Showing papers in "Agricultural and Resource Economics Review in 2011"

Comparing Willingness to Pay for Organic, Natural, Locally Grown, and State Marketing Program Promoted Foods in the Mid-Atlantic Region

Abstract: A choice experiment of Mid-Atlantic consumers was conducted to determine marginal willingness to pay for the attributes organic, natural, locally grown, and state marketing program promoted for strawberry preserves. The influence of purchasing venue on willingness to pay was also examined. Results indicated a price premium when purchased at a farmers market across all five states and versions. Organic was preferred to natural in only one state. Preference ordering between local and state program promoted varied. Consumers in Maryland and Pennsylvania clearly preferred local, while those in New Jersey seemed most likely to prefer the state program version.

The Relative Importance of Search versus Credence Product Attributes: Organic and Locally Grown

Abstract: Organic foods and local foods have come to the forefront of consumer issues, due to concerns about nutrition, health, sustainability, and food safety. A conjoint analysis experiment quantified the relative importance of, and trade-offs between, apple search and experience attributes (quality/blemishes, size, flavor), credence attributes (conventional vs. organic production method, local origin vs. product of USA vs. imported), and purchase price when buying apples. Quality is the most important apple attribute. Production method-organic versus conventional-had no significant impact on preferences. Key Words: conjoint analysis, organic, locally grown, credence attributes (ProQuest: ... denotes formula omitted.) Two significant trends have been developing in the area of fresh fruit and vegetables. Organic foods and local foods have come to the forefront of consumer issues in the past 5 years. These trends have been influenced by issues related to nutrition, health, sustainability, and food safety. As consumers have become increasingly concerned with the quality, safety, and production features of food, the demand for food products with credence attributes (e.g., origin, organic, locally grown, environment-friendly) on product labels has been garnering increased attention (Dentoni et al. 2009). Studies suggest that credence attributes impact consumer buying intentions. Certain segments of the population are willing to pay more for food products carrying a label identifying specific credence features, including safety and quality characteristics, certified as being present by a trusted source (Mabiso et al. 2005). No area has been more affected by these trends than fresh fruits and vegetables. Although organic foods have received a lot of corporate attention because of fast growth rates, the growth has been from a very low base and the absolute amount is still quite low. In 2008, according to a Nielsen Report, organic sales of fresh produce were only 6 percent of the total fresh produce sales, and only about one percent of total supermarket sales were organic. Additionally, the current economic crisis has made the price differential more of a barrier to purchase. In contrast to organic, buying local has become more in vogue. Whether fact or myth, consumers have seen buying local fresh products as assurance of food safety and as insurance against foodborne illness, and because of the lack of transit, locally grown produce is perceived to be fresher and tastier. Supermarkets are identifying the farmers and producers in advertising, in in-store promotional material, and on their website. Some stores are listing how far their food travels to the store. The objective of this study is to determine the relative strength of two credence attributes, organic and locally produced, within the context of other fresh apple search and experience attributes. Specifically, the study addresses which credence attribute has the higher impact on consumers' preference for the product. A conjoint analysis experiment quantified the relative importance of, and trade-offs between, apple physical search and experience attributes (sweetness,1 quality/blemishes,2 size, crispness), credence attributes (conventional vs. organic production method, local origin vs. product of USA vs. imported), and purchase price on purchase intention when buying apples. Background on Credence Attributes Consumers demand high quality, safety, and freshness in their fruits and vegetables. Quality is a multidimensional attribute, with certain quality dimensions (color, odor, taste) readily discernible by consumers (Anderson and Anderson 1991). These readily discernible dimensions are known as search and experience attributes. "Search" attributes refer to visual attributes of products (such as size, color, and blemishes) for which consumers can seek pre-purchase information, while "experience" attributes (such as taste) are ones that are ascertained on the basis of consuming the product (Nelson 1970, 1974, Stigler 1961). …

Use of Direct Marketing Strategies by Farmers and Their Impact on Farm Business Income

Abstract: Direct marketing strategies increasingly have been recognized as a viable business option in U.S. agriculture as they allow producers to receive a better price by selling products directly to consumers. The objective of this study is twofold. Using a national survey, we first estimated a zero-inflated negative binomial model to identify factors affecting the total number of direct marketing strategies adopted by farmers. Then we estimated a quantile regression model to assess the impact of the intensity of adoption of direct marketing strategies on gross cash farm income. The results show that the intensity of adoption has no significant impact on gross cash farm income and that participation in farmers markets is negatively correlated with gross cash farm income at all five quantiles estimated.

Intensity of Precision Agriculture Technology Adoption by Cotton Producers

Abstract: Many studies on the adoption of precision technologies have generally used logit models to explain the adoption behavior of individuals. This study investigates factors affecting the intensity of precision agriculture technologies adopted by cotton farmers. Particular attention is given to the role of spatial yield variability on the number of precision farming technologies adopted, using a count data estimation procedure and farm-level data. Results indicate that farmers with more within-field yield variability adopted a higher number of precision agriculture technologies. Younger and better educated producers and the number of precision agriculture technologies used were significantly correlated. Finally, farmers using computers for management decisions also adopted a higher number of precision agriculture technologies.

A Hybrid Land Conversion Model Incorporating Multiple End Uses

Abstract: The need for models that forecast land use change spans many disciplines and encompasses many approaches. Pattern-based models were the first in which projections of change at specific locations in actual landscapes could be predicted. In contrast, recent economic models have modeled the underlying behavioral process that produces land use change. This paper combines attributes from each approach into a hybrid model using a multiple discrete continuous extreme value formulation that allows for multiple conversion types, while also estimating the intensity of each type of conversion, which is an important but often overlooked dimension. We demonstrate the simulation routine, which successfully predicts a majority of growth by type, time, and location at a disaggregated scale, for a three-county region in Maryland.

State-Branded Programs and Consumer Preference for Locally Grown Produce

Abstract: Revitalization of state brands is deemed important to several constituencies. Stated preference with choice experiment methods were used to elicit consumer preferences for two locally grown products: spinach, which has had a well-publicized food safety incidence, and carrots, which have had no such incidence in recent history. A full factorial design was used to implement the choice experiment, with each commodity having four identical attributes varying at different levels. Findings reveal that consumers are willing to pay a premium for locally grown spinach marked with the Arizona Grown label over locally grown spinach that was not labeled. This premium was higher than the premium that would be paid for state-branded carrots. This difference highlights consumers’ perceptions of “locally grown” as an indicator of safety in their food supply. Findings have important implications with respect to providing consumer value and point to differentiated positioning strategies for state-branded produce.

Off-Farm Employment Effects on Adoption of Nutrient Management Practices

Abstract: Off-farm income as a share of total farm household income has been increasing. Previous studies found inconsistent results regarding the impact of off-farm income on adoption of conservation practices. We test the hypothesis that off-farm employment has a positive impact on adoption of capital incentive practices and a negative impact on adoption of labor-intensive practices. The results confirm that adoption of injecting manure into the soil, a capitalintensive practice, is positively and significantly impacted by off-farm employment of the operator. However, off-farm employment variables had no effect on adoption of record keeping. Key Words: adoption, nutrient management, off-farm income (ProQuest: ... denotes formulae omitted.) Animal feeding operations1 (AFOs), and livestock operations more generally, are significant sources of water pollution in the United States (U.S. Environmental Protection Agency 1998, Abdalla and Lawton 2006). Livestock production produces a byproduct, manure, that contains nutrients such as nitrogen and phosphorous; but without proper management, these nutrients can degrade water sources (Aillery et al. 2005). To reduce the pollution from AFOs, the U.S. Department of Agriculture (USDA) and the Environmental Protection Agency (EPA) promote the adoption of best management practices for manure as part of comprehensive nutrient management plans (CNMPs). While concentrated animal feeding operations (CAFOs) are required to adopt some practices, for other AFOs adoption is voluntary under the Federal Clean Water Act (U.S. Department of Agriculture and U.S. Environmental Protection Agency 1999). Therefore, a better understanding of the barriers to adoption will help policy makers and Extension staff more effectively promote nutrient management practices. This study examines factors affecting adoption of two manure management practices: injecting manure and record keeping on the timing and location of manure applications. More specifically, we examine whether the nature of off-farm employment has differential effects on adoption of capital-intensive versus labor-intensive practices. We find that part-time employment of the farm operator, but not household off-farm income, positively affects adoption of manure injection. The paper proceeds as follows: the next section reviews the literature on off-farm employment and technology adoption. We then develop hypotheses that guide our empirical strategy, described in the following section. We present our results and conclude with future research needs and implications for Extension efforts. Adoption of New Technology and Off-Farm Work A voluminous literature, both theoretical and empirical, exists on adoption of agricultural practices and technologies [recent reviews with an emphasis on adoption of conservation practices include Pannell et al. (2006), Prokopy et al. (2008), and Gedikoglu and McCann (2010)]. Profitability was one of the earliest factors studied and one that fairly consistently has a positive effect on adoption in the empirical literature (Griliches 1957, Koundouri, Nauges, and Tzouvelekas 2006, Rahm and Huffman 1994). Other factors, such as increased farm size (Feder, Just, and Zilberman 1985, Asafu-Adjaye 2008) and human capital/ education (Abdulai and Huffman 2005, Chang and Boisvert 2005, Walton et al. 2008), tend to increase adoption. Factors that typically decrease adoption are increased age, credit constraints (Just and Zilberman 1998) and risk/uncertainty (Feder 1980, Feder and O'Mara 1982, Just and Zilberman 1998, Rahelizatovo and Gillespie 2004). Rogers (2003) includes perceptions about innovations- including compatibility with the existing system, which increases adoption-and discomfort and complexity, which decrease it. Due to its increasing share in farm households' income, recent studies examined the role of offfarm income in the adoption of new technologies. Mishra et al. …

The Impact of Reducing Greenhouse Gas Emissions in Crop Agriculture: A Spatial- and Production-Level Analysis

Abstract: With the Waxman-Markey Bill passing the House and the administration’s push to reduce carbon emissions, the likelihood of the implementation of some form of a carbon emissions policy is increasing. This study estimates the greenhouse gas (GHG) emissions of the six largest row crops produced in Arkansas using 57 different production practices predominantly used and documented by the University of Arkansas Cooperative Extension Service. From these GHG emission estimates, a baseline state “carbon footprint” was estimated and a hypothetical GHG emissions reduction of 5, 10, and 20 percent was levied on Arkansas agriculture using a cap-and-trade method. Using current production technology and traditional land use choices, results show that the trading of carbon-emitting permits to reduce statewide GHG emissions by 5 percent from the baseline would enhance GHG emissions efficiency measured as net crop farm income generated per unit of carbon emissions created. The 5 percent reduction in GHG emissions does cause marginal reductions in acres farmed and has marginal income ramifications. Beyond the 5 percent reduction target, gains in GHG emissions efficiency decline but remain positive in most counties through the 10 percent GHG reduction target. However, with a 10 percent GHG reduction, acreage and income reductions more than double compared to the 5 percent level. When GHG emissions are reduced by 20 percent from the baseline, the result is a major cropping pattern shift coupled with significant reductions in traditional row crop acreage, income, and GHG emissions efficiency.

Rural Community Participation, Social Networks, and Broadband Use: Examples from Localized and National Survey Data

Abstract: Although attention has been given to how broadband access is related to economic development in rural areas, scant consideration has been given to how it may be associated with voluntary participation. This issue is important in that numerous studies have shown how much more vital community participation is in rural areas as compared to suburban and urban places. Drawing on three diverse data sets, we examine the influence of broadband access on community participation. In addition, we explore whether broadband access exerts its influence through, in conjunction with, or independent of social networks. The results suggest that broadband access and social network size have independent effects on volunteering in rural places.

The Implications of Skewed Risk Perception for a Dutch Coastal Land Market: Insights from an Agent-Based Computational Economics Model

Abstract: Dutch coastal land markets are characterized by high amenity values but are threatened by potential coastal hazards, leading to high potential damage costs from flooding. Yet, Dutch residents generally perceive low or no flood risk. Using an agent-based land market model and Dutch survey data on risk perceptions and location preferences, this paper explores the patterns of land development and land rents produced by buyers with low, highly skewed risk perceptions. We find that, compared to representative agent and uniform risk perception models, the skewed risk perception distribution produces substantially more, high-valued development in risky coastal zones, potentially creating economically significant risks triggered by the current Dutch flood protection policy.

The Trees and the Bees: Using Enforcement and Income Projects to Protect Forests and Rural Livelihoods Through Spatial Joint Production

Abstract: Forest managers in developing countries enforce extraction restrictions to limit forest degradation. In response, villagers may displace some of their extraction to other forests, which generates “leakage” of degradation. Managers also implement poverty alleviation projects to compensate for lost resource access or to induce conservation. We develop a model of spatial joint production of bees and fuelwood that is based on forest-compatible projects such as beekeeping in Thailand, Tanzania, and Mexico. We demonstrate that managers can better determine the amount and pattern of degradation by choosing the location of both enforcement and the forest-based activity.

Factors Influencing the Selection of Precision Farming Information Sources by Cotton Producers

Abstract: Precision farming information demanded by cotton producers is provided by various suppliers, including consultants, farm input dealerships, University Extension systems, and media sources. Factors associated with the decisions to select among information sources to search for precision farming information are analyzed using a multivariate probit regression accounting for correlation among the different selection decisions. Factors influencing these decisions are age, education, and income. These findings should be valuable to precision farming information providers who may be able to better meet their target clientele needs.

Estimating the Economic Impact of Telemedicine in a Rural Community

Abstract: One commonly discussed benefit of broadband access in rural America is the potential for telemedicine visits that allow rural residents to take advantage of urbanized medical services. While the primary benefit of telemedicine is often viewed as improved health care access, the availability of these services also offers significant economic contributions to the local community. Site visits to 24 rural hospitals of varying size over a four-state area in the Midwest provide information to develop a methodology for estimating telemedicine's economic impact. Using this technique, telemedicine services contribute between $20,000 and $1.3M annually to these local economies, with an average of $522,000. Key Words: telemedicine, economic impact, teleradiology, telepsychiatry Demonstrating the economic benefits associated with telemedicine is essential for the justification of community investment in telemedicine infrastructure. Although communities often must decide whether to fund telemedicine through taxes, subsidies, or other means, research to date has examined only the hospital-specific benefits of telemedicine. This study expands upon that research to document the return of telemedicine not only to hospitals, but also to their surrounding communities. Telemedicine, or the linking of rural residents with urban health specialists, has long held the promise of dramatically improving health care in rural communities. Research has shown that the availability of telemedicine allows rural areas to offer a larger variety of health care services (Rickets 2000); improve the overall perception of health care quality (Nesbitt et al. 2005); and even help with recruitment and retention of physicians (Sargeant, Allen, and Langille 2004, Goetz and Debertin 1996). The nature of telemedicine, however, allows it to do more than simply offer better health services to a community. The economy of a rural community is impacted by the very presence of telemedicine: reduced travel lowers transportation costs and decreases missed time from work; the amount of lab and pharmacy work performed locally increases; and hospitals save from outsourcing telemedicine procedures versus having to pay an in-house specialist for the same work. Quantifying the economic impact at the community level can be important for areas considering implementing or expanding a telemedicine program, particularly since the basic rationale for the existence of such a program is to provide better service to the community. The current framework for telemedicine evaluation, done at the hospital level, does not allow for this wider view of the potential impacts. Most of the recent empirical studies on telemedicine have used hospital-level cost analysis frameworks to determine whether or not a particular system was cost-effective (Whitten, Kingsley, and Grigsby 2000). In general, the findings have been somewhat disappointing for telemedicine, as expected cost savings have not been documented. De la Torre, Hernandez-Rodriguez, and Garcia (2004) find that, from a patient's perspective, some instances of telemedicine may not be costeffective when compared to conventional care. Whitten et al. (2002) systematically reviewed over 600 articles that dealt with cost-benefit analysis pertaining to telemedicine and concluded that no solid evidence existed that telemedicine is a cost-effective method for the delivery of health care. However, very few (if any) studies have focused on the economic benefits of telemedicine from a community perspective. Only Whitacre et al. (2009) developed a framework to look at telemedicine from this viewpoint, although their study was limited to five hospitals within a single state. This paper builds upon (and adds significant detail to) the framework developed by Whitacre et al. and extends the analysis to multiple telemedicine modalities for 24 hospitals in four relatively rural states. A solid understanding of the economic potential of various forms of telemedicine is vital for communities considering implementation of such a program, particularly in light of the unstable financial environment faced by rural hospitals (Stensland, Moscovice, and Christianson 2002). …

Differences in WTP and Consumer Demand for Organic and Non-GM Fresh and Processed Foods

Abstract: Auction experiments were used to examine demand and premium differences between organic, non-GM (genetically modified), and conventional versions for two pairs of fresh and processed foods. Results showed processed foods had greater substitutability among the versions than fresh products. Conventional versions were the least price sensitive, while non-GM versions were the most sensitive. Significant premium differences were found between fresh and processed foods for sweet corn and tortilla chips, but not for potatoes and potato chips. Results from random effects models mirrored these findings. In general, the extent of premium differences between fresh and processed versions appears dependent on the food product. Key Words: auction experiments, willingness to pay, organic, non-GM, fresh, processed food (ProQuest: ... denotes formulae omitted.) Certified organic food has a growing presence in the marketplace. The Organic Trade Association (2006) found that in 2005, total sales of organic foods were $13.8 billion, with a growth rate of 16.2 percent. The largest component of these was fresh foods, with fruits, vegetables, and dairy accounting for 39 percent of total sales. They also noted that organic processed foods, such as packaged/ prepared foods and snack foods, have been expanding rapidly, with growth rates of 19.7 percent and 18.3 percent, respectively. The total sale of packaged/prepared foods was $1.8 billion (13 percent) and snack food was $667 million (5 percent) in 2005. This growth of the organic market has notably occurred during a time when farmer usage of agricultural biotechnology has rapidly increased. Genetically modified (GM) crops, created through biotechnology, have become prevalent in the food system. Examples of GM seeds that have been developed include corn, soybeans, and potatoes. In addition to being consumed in their fresh forms, these products are often standard ingredients in a wide variety of processed foods. It was estimated that 60-70 percent of processed foods on supermarket shelves in North America contain some GM ingredients (Heslop 2006). Although the technology is widespread, studies have shown that some consumers perceive risks from GM foods (see Burton et al. 2001, Onyango et al. 2003, Costa-Font, Gil, and Traill 2008). To avoid GM foods, consumers have limited options. Since U.S. government regulations do not include a labeling requirement for GM foods, consumers can either buy certified organic food, which includes a non-GM requirement, or purchase from the small non-GM market segment. This study was designed to examine the differences between fresh and corresponding processed food markets for both organic and non-GM food products. Specifically, the first objective was to compare the demand between the fresh and processed categories, which was investigated through the construction of demand curves and the calculation of own- and cross-price elasticities. The second objective was to determine whether premiums for either organic or non-GM foods were significantly different depending on the level of processing. This was analyzed using a random effects model based on demographic characteristics as well as subjects' opinions about organic and GM foods. To investigate these objectives, two pairs of food items were considered. Each pair consisted of a whole, fresh food and a processed food based on that main ingredient. The two pairs were potatoes and potato chips, and sweet corn and tortilla chips. It was believed that the results obtained from this study could provide insight into consumers' decisions and help policy makers and food companies improve marketing strategies for organic and non- GM food products. Literature Review Fresh products have been considered in numerous studies on organic and GM foods. Wolf et al. (2002) studied consumer attitudes toward organic and conventionally grown lettuce using a survey conducted in California. …

Retail Dairy Prices Fluctuate with the Farm Value of Milk

Abstract: Farm milk prices tend to be volatile. Dairy farmers, industry pundits, and policymakers further tend to react to price volatility with alarm. One point of concern is the response of retail prices. This study investigates farm-to-retail price transmission in the 2000s for whole milk and cheddar cheese. Results show that price shocks at the farm gate are transmitted with delay and asymmetry to retail. Differences in the nature of price transmission for whole milk and cheddar cheese prices are also identified. Key Words: asymmetric price transmission, cointegration, dairy prices, error correction models (ProQuest: ... denotes formulae omitted.) Price volatility in U.S. dairy markets is not "new" but, because it affects farm receipts and the ability of producers to maintain operations, it continues to generate questions about market structure and performance. The most recent incidence of volatility occurred in 2007-2009. Milk prices received by dairy farmers fluctuated between $18 and $22 per cwt (100 pounds) from May 2007 through September 2008 before falling below $12 per cwt in February 2009.1 A similar pattern of farm price movements took place between May 2004 and May 2006. Recent price volatility has been unique in some ways. Low farm milk prices in late 2008 throughout 2009 coincided with higher than previous feed prices. The annual average feed cost2 was $4.69 per cwt between 2000 and 2006. It then rose to $7.75 per cwt between 2007 and 2009, an increase of 65 percent. The cost-price squeeze in 2009 was devastating for dairy farmers. Milk producers in the Northeast, for example, responded to their cash flow and debt repayment situations by, among other things, drawing down liquidity gained in 2007 and 2008 (Putnam 2010). Total industry losses were estimated at over $6 billion (Elam 2010). Questions about market structure and performance often generated by volatility include questions about the behavior of retail food prices. According to the American Farm Bureau Federation (AFBF), when the farm price of milk increases, marketers quickly pass higher prices on to consumers. By contrast, when farm prices decrease, marketers adjust retail prices slowly in order to increase their profits. The net effect, says the AFBF, is a wider farm-to-retail price spread (AFBF 2003). Debate over this matter grew more intense when retail prices appeared to change relatively little as farm prices dropped in late 2008 and early 2009. In February 2009, the Cheese Reporter, a trade publication, ran an editorial "Sometimes, Retail Dairy Prices Do the Strangest Things" (Groves 2009, p. 2). At various times during 2009, it was claimed that large fluid milk processors were engaging in anticompetitive practices, claims that prompted a decision to hold hearings/workshops the following year. Over the course of 2010, the U.S. Department of Justice (USDOJ) and the U.S. Department of Agriculture (USDA) held a series of five workshops on competition and regulatory issues in agriculture (USDOJ and USDA 2010). One work- shop focused on the dairy industry and another focused on farm-to-retail price spreads for foods, including meat and dairy products. Existing research corroborates the fears of dairy farmers, pundits, and policymakers. In a seminal study, Kinnucan and Forker (1987) find that price transmission is asymmetric for dairy products. Symmetry would require retail prices to adjust with equal speed and completeness, up when farm prices rise and down when they fall. The analysis finds instead asymmetry similar to that described by the AFBF. However, since data from 1971 through 1981 were used, Kinnucan and Forker's (1987) conclusions may not apply to recent events. The question of farm-to-retail price transmission has been revisited often for U.S. fluid milk prices. Lass, Adanu, and Allen (2001) examined fluid milk prices in the Hartford, Connecticut, and Boston, Massachusetts markets between January 1982 and June 1998. …

The Impact of Human Capital on Farm Operator Household Income

Abstract: Data from the 2006 Agricultural Resource Management Survey and multivariate regression procedures are used to examine the role of human capital in impacting the incomes of farm households. The paper uses an “adjusted” concept of income where government payments are subtracted from total household income thus allowing for the utilization of government payments as a potential control variable in the regression models. Findings indicate a significant and positive role for higher education except for farm households at the very lower and upper ends of the income distribution.

Determining Consumer Perceptions of and Willingness to Pay for Appalachian Grass-Fed Beef: An Experimental Economics Approach

Abstract: The focus of the current study was on the market potential for grass-fed beef in the Appalachian region, given that these products embody observed, experiential, nutritional, and process attributes that may appeal to a large consumer base. An in-store variant of the Becker-DeGroot-Marschack experimental auction mechanism was employed in the region to determine consumer preferences and willingness to pay. A majority of respondents preferred the grass-fed product over conventional grain-fed samples and were willing to pay a price premium to obtain it. Preferences for grass-fed were rooted largely in the associated superior nutritional content and core observed attributes.

The Impact of Settlement Design on Tropical Deforestation Rates and Resulting Land Cover Patterns

Abstract: Policymakers in the Brazilian Amazon face the challenge of meeting environmental and developmental goals as cities and towns within these tropical forests continue to face migration pressure. Alternative government planning strategies have been implemented to address forest clearing in conjunction with meeting social agendas. This paper uses panel estimation methods to investigate the impact of settlement design on land use. Results indicate that new settlement designs developed to further social interaction have had a negative impact on land cover and land use transformation. Thus, while new settlement designs appear to positively impact stated social goals, including greater contact between families and access to water and services, these social advances have come at the expense of environmental goals.

Welfare Effects of Anti-Sprawl Policies in the Presence of Urban Decline

Abstract: This paper extends first-best analysis of anti-sprawl policies, such as development taxes, and examines the welfare effects of development taxes in the presence of urban decline at the city core. We find that anti-sprawl policies generate several important feedbacks within the urban system, generating additional welfare gains and affecting the level of urban decline and suburban sprawl. Further, the optimal development tax exceeds the (first-best) Pigouvian level, irrespective of whether or not revenues are returned lump-sum to all landowners or earmarked for urban decline mitigation. Two trends characterize the evolution of metropolitan areas in the United States. Many central cities of major metropolitan areas are in decline relative to the suburbs, and at the same time, metropolitan areas are also experiencing rapid development in their outer suburban areas. 1

Can Crop Insurance Premiums Be Reliably Estimated

Abstract: This paper develops and applies a methodology to assess the accuracy of historical loss-cost rating procedures, similar to those used by the U.S. Department of Agriculture's Risk Management Agency (RMA), versus alternative parametric premium estimation methods. It finds that the accuracy of loss-cost procedures leaves much to be desired, but can be markedly improved through the use of alternative methods and increased farm-level yield sample sizes. Evidence suggests that the high degree of inaccuracy in crop insurance premium estimations through historical loss-cost procedures identified in the paper might be a major factor behind the need for substantial government subsidies to keep the program solvent.

Growth Management Policies for Exurban and Suburban Development: Theory and an Application to Sonoma County, California

Abstract: This study examines the effectiveness of growth management policies on influencing future patterns of exurban and suburban development. We initially estimate a spatially explicit model of residential development with parcel data in Sonoma County, California. This estimated model is then used to simulate the effect of urban growth boundaries (UGBs) versus allowing municipal sewer service expansion. The UGB policy decreases the amount of suburban development but is less effective in managing exurban development. The downzoning policy in agricultural and resource areas reduces the amount of exurban development, but only partially due to the prevalence of grandfathered lots in rural areas.

Incorporating Spatial Complexity into Economic Models of Land Markets and Land Use Change

Abstract: Recent work in regional science, geography, and urban economics has advanced spatial modeling of land markets and land use by incorporating greater spatial complexity, including multiple sources of spatial heterogeneity, multiple spatial scales, and spatial dynamics. Doing so has required a move away from relying solely on analytical models to partial or full reliance on computational methods that can account for these added features of spatial complexity. In the first part of the paper, we review economic models of urban land development that have incorporated greater spatial complexity, focusing on spatial simulation models with spatial endogenous feedbacks and multiple sources of spatial heterogeneity. The second part of the paper presents a spatial simulation model of exurban land development using an auction model to represent household bidding that extends the traditional Capozza and Helsley (1990) model of urban growth to account for spatial dynamics in the form of local land use spillovers and spatially heterogeneous land characteristics.

Open Space and Urban Sprawl: The Effects of Zoning and Forest Conservation Regulations in Maryland

Abstract: Rapid urbanization enhances the desirability of policies for preserving open space but policies intended to preserve open space may extend the urban boundary and create leapfrog development. We investigate this potential conflict between open space preservation and urban sprawl conceptually and empirically using data from the Baltimore-Washington suburbs. In accord with previous theoretical and empirical results, the estimated econometric model indicates that both zoning and forest planting requirements contribute to sprawl by increasing the amount of land needed to accommodate the current number of households. These results point to a conflict between preserving open space incorporated into private building lots or internal to subdivisions and public open space at the urban fringe.

Food Safety and Spinach Demand: A Generalized Error Correction Model

Abstract: We estimate an error correction model representing demand for leafy green vegetables but generalize the structure to allow for adjustment to one conspicuous shock. We investigate whether the adjustment rate to the U.S. Food and Drug Administration's (FDA) 2006 warning that fresh spinach was contaminated with deadly bacteria was distinct from the overall adjustment rate. Our model allows consumers to correct both for past errors and for any errors in their reaction to the shock. This method yields an estimate of the adjustment rate to the policy shock and points to an improved estimate of the duration of policy impacts. Key Words: error correction model, adjustment rates, AIDS demand model, retail food demand (ProQuest: ... denotes formulae omitted.) This paper uses an Error Correction Model (ECM) to determine whether consumers' adjustment to a warning from the federal government that a food was unsafe differed from the way in which consumers adjusted to more typical sources of disequilibrium. In general, policy makers are keenly interested in how long it takes a market to recover from any shock. Is the adjustment rate, or return to equilibrium, nearly as fast as data are reported? Or, is the rate so slow that intervention might be thought a useful policy option? Policy makers may be specifically interested in adjustments to food safety shocks, as these shocks are sometimes so big that they dwarf the impacts of all other events. ECMs are a popular method for modeling economic phenomena when data are nonstationary and for modeling cointegrated relationships (Duffy 2003, Edgerton et al. 1996, Enders 2003, Karagiannis and Mergos 2002, and Nzuma and Sarker 2010). But ECMs have several practical uses even when economic data are stationary. For example, they can be used as an atheoretical tool for modeling a wide variety of dynamic economic behaviors (Friesen 1992, Friesen, Capalbo, and Denny 1992). Regardless of whether data are stationary or nonstationary, ECMs are often used to estimate the rate of adjustment from disequilibrium to equilibrium, a critical goal in itself (Balcombe and Rapsomanikis 2008). A typical ECM consists of two components: an equilibrium model constructed from data represented in levels, obeying equilibrium constraints, and a disequilibrium model represented in differences. The interaction between these two model components allows economists to estimate the adjustment rate to equilibrium. Adjustment rate estimates derived from ECMs have been based on the implicit assumption that all factors embodied in the econometric error term equally influence the rate of adjustment to equilibrium (Duffy 2003, Edgerton et al. 1996, Enders 2003, Karagiannis and Mergos 2002, and Nzuma and Sarker 2010). This analysis departs from the standard ECM by generalizing the model to investigate: (1) whether the adjustment rate changes before and after a major shock, and (2) whether there are distinct rates of adjustment for various components of the econometric error. In the second case, the ECM investigates whether the adjustment rate to one conspicuous disequilibrium shock that occurred at a well-known point in time differs from the adjustment rate to all other shocks. This requires us to break the ECM error term into component parts and test whether distinct adjustment rates exist for each component. In effect, this analysis investigates whether analysts can expand the structure of the typical ECM to measure adjustment rates to the unusual events that drive policy making. This is a forensic economics question. If, for example, the public sector chooses to make some subsector of the agricultural economy financially whole after an adverse event, analysts would need to know how long it took for the market to recover and what path it took to recovery. It is possible that the rate at which adjustments were made to the relatively small ex ante events might not offer much guidance. …

Constraints or Cooperation? Determinants of Secondary Forest Cover Under Shifting Cultivation

Abstract: This study examines the drivers of land use in a shifting cultivation system with forest fallow. Forest fallow provides on-farm soil quality benefits, local hydrological regulation, and global public goods. An optimal control model demonstrates that farmers have an incentive to fallow less than is socially optimal, though market failures limiting crop production can have a countervailing effect by encouraging fallow. An econometric model estimated using data from the Brazilian Amazon suggests that fallowing does not result from internalization of local fallow services but instead is associated with poor market access and labor and liquidity constraints.

Residential Broadband Availability: Evidence from Kentucky and North Carolina

Abstract: I analyze the determinants of county-level broadband availability to gauge the extent to which the rural-urban broadband gap has narrowed and the factors that underlie that narrowing. Using data that have been collected by organizations tracking and promoting broadband in Kentucky and North Carolina, I find that in both states the rural-urban availability gap has indeed narrowed substantially, although there appears to be a limit on the extent to which broadband service will extend into the least densely populated counties. Among rural counties, availability rates increase systematically with the size of the county's urbanized population. Key Words: broadband availability, digital divide, rural development Broadband connectivity is widely promoted as a potentially significant contributor to local economic development in relatively isolated rural places. Broadband facilitates high-speed data transmission, thereby reducing the effective cost of distance to businesses and to consumers. This in turn eases key constraints related to economic and geographic remoteness that characterize what Parker (1990) dubbed the "rural penalty"-small markets, high transport costs, and geographic isolation. Thus, broadband deployment is projected to increase the productivity and profitability of newly served firms (Crandall, Lehr, and Litan 2007); increase the probability of attracting new firms into an area (Heath 1999); and facilitate innovations in healthcare delivery, distance education, and e-commerce that bring significant welfare improvements for rural residents. Ironically, precisely the same physical remoteness and low population densities that make broadband particularly desirable in rural areas also render its deployment expensive.1 A 2005 Office of Management and Budget (OMB) study found that investment per subscriber in rural systems averaged $2,921 compared to $1,920 in urban locations (OMB 2005, p. 262). Broadband technologies require very large up-front financial outlays by service providers. For this reason, rural small businesses generally pay more than do their urban counterparts for high-speed Internet access (Pociask 2005). In addition, demand side factors have been found to limit deployment of broadband in rural areas, insofar as broadband carriers generally require a minimum number of customers before they will offer service in an area (Malecki 2003). For all these reasons, broadband penetration into rural areas-and particularly into more remote areas-has lagged behind its deployment in more densely populated and less remote locations, even while rural-urban differences in computer and Internet usage2 have narrowed dramatically in the recent past [U.S. General Accountability Office (GAO) 2006]. In an attempt to narrow this rural-urban "digital divide," and to promote the projected positive economic impacts of broadband in rural places, the Rural Utilities Service of the U.S. Department of Agriculture (USDA) has, since 2000, made $1.8 billion in loans at subsidized rates to telecommunications providers, primarily for broadband deployment (Kandilov and Renkow 2010). Additionally, many states provide grants to Internet service providers for purposes of extending broadband into hitherto unserved (or underserved) locations. Most recently, the American Recovery and Reinvestment Act (ARRA) of 2009 authorized $2.5 billion in new federal spending for these same purposes (Kruger 2009). The extent to which public policies promoting broadband deployment and broadband adoption have had the desired positive economic impacts has not been well chronicled. In part, this reflects a deficiency in time-series data suited to tracking broadband availability across geographical units. In particular, much of the research on availability has relied on ZIP code-level information reported to the Federal Communications Commission (FCC) by broadband suppliers (Aron and Burnstein 2003, Flamm and Chaudhuri 2005, Grubesic 2004, Wallstein 2005). …

Do Supervisors Affect the Valuation of Public Goods

Abstract: Systematic supervision procedures have been proposed to improve contingent valuation surveying, particularly in developing countries. Surprisingly, the CV literature does not say much about the potential effects of supervision even though there is evidence of interviewer effects and social desirability issues that can bias results. This paper investigates the effects of interview supervision on the valuation of public services, using split-sample treatments to include a test of scope of a nested good and to assess the effect of interview supervision on reported WTP. Results suggest that supervisors can be used to improve quality with no effect on WTP estimates.

Spatially Delineated Public Goods and Spatially Located Public Bads: A Hedonic Approach to Measuring Urban Revitalization

Abstract: A regression discontinuity approach is used to measure the impact of public-goods creating programs in a declining inner city neighborhood of Worcester Massachusetts Using GIS data, we develop a hedonic model of residential sales, using a parcel-level GIS tax assessment and land use database linked to property sales data for the years 1988 through 2007, to test the effect of the creation of a new high-performing public school, as well as other locational amenities and disamenities on neighborhood housing prices, by comparing properties adjacent to either side of the school catchment area boundary

Preliminary Assessment of Nitrous Oxide Offsets in a Cap and Trade Program

Abstract: Nitrous oxide is a powerful greenhouse gas that is emitted from cropland treated with nitrogen fertilizer. Reducing such emissions through nutrient management might be able to produce offsets for sale in a cap and trade program aimed at reducing greenhouse gases. We use the Nitrate Leaching and Economic Analysis Program (NLEAP) model and data from the Agricultural and Resource Management Survey to examine what changes in rate, timing, or method of application a farmer would take to produce offsets. We find that reducing the application rate is the most favored approach for producing offsets. We also find that some management choices may increase nitrate losses to water.

Phosphorus Imbalances in the Chesapeake Bay Watershed: Can Forestland and Manure Processing Facilities Be the Answers?

Abstract: A mixed-integer linear programming model was formulated to minimize the cost of transport and processing of excess manure in the Chesapeake Bay watershed. The results showed that primarily poultry manure was moved out of surplus counties for land application or processing. In the base model, annual cost was more than $350 million, with the bulk of the cost arising from construction of energy facilities for poultry manure. Forestland application of poultry manure had the lowest average cost, and more forestland than agricultural land was used for manure application. The lowest cost scenario was $127 million annually when constraints were removed to expand manure application on agricultural land and allow unlimited construction of composting facilities. Such a low-cost solution could not realistically be implemented without further development of markets for compost. Key Words: mathematical programming, water quality, animal manure, composting (ProQuest: ... denotes formulae omitted.) Historically, regional concentrations of industrial animal agriculture have led to concerns about nutrient imbalances occurring within watersheds across the United States (Gollehon et al. 2001). These imbalances represent an excess of fertilizer and manure nutrients compared to crop nutrient needs. Kellogg et al. (2000) estimated that 73 counties across the United States had excess nitrogen (N) from manure, while 160 counties had excess phosphorus (P) from manure. The Chesapeake Bay watershed (CBW) is a prime example of this concern. Previous work has documented that the CBW suffers from both N and P imbalances (Ribaudo et al. 2003, Mid-Atlantic Regional Water Program 2005). In the CBW, there are 11 times more livestock animals than humans, and about 40 percent of N and 54 percent of P applied to land within the watershed come from manure (Chesapeake Bay Foundation 2004). This same report estimates that animal manures contribute 18 percent of N and 25 percent of P reaching the Bay. Kellogg (2000) ranked the CBW among the three highest priority watersheds in the United States needing protection from manure nutrients. The CBW has the highest land area to water volume ratio of any riverine estuary in the world (Taylor and Pionke 2000). This means that excess nutrients along with sediments can lead to excessive growth of phytoplankton in the Bay. In its most recent assessment, the Chesapeake Bay Program (2009) found that water quality in the Bay was at only 21 percent of its desired goal, while ecosystem health was at 38 percent of goal. Increased areas of low oxygen levels (called hypoxia zones) in the Bay and its tidal tributaries continue to be major problems, with dissolved oxygen standards being less than 50 percent of goal for most of the Bay during summer months. Populations of both native oysters and blue crabs in the Bay were estimated as being well below their restoration goals (Chesapeake Bay Program 2009). According to Baker (2009), immense areas of the Chesapeake Bay and its tidal tributaries are essentially dead due to a lack of dissolved oxygen to sustain healthy life. It has been estimated that in order to remove the Bay and its tributaries from the "impaired waters" list, N flows would have to be reduced by 39 percent and P flows by 33 percent from their 2000 levels (Chesapeake Bay Foundation 2004). Overall, non-point pollution sources are seen as being primarily responsible for rivers and streams in the United States not being able to meet their designated uses due to poor water quality (U.S. Environmental Protection Agency 2002). While point sources have been addressed in the past, indications are that non-point sources, mainly animal waste, contribute the majority of nutrient loads (82 percent of N and 62 percent of P) into the Chesapeake Bay (Cestti, Srivastava, and Jung 2003). Thus, reducing animal manure's contribution to nutrient flows into the Bay becomes essential to improving water quality. …