nep-env New Economics Papers
on Environmental Economics
Issue of 2019‒02‒18
24 papers chosen by
Francisco S. Ramos
Universidade Federal de Pernambuco

  2. Natural hazards and internal migration: The role of transient versus permanent shocks By Tanvir Pavel; Syed Hasan; Nafisa Halim; Pallab Mozumder
  3. Estimating the Economic Impacts of Climate Change Using Weather Observations By Charles D. Kolstad; Frances C. Moore
  4. Mitigation strategies under the threat of solar radiation management By Fabien Prieur; Ingmar Schumacher; Martin Quaas
  5. El costo social del carbono: una visión agregada desde América Latina By Alatorre, José Eduardo; Caballero, Karina; Ferrer, Jimy; Galindo, Luis Miguel
  6. Regional Climate Policy under Deep Uncertainty By William Brock; Anastasios Xepapadeas
  7. Inclusive development in environmental sustainability in sub-Saharan Africa: insights from governance mechanisms By Simplice A. Asongu; Nicholas M. Odhiambo
  8. Wealth Management and Uncertain Tipping Points By Steinar Strøm; Jon Vislie
  9. “Green regions and local firms’ innovation” By Lorena M. D’Agostino; Rosina Moreno
  10. Incorporating CO2 emissions into macroeconomic models through primary energy use By Grant Allan; Kevin Connolly; Andrew G Ross; Peter McGregor
  11. Market size asymmetry and industrial policy in an international duopoly: Environmental tax vs. production subsidy By Lidia Vidal-Meliá; Eva Camacho-Cuena; Miguel Ginés-Vilar
  12. The elusive consensus on climate change By Richard S.J. Tol
  13. Socially responsible investing: from the ethical origins to the sustainable development framework of the european union By Alice Martini
  14. Comparing Pollution Where You Live and Play: A Hedonic Analysis of Enterococcus in the Long Island Sound By Megan Kung; Dennis Guignet; Patrick Walsh
  15. Options of optimal dam capacity under externality and uncertainty By Harold Houba; Kim Hang Pham Do; Xueqin Zhu
  16. CAFE in the City – A Spatial Analysis of Fuel Economy Standards By Waldemar Marz; Frank Goetzke
  18. Agricultural Disaster Payments: Are They Still Politically Allocated? By Scott Callahan
  19. Precision Agriculture in Hungary: Are perceptions far from the facts? By Takács-György, Katalin; Molnár, András; Lámfalusi, Ibolya; Illés, Ivett; Gaál, Márta; Kiss, Andrea; Kemény, Gábor; Kemény-Horváth, Zsuzsanna; Péter, Krisztina; Domán, Csaba
  20. On the Role of Bank Liability in Protecting against Environmental Pollution (Japanese) By ODA Keiichiro
  21. Intensifying the Fight Against IUU Fishing at the Regional Level By Barbara Hutniczak; Claire Delpeuch; Antonia Leroy
  22. Australian drought policy: Notes on collateral damage and other issues By Watson, Alistair
  23. Environmentally Aware Households By Delis, Manthos; Iosifidi, Maria
  24. The Production Effects of Crop Diversification Requirements Under the European Union Greening Policy. By Daniel Voica; Stefan Wimmer

  1. By: Ilya Stepanov (National Research University Higher School of Economics); Johan Albrecht (National Research University Higher School of Economics)
    Abstract: The issue of instrument choice is vital for climate policy. Carbon pricing is used next to a range of traditional energy taxes and renewable energy policies such as feed-in tariffs and minimal renewable generation targets. Several countries introduced carbon taxes alongside existing energy taxes such as excise duties on vehicle fuels. Since 2005, the EU Emissions Trading Scheme (EU ETS) has attached a direct price to the GHG emissions of ETS companies. The combination of multiple instruments and explicit and indirect carbon price signals created a complex and frequently changing institutional landscape that blurs the contribution of each policy instrument. Can the decarbonization of the European economy be attributed to carbon price instruments or to renewable energy policies together with other fiscal instruments? This paper clarifies the relative impact of explicit carbon price instruments (carbon taxes and EU ETS) compared to other instruments, namely renewable energy policies and indirect carbon price signals (general energy taxes). The methodology is based on the calculation of the implicit carbon price in existing fiscal systems. On the basis of panel data for 30 European countries 1995–2016, several fixed-effect regression estimations were performed. The results indicate a greater but decreasing impact of price instruments on carbon intensity compared to renewable energy policies and a greater but decreasing relative impact of indirect price signals compared to explicit ones.
    Keywords: energy taxes, carbon tax, cap-and-trade, renewable energy policy, climate change, climate policy
    JEL: Q52 Q58 Q48
    Date: 2019
  2. By: Tanvir Pavel (Department of Economics, Florida International University, Miami, USA); Syed Hasan (School of Economics and Finance, Massey University, Palmerston North, New Zealand); Nafisa Halim (Department of Global Health, Boston University, Boston, USA); Pallab Mozumder (Department of Earth and Environment and Department of Economics, Florida International University, Miami, USA)
    Abstract: We analyse internal migration triggered by natural disasters in Bangladesh. We conducted a survey in nine coastal districts and two major cities in Bangladesh to investigate whether floods and cyclones, which can be considered as transient shocks, affect interregional migration differently compared to riverbank erosion that causes loss of lands and thus generates shocks that are permanent in nature. Our findings suggest that transient shocks induce households to move to nearby cities while permanent shocks push people to big cities with more opportunities. Comparing income and expenditure of migrants and non-migrant households, we find that the former group is better-off relative to their counterpart, indicating that welfare can be improved\ by facilitating migration. Rising exposure to climate change induced natural disasters around the world imply that our findings will be increasingly relevant for designing policies to address vulnerability, particularly for disaster prone countries with weak social safety nets.
    Keywords: Climate change, Natural disaster, Coastal area, Permanent shock, Transient shocks, Internal migration
    JEL: I38 Q54 Q56 R23
    Date: 2018
  3. By: Charles D. Kolstad; Frances C. Moore
    Abstract: This paper reviews methods that have been used to statistically measure the effect of climate on economic value, using historic data on weather, climate, economic activity and other variables. This has been an active area of research for several decades, with many recent developments and discussion of the best way of measuring climate damages. The paper begins with a conceptual framework covering issues relevant to estimating the costs of climate change impacts. It then considers several approaches to econometrically estimate impacts that have been proposed in the literature: cross-sections, linear and non-linear panel methods, long-differences, and partitioning variation. For each method we describe the kind of impacts (short-run vs long-run) estimated, the type of weather or climate variation used, and the pros and cons of the approach.
    JEL: H41 Q51 Q54
    Date: 2019–02
  4. By: Fabien Prieur; Ingmar Schumacher; Martin Quaas
    Abstract: The option to tackle climate change by means of Solar Radiation Management (SRM) is mostly thought to reduce efforts of mitigating greenhouse gas emissions. Here we hypothesize that (i) a unilateral threat to employ SRM can induce players to commit to strategies with increased mitigation effort compared to what would be observed at the Nash equilibrium in emission strategies only and (ii) there exists a way to share the burden imposed by commitment to avoid SRM that Pareto dominates an alternative that would involve too high current emission levels then followed by future SRM deployment. To study these hypotheses we develop a two-region, two-stage, two-period game where regions choose mitigation and SRM. While SRM targets regional climate preferences, in line with current scientific evidence its deployment leads to uncertain damages on the other region. We first develop the general theory and then study a more specific linear-quadratic application. Finally we calibrate the model to real-world data and find that hypothesis (ii) holds for plausible values.
    Keywords: climate change, solar radiation management, heterogeneous damages, strategic interaction, commitment
    JEL: C72 Q54
    Date: 2019
  5. By: Alatorre, José Eduardo; Caballero, Karina; Ferrer, Jimy; Galindo, Luis Miguel
    Abstract: El principal objetivo de este estudio es ofrecer una síntesis de los valores del Costo Social del Carbono (CSC) para la construcción de políticas públicas referidas al cambio climático en América Latina. El CSC identifica el costo económico que ocasiona una tonelada adicional de CO2 emitida a la atmosfera para las actividades económicas, el bienestar social y los ecosistemas. En la síntesis de la literatura de los valores del CSC se emplearon diversas técnicas de metaanálisis en las se identificó un costo social del carbono de 25,83 dólares por tonelada.
    Date: 2019–02–01
  6. By: William Brock; Anastasios Xepapadeas
    Abstract: We study climate change policies by using the novel pattern scaling approach of regional transient climate response to develop an economyclimate model under conditions of deep uncertainty associated with: (i) temperature dynamics, (ii) regional climate change damages, and (iii) policy in the form of carbon taxes. We analyze both cooperative and noncooperative outcomes in a regional model. Under deep uncertainty, robust control policies are more conservative regarding emissions, the higher the aversion to ambiguity, while damage uncertainty seems to produce more conservative behavior than climate dynamics uncertainty. Cooperative policies tend to be more conservative than noncooperative policies for similar concerns about uncertainty but, as concerns about uncertainty increase, policies tend to move closer to each other. Asymmetries in concerns about uncertainty tend to produce large deviations in regional emissions policy at the noncooperative solution. If aversion to ambiguity is sufficiently high, optimal regulation aiming to attain a cooperative steady state or a steady state that satisfies conditions for a Nash equilibrium might not be possible. The result is associated with the existence of regional hot spots and temperature spillovers across regions, a situation which emerges in the real world. In such cases, deep uncertainty about the impacts of climate change makes robust regulation infeasible.
    Keywords: Regional climate change policy, Regional temperature anomalies, Deep uncertainty, Robust control, Cooperative and noncooperative solutions.
    JEL: Q54 Q58 D81
    Date: 2019–01–26
  7. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This research examines the relevance of inclusive development in modulating the role of governance on environmental degradation. The study focuses on forty-four countries in sub-Saharan Africa for the period 2000-2012. The Generalised Method of Moments is employed as the empirical strategy and CO2 emissions per capita is used to measure environmental pollution. Bundled and unbundled governance dynamics are employed, notably: political governance (consisting of political stability/no violence and “voice and accountability”), economic governance (encompassing government effectiveness and regulation quality), institutional governance (entailing corruption-control and the rule of law), and general governance (a composite measure of political governance, economic governance and institutional governance). The following main findings are established. First, the underlying net effect in the moderating role of inclusive development in the governance-CO2 emissions nexus is not significant in regressions pertaining to political governance and economic governance. Second, there are positive net effects from the relevance of inclusive development in modulating the effects of regulation quality, economic governance and general governance on CO2 emissions. The significant and insignificant effects are elucidated. Policy implications are discussed.
    Keywords: CO2 emissions; Governance; Sustainable development; Sub-Saharan Africa
    JEL: C52 O38 O40 O55 P37
    Date: 2019–01
  8. By: Steinar Strøm; Jon Vislie
    Abstract: We analyze optimal wealth management, within a global setting, where accumulation of GHGs caused by extraction of fossil resources affects the probability distribution for hitting a threshold or tipping point, indicating a climate change. We derive an optimal strategy for overall wealth management, within a Ramsey-Hotelling-framework. We have two assets; one being reproducible (reversible capital equipment) and another being non-reproducible (stock of exhaustible natural resources – fossil fuels). Resources, along with capital equipment, are inputs in the production of an aggregate output allocated to consumption and net investment. Resource extraction adds to a stock of GHGs that affects the likelihood for a catastrophic event. If, and when, such an event occurs there is a downscaling of production opportunities. We derive a first-best precautionary global tax on using fossil fuel, which internalizes the present value of (conditional) expected welfare loss of hitting a threshold, as well as a set of risk-modified optimality conditions for overall wealth management, as long as no catastrophe has occurred.
    Keywords: wealth management, stochastic tipping points, catastrophic outcome, precautionary taxation, social rates of discount
    JEL: E21 O44 Q32
    Date: 2019
  9. By: Lorena M. D’Agostino (Department of Economics and Management. University of Trento); Rosina Moreno (AQR-IREA Research Group.)
    Abstract: Technological innovation is essential to achieve simultaneously economic, environmental and social goals (i.e. the green growth). Indeed, many studies found that environmental innovation spurs overall innovation. However, this topic has not been investigated by taking into account the geographical context. Therefore, our paper seeks to investigate whether ‘green regions’, with an increased public and private commitment in environmental issues, are related to innovation of local firms. Using data on Spanish manufacturing firms and regions, we find that environmental technologies (especially in green energy), environmental investments, and environmental management at the level of regions are positively associated to local firms’ innovation.
    Keywords: innovation; region; firm; green patents; environment JEL classification: R11; O31; O44
    Date: 2019–01
  10. By: Grant Allan (Department of Economics, University of Strathclyde); Kevin Connolly (Department of Economics, University of Strathclyde); Andrew G Ross (Department of Economics, University of Strathclyde); Peter McGregor (Department of Economics, University of Strathclyde)
    Abstract: Two key pillars of the energy quadrilemma (which measure the sustainability of energy policy) are a reduction in greenhouse gas emissions and economic development. Recent worldwide energy policy has focused on the reduction of greenhouse gas emissions to combat climate change, which will influence, and in turn be influenced by, economic activity and energy use. As such, it is critically important to identify and incorporate emissions into macroeconomic models. Typically, emissions are linked to economic activity via the level of output, both calculated at a sectoral level. However, this approach - while consistent with linear models such as Input-Output - assumes that emissions per unit of output remains constant, which can be problematic with more complex economic systems. In this paper we detail a method for incorporating sectoral and aggregate CO2 emissions into a macroeconomic model (CGE) of the UK through the use of sectoral primary energy use.
    Keywords: Emissions, macroeconomic models, primary use energy
    JEL: Q43 O13
    Date: 2018–11
  11. By: Lidia Vidal-Meliá (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Eva Camacho-Cuena (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Miguel Ginés-Vilar (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: This paper analyzes how international trade affects the governments’ decision on their industrial policy in the context of bilateral international trade and imperfect competition. We model an international duopoly with market size asymmetry and product heterogeneity. Each firm produces two different products, one for the domestic market and the other one for the foreign market, where the firms’ production generates local emissions. The findings of our paper show the important role of market asymmetry in determining the optimal industrial policy in a setting where both, firms and regulators, act strategically. The government in each country decides, as industrial policy between two option: an emission tax or a production subsidy. We find that the governments in small countries have incentives to set an environmental tax to the firms competing in international markets with similar size. This is the case even if the government in the large market decided to set a production subsidy, as long as market size asymmetry is low enough. Instead, if firms in a small country compete in large markets, that is, increasing the market size asymmetry between countries, it is then optimal for the government in the small country to give up emission taxes and pay productions subsidies to keep the firms’ competitiveness in the home and foreign markets if the government in the big country subsidizes production. In this case, an increase in the firms’ profits offsets the effects of emission damages on the country social welfare.
    Keywords: Environmental tax, Production subsidy, Market size asymmetry, Product heterogeneity, Imperfect markets
    JEL: F18 H23 L13 Q56
    Date: 2019
  12. By: Richard S.J. Tol (Department of Economics, University of Sussex, Brighton, UK; Institute for Environmental Studies, Vrije Universiteit, Amsterdam; Department of Spatial Economics, Vrije Universiteit, Amsterdam; Tinbergen Institute, Amsterdam; CESifo, Munich, Germany; Payne Institute for Earth Resources, Colorado School of Mines, Golden, Colorado)
    Abstract: Thirteen studies quantify the agreement that climate change is real and human-made. Consensus is at odds with the scientific method and irrelevant for policy. Respondents with little relevant expertise and papers on loosely related subjects dominate the studies. Data are analyzed with insufficient care, and samples arbitrarily restricted. Combining estimates from different studies, 89% agree that human activity significantly affected climate after 1750, and 80% that humans were the most important driver of climate change. 97% agree that human activity was the most important factor in climate change since 1950, but only 80% that anthropogenic greenhouse gases were.
    Keywords: climate change, consensus, surveys
    JEL: Q54
    Date: 2019–02
  13. By: Alice Martini (Dipartimento di Scienze Politiche – Università di Pisa)
    Abstract: In this work we present an overview of the historical development of Socially Responsible Investing, a financial activity that has been boosting in recent decades from a niche, mainly religious-led exclusionary practice, towards a mainstream strategy of risk analysis for institutional and retail investors. We will also discuss the advances that regulatory activity and harmonization process on such industry have achieved at international level in recent years, with a special focus on the European Union.
    Keywords: Socially Responsible Investing; Environmental, Social and Governance factors; Corporate Social Responsibility; Economic and Financial history; European Action Plan on Sustainable Finance.
    Date: 2019–02
  14. By: Megan Kung; Dennis Guignet; Patrick Walsh
    Abstract: Hedonic property value studies of water quality conventionally focus on quality levels measured nearest a home. This study examines whether quality at the nearest access point, i.e., a beach, matters more to local residents. We conduct a hedonic analysis focusing on water quality in the Long Island Sound, where an aging infrastructure and heavy precipitation lead to frequent sewage overflows. The analysis focuses on bacteria contamination and beach closures. Results suggest that decreases in water quality measured at the nearest beach yield a larger negative effect and impact homes at a much farther spatial extent than previously suggested in the literature. Key Words: beach; enterococcus; hedonic; Long Island Sound; property value; water quality
    JEL: Q24 Q51 Q53
    Date: 2019
  15. By: Harold Houba; Kim Hang Pham Do (School of Economics and Finance, Massey University, Palmerston North, New Zealand); Xueqin Zhu (Environmental Economics and Natural Resources Group, Wageningen University, Wageningen, The Netherlands)
    Abstract: This paper analyses the relation between optimal dam capacity and water management in a unified approach. Having extended a hydropower generation model, we investigate the optimal dam capacity for multi-functional dams such as providing infrastructure for industrial and households water use, conjunctive use of hydropower generation and irrigation; storing water in the wet season for use in the dry season, and mitigating flooding damages. Our optimal solution shows that optimal dam capacity is characterized by the marginal benefits of hydropower generation, the marginal costs of flooding damages, and the constraining factors. We also provide the implication of the optimal solution for three real world cases of dam construction, i.e. for flood control, for irrigation and for hydropower generation.
    Keywords: river-basin management, dam capacity, welfare optimisation, externalities
    JEL: Q40 O21 C71 C72 D62
    Date: 2018
  16. By: Waldemar Marz; Frank Goetzke
    Abstract: Climate policy instruments in the transportation sector like fuel economy standards (CAFE) and fuel taxes not only affect households’ vehicle choice, but also the urban form in the long run. We introduce household level vehicle choice into the urban economic monocentric city model and run long-term climate policy scenarios to analyze the welfare effects of this urban adjustment in reaching emission goals. This goes beyond more short-term empirical analyses of the rebound effect in driving. We find that stricter CAFE standards lead to an urban expansion and considerable additional welfare costs for certain emission goals, unaccounted for in the previous literature on welfare costs of CAFE. These welfare costs can be reduced roughly by one half through the combination of CAFE with an urban growth boundary. Fuel taxes, in turn, lead to an urban contraction and additional welfare gains. We analyze the sensitivity of the results to changes in model parameters.
    Keywords: Fuel economy standards, fuel tax, monocentric city, rebound effect
    JEL: H23 L90 Q48 R40
    Date: 2019
  17. By: Maryna Tverdostup; Tiiu Paas
    Abstract: The study aims to assess productivity and efficiency of selected blue economy sectors in two neighbouring countries: Estonia and Finland. The analysis relies on the Amadeus database for both countries, implementing Data Envelopment Analysis (DEA) and calculating partial productivity measures. The results of the study show that, on average, blue sectors report high performance indicators in coastal regions of the countries, the only exceptions being the tourism and bio and subsea activities sectors in Estonia and marine (cargo) transportation in Finland. The common pattern of imperfectly efficient blue sectors in both countries is a substantial excess of fixed assets, which convey extra costs for business activities and, to some extent, generate excessive environmental pressures. The special nature of a shared blue economic area of Estonia and Finland stipulates close cross-border cooperation as a major tool to improve performance of the imperfectly efficient sectors through shared “best practice” operations, technologies and infrastructures. However, the lack of appropriate cross-border statistical data restricts analytical opportunities and development of policy recommendations.
    Keywords: blue economy, economic performance analysis, cross-border statistics
    Date: 2019
  18. By: Scott Callahan
    Abstract: This paper studies the allocation of agricultural disaster subsidies. Exploiting a regime change in agricultural disaster policy which occurred with the passage of the 2008 Farm Bill, disaster subsidy disbursement under both the 2005-2007 Crop Disaster Program and the SURE program that ran from 2008-2014 are estimated, and the effects of political factors on subsidy disbursement are compared. Results indicate that the transition from ad-hoc emergency disaster programs to a permanent agricultural disaster program did not reduce the political allocation of agricultural disaster subsidies, in contrast to results from the FEMA disaster payment literature. Key Words: Agricultural Policy, Campaign Finance, Lobbying, Rent Seeking
    JEL: Q18 D72
    Date: 2018
  19. By: Takács-György, Katalin; Molnár, András; Lámfalusi, Ibolya; Illés, Ivett; Gaál, Márta; Kiss, Andrea; Kemény, Gábor; Kemény-Horváth, Zsuzsanna; Péter, Krisztina; Domán, Csaba
    Abstract: Technological progress can possibly offer multiple solutions to the most significant challenges faced by agriculture. Although benefits of precision agriculture are promoted from a long period, however, its diffusion progressing in a slower manner. Perceptions of Hungarian FADN arable farms collected through a survey (2016) is contrasted with the cost-benefit analysis of farms already applying certain parts of precision agriculture technology. The survey revealed the details of the application of different technologies and their impacts as perceived among arable farms. Special subsidies implementing into the “greening” component of CAP will be an inciting factor for supporting the wider spread of PA.
    Keywords: Agricultural and Food Policy
    Date: 2017–08–30
  20. By: ODA Keiichiro
    Abstract: By extending the basic framework of Boyer and Laffont (1997) to an incomplete contracting model, where a bank with "lender liability" and a firm under an unlimited liability constraint play bargaining games in using option contracts, we show that environmental damages as externalities caused by the firm can be reduced to the socially desirable level through the provision of monitoring, insurance and credit by the bank interacting with the financial market.
    Date: 2018–12
  21. By: Barbara Hutniczak (OECD); Claire Delpeuch (OECD); Antonia Leroy (OECD)
    Abstract: Regional fisheries management organisations (RFMOs) are the primary mechanism for co-operation between fishing countries and coastal states to ensure sustainable fishing globally. This paper aims to inspire and guide RFMO secretariats and member countries in how to focus their effort and investment to step up the contribution of RFMOs to the fight against illegal, unreported and unregulated (IUU) fishing. It does so by measuring the extent to which RFMOs apply best practices against IUU fishing and pointing to the remaining gaps. Information gathered from RFMOs’ resolutions and recommendations introducing conservation and management measures (CMMs), other publicly available sources and direct communication with RFMOs’ secretariats was analysed and summarised into five indicators reflecting the most important management tools targeting IUU fishing at the disposal of RFMOs. Indicators show overall progress among RFMOs, but discrepancies remain, suggesting scope for improvement by learning from best performers.
    Keywords: Fisheries management, IUU fishing, regional fisheries management organisation, RFMO
    JEL: Q22 Q27 Q28
    Date: 2019–02–14
  22. By: Watson, Alistair
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Land Economics/Use
    Date: 2019–02–14
  23. By: Delis, Manthos; Iosifidi, Maria
    Abstract: The rising environmental awareness induces a changing landscape for policymakers and real economic prospects. We examine the properties of a general equilibrium model with endogenous household preferences (for labor, consumption, and environmental quality) and a negative environmental externality. The endogeneity of labor creates an additional channel of substitution between environmental quality and labor, besides the channel of substitution between environmental quality and consumption. We show that a key requirement for improved output following a positive shock in the weight of environmental quality (household environmental awareness) is that environmental awareness trades off the weight on labor and not the weight on consumption. An interesting feature of the model is that the existence of the environmental externality gives a non-zero capital tax in the long run.
    Keywords: Environmental awareness; Environmental quality; Labor; Consumption; Real outcomes
    JEL: H3 Q5
    Date: 2019–02–12
  24. By: Daniel Voica (School of Economics and Finance, Massey University); Stefan Wimmer (School of Life Sciences Weihenstephan, Technical University of Munich, Freisling)
    Abstract: This paper explores the potential production and land use effects of making subsidy payments subject to crop diversification. We first derive a theoretical model for a rational farmer who receives subsidies contingent on the degree of crop diversification. A state-contingent framework is used to show that crop diversification decisions are independent of risk preferences if farmers have access to off-farm opportunities, such as financial markets. Pricing equations for land allocation and output decisions are derived from the theoretical model and used in a Generalized Method of Moments framework to estimate parameters of interest. We use a panel of crop farms from France, Germany, Poland, and the UK obtained from the EU Farm Accounting Data Network (FADN).
    Date: 2018

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