicating the effect of major cereal imports and food aid directed to these areas. Considering crop and livestock prices jointly, the analysis reveals that livestock-cereal terms of trade improved. This is mainly due to the fact that although livestock prices declined during this period, as is usually seen in droughts, this decline was less than the decline in prices of cereals in such areas. The fluctuating behavior of cereal prices since January 2015 strikingly contrasts with the El Niño triggered major drought during 1997/98 in Ethiopia. During that period, cereal production declined by 25 percent compared to the year before, with significant increases in the real price of cereals, ranging between 15 and 45 percent. In contrast, in 2016 real cereal prices declined, which appears consistent with the relatively larger cereal imports and lower impacts of the drought on national cereal production in 2015/16.
    Keywords: wages; droughts; prices; cereals; maize; sorghum; wheats; livestock; resilience, El Niño,
    Date: 2017
  17. By: Edward Barbier; Philippe Delacote; Julien Wolfersberger
    Abstract: The forest transition describes a reversal or turnaround in longrun land-use trends for a country or region from a period of net forest area loss to net gain. Such forest recovery has occurred in high-income economies, and increasingly in developing countries. Although this process has been studied extensively by geographers, social scientists and historians, only recently has it been analyzed by economists. This contribution has focused on how competing land use values result in changing patterns of use that lead to an increase or decrease in forest cover. A simple model of forest transition is developed to illustrate this approach in the literature. Empirical applications attempt to explain the underlying economic factors, including governance and institutions, which determine the long-run transition in land use values and patterns. The various findings of these analyses have important policy implications, including for REDD+ and other forest recovery programs.
    Keywords: Deforestation, Forest Transition, Forest Policy, Land Use Change, REDD+.
    JEL: Q23 Q24 O13
    Date: 2016
  18. By: Gouel, Christophe; Guimbard, Houssein
    Abstract: Estimating future demand for food is a critical aspect of global food security analyses. The process linking dietary changes to wealth is known as the nutrition transition and presents well-identified features that help to predict consumption changes in poor countries. This study proposes to represent the nutrition transition with a nonhomothetic, flexible-in-income, demand system, known as the Modified Implicitly Directly Additive Demand System (MAIDADS). The resulting model is transparent and estimated statistically based on cross-sectional information from FAOSTAT the statistical database of the Food and Agriculture Organization of the United Nations. It captures the main features of the nutrition transition: rise in demand for calories associated with income growth; diversification of diets away from starchy staples; and a large increase in caloric demand for animal-based products, fats, and sweeteners. The estimated model is used to project food demand between 2010 and 2050 based on a set of plausible futures (trend projections and Shared Socioeconomic Pathways scenarios). The main results of these projections are as follows: (1) global food demand will increase by 46 percent, less than half the growth in the previous four decades; (2) this growth will be attributable mainly to lower-middle-income and low-income countries; (3) the structure of global food demand will change over the period, with a 95 percent increase in demand for animal-based calories and a much smaller 18 percent increase in demand for starchy staples; and (4) the analysis of a range of population and income projections reveals important uncertainties depending on the scenario, the projected increases in demand for animal-based and vegetal-based calories range from 78 to 109 percent and from 20 to 42 percent, respectively.
    Keywords: food security; demand; nutrition; diet; commodity markets; markets; economic development; prices; population; income; foods, Bennett’s law; food demand; nutrition transition, D12 Consumer Economics: Empirical Analysis; Q11 Agriculture: Aggregate Supply and Demand Analysis, Prices,
    Date: 2017
  19. By: Sonia Quiroga (University of Alcala); Emilio Cerdá (Universidad Complutense de Madrid)
    Abstract: Among the challenges facing the European Union agricultural sector in the coming years, the impacts of climate change could lead to much greater variability in farmers? incomes. In this context, the insurance industry will have to develop new instruments to cover farmers? incomes against losses due to meteorological factors. Some protective technologies that farmers can use for climate risk management have associated costs that vary as a function of the losses involved. These sorts of instruments compete with other less flexible instruments such as crop insurance. We here analyse an issue of decision-making, where the farmer can decide how much to invest in protection, as in situations where the farmer chooses which portion of a loss to protect in the case of adverse weather conditions, and we propose optimal management to mitigate the increasing negative effects of climate uncertainty. By analysing the optimal policy in a continuous choice situation, we consider whether farmers, as part of their crop management duties, should opt to protect some portion of their harvest value with available technologies, or whether they should protect the entire crop. To analyse this decision-making problem, we employ the cost-loss ratio model and take risk aversion into account.
    Keywords: Crop yield protection, climate risks, information value, cost-loss ratio, decision models
    JEL: Q00 C44 Q54
    Date: 2017–04
  20. By: Erin S. Garnett; Stephanie R. Gretsch; Clair Null; Christine L. Moe
    Abstract: Consumer responses to food product recalls have been documented, but there is little information on how consumers respond to illnesses or outbreaks associated with food service facilities.
    Keywords: Consumer survey, Foodborne outbreaks, Norovirus
    JEL: I0 I1
  21. By: Ambler, Kate; de Brauw, Alan; Godlonton, Susan
    Abstract: Reducing food loss and waste are important policy objectives prominently featured in the United Nation’s Sustainable Development Goals. To optimally design interventions targeted at reducing losses, it is important to know where losses are concentrated between the farm and fork. This paper measures farmlevel postharvest losses for three main crops—maize, soy, and groundnuts—among 1,200 households in Malawi. Farmers answered a detailed questionnaire designed to learn about losses during harvest and transport, processing, and storage and which measures both total losses and reductions in crop quality. The findings indicate that fewer than half of households report suffering losses conditional on growing each crop. In addition, conditional on losses occurring, the loss averages between 5 and 12 percent of the farmer’s total harvest. Compared to nationally representative data that measure losses using a single survey question, this study documents a far greater percentage of farmers experiencing losses, though the unconditional proportion lost is similar. We find that losses are concentrated in harvest and processing activities for groundnuts and maize; for soy, they are highest during processing. Existing interventions have primarily targeted storage activities; however, these results suggest that targeting other activities may be worthwhile.
    Keywords: food wastes; postharvest losses; agriculture; production; maize; groundnuts; soybeans; vegetables; nuts; cereals; households; farmers; harvesting; transport; processing; food processing; storage; food storage; crop storage; crops; farm storage; sustainable development, agricultural production,
    Date: 2017
  22. By: Mohaddes, K.; Raissi, M.
    Abstract: This paper studies the impact of commodity terms of trade (CToT) volatility on economic growth (and its sources) in a sample of 69 commodity-dependent countries, and assesses the role of Sovereign Wealth Funds (SWFs) and quality of institutions in their long-term growth performance. Using annual data over the period 1981.2014, we employ the Cross-Sectionally augmented Autoregressive Distributive Lag (CS-ARDL) methodology for estimation to account for cross-country heterogeneity, cross-sectional dependence, and feedback effects. We find that while CToT volatility exerts a negative impact on economic growth (operating through lower accumulation of physical capital and lower TFP), the average impact is dampened if a country has a SWF and better institutional quality (hence a more stable government expenditure).
    Keywords: Economic growth, commodity prices, volatility, sovereign wealth funds.
    JEL: C23 E32 F43 O13 O40
    Date: 2017–02–03
  23. By: Benjamin Dequiedt; Emmanuel Servonnat
    Abstract: In this paper, we investigate how risk and risk aversion influence the fertilisation behavior of farmers. We show analytically that a decreasing variance of yield along with nitrogen inputs encourages risk averse farmers to apply larger quantities of fertilizers compared with risk neutral behavior. Then, we use data concerning three departments in France (Deux-Sèvres, Seine-Maritime and Eure-et-Loir) to determine (i) crop yield response function to N fertilizers and (ii) risk aversion behavior of farmers on the basis of their actual fertilizers applications. We find that risk averse farmers represent 29,7% of farmers while risk seeking ones represent 35,5%. Risk aversion behavior is associated with an additional application of 29 kg/ha compared with risk neutral behavior which represents an average loss of 76 euros/ha. We show that the reduction of abatement linked to risk aversion behavior should appear only when crop yield variance is convex with respect to N fertilizers. Lastly, our results show that an insurance covering yield variability could be foreseen as an interesting tool to mitigate emissions.
    Keywords: Risk aversion, Emissions Tax, Mitigation Insurance, Fertilisation, Agriculture
    JEL: D81 D92 Q58
    Date: 2016
  24. By: Ai Hisano (Harvard Business School, General Management Unit)
    Abstract: This working paper examines the remarkable growth of wine consumption in the United States since the 1960s. The country is now the largest wine consumer in the world, exceeding the wine-producing European countries such as France and Italy, which had long dominated world markets. The paper identifies the late 1960s and 1970s as the major turning point by analyzing the role of businesses in reinventing the image of wine from a cheap and very alcoholic beverage to a sophisticated natural product, and a fine accompaniment for gourmet food. By creating wine as a symbol of social status, the reimagined wine industry became a reinforcer of social and class divisions in the United States.
    Date: 2017–05
  25. By: María Alejandra Arias (University of Chicago); Ana María Ibáñez (Universidad de Los Andes, Colombia); Andres Zambrano (Universidad de Los Andes, Colombia)
    Abstract: This paper examines the effect of conflict on agricultural production of small farmers. First, an inter-temporal model of agricultural production is developed in which the impact of conflict is transmitted through violent shocks and uncertainty brought about by conflict. We test the model using a unique household survey applied to 4,800 households in four micro-regions of Colombia. Our findings suggest households learn to live amid conflict, albeit at a lower income trajectory. When presence of non-state armed actors prolongs, farmers shift to activities with short-term yields and lower profitability from activities that require high investments. If violence intensifies in regions with presence of non-state armed actors, farmers concentrate on subsistence activities.
    Keywords: conflict, uncertainty, agricultural production, small-farmers, developing economies JEL Classification: D13, D74, Q1
    Date: 2017–03
  26. By: Julie Rozenberg; Adrien Vogt-Schilb; Stephane Hallegatte
    Abstract: To mitigate climate change, some governments opt for instruments focused on investment, like performance standards or feebates, instead of carbon prices. We compare these policies in a Ramsey model with clean and polluting capital, irreversible investment and a climate constraint. Alternative instruments imply different transitions to the same balanced growth path. The optimal carbon price minimizes the discounted social cost of the transition to clean capital, but imposes immediate private costs that disproportionately affect the current owners of polluting capital, in particular in the form of stranded assets. A phased-in carbon price can avoid stranded assets but still result in a drop of income for the owners of polluting capital when it is implemented. Second-best standards or feebates on new investment lead to higher total costs but avoid stranded assets, preserve the revenues of vested interests, and smooth abatement costs over individuals and time. These results suggest a trade-off between political feasibility and cost-effectiveness of environmental policies.
    Keywords: Stranded Assets, Energy efficiency, Greenhouse Gas Emissions, Power plants, Coal, Environmental taxes, Environmental Policy, Climate change mitigation, clean capital, stranded assets, BIDcambioclima
    JEL: L50 O33 O44 Q52 Q54 Q58
    Date: 2017–03
  27. By: Chandan Singha (Hindu College, University of Delhi)
    Abstract: The study attempts to assess the key determinants of the decision to adopt soil conservation. The study area is Teesta River Watershed, in Darjeeling District in the Eastern Himalayas. In this watershed, there have been soil conservation interventions both by the individual farmers on their own farm and by the government at the sub-watershed level. The data for this study was collected through a primary survey conducted during 2013. The distinguishing feature of our analysis is that it explicitly accounts for possible neighbourhood effects in influencing adoption. This is captured both by identifying adoption practices among farmers who are immediately upstream, and using spatial econometric techniques that incorporate the spatial distance between neighbouring farms. We use Bayesian formulation of a standard probit model in conjunction with Markov Chain Monte Carlo to estimate the model. The findings suggest strong and positive evidence of neighbourhood impact on farmers in making soil conservation decisions. We also examine if adoption decisions differ between farmers residing in treated and untreated sub-watershed and conclude that they do not. Knowledge about the magnitude and extent of spatial dependency can help the Government in designing better policies to promote the adoption of soil conservation practices at a lower cost.
    Keywords: Soil conservation measure, neighbourhood effect, spatial dependence, sub-watershed
    Date: 2017–05
  28. By: Evan Borkum; Anitha Sivasankaran; Jane Fortson; Kristen Velyvis; Christopher Ksoll; Elena Moroz; Matt Sloan
    Abstract: In this report we describe the designs for two evaluations of the MCC-funded Fruit Tree Productivity Project in Morocco: (1) an evaluation of the modern olive oil processing units funded by the project, and (2) an evaluation of the project’s investments in irrigated olive and date areas.
    Keywords: Morocco, agriculture, trees
    JEL: F Z
  29. By: G. Cornelis van Kooten
    Keywords: supply management; quota buyback programs; compensation; welfare measurement
    JEL: Q13 Q17
    Date: 2017–04
  30. By: Patrick Georges (Graduate School of Public and International Affairs, University of Ottawa, Ottawa, ON)
    Abstract: This paper analyses the trade policy options of Canada under Trump and reviews some arguments that have been made by economists and others in the current debate surrounding U.S. return to protectionism and mercantilism. For Canada, both imports and exports are vital, and trade with the U.S. and with the rest of the world is of key importance. The new mercantilist position of the U.S. administration under Trump requires Canada to reflect on how to communicate the Canada-U.S. trade relation in terms of win-win strategies. A good starting point for this exercise, however, is to emphasize that NAFTA, as a trade preferential arrangement, is not as valuable as it used to be in the 1990s because NAFTA margins of preferences are no more sufficiently attractive to offset the cost of complying with NAFTA Rules of Origins requirements. Second, Canada-U.S. border security measures introduced after the terrorist attacks of 2001 have also offset NAFTA’s tariff preferences. Finally, the paper discusses the benefits of diversifying Canada’s trade geographically in a world where North America has become a smaller share of the global pie.
    JEL: F10 F13 F14 F15 F16
    Date: 2017
  31. By: João Romão (University of Algarve and CEFAGE, Portugal); Peter Nijkamp (Tinbergen Institute, the Netherlands)
    Abstract: Despite the increasing socio-economic importance of tourism, in particular in the European context, a set of recent studies involving a large number of European regions has led to the identification of important problems related to the sustainable use of natural resources, innovation dynamics and specialization patterns, impacts of tourism on regional economic growth, and the relations between tourism performance and regional sustainable development in Europe. Taking these questions as a starting point, the purpose of this review article is to propose a conceptual framework for their analysis, including concepts like authenticity, place, smart tourism, co-creation of destinations and experiences, information segmentation, differentiation of supply, life cycle of tourism destinations, path dependence, customer variety, specialization or integrative diversification of tourism products. Finally, this analytical framework is used in order to identify and discuss a set of challenges for the future of tourism in European regions, with a view to policy and managerial implications, oriented to the integration of tourism policies within a broader context of socio-economic development, with implications on the definition and implementation of innovation and regional development policies, including smart specialization strategies. These challenges relate to the touristic experience (memorable, personalized and authentic), innovation (in the context of a diverse economy) and participatory governance (communities sharing spaces and places).
    Keywords: Territorial capital; Innovation; Related variety; Sustainability; Regional development.
    JEL: Q56 R11 Z32
    Date: 2017

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.