Showing papers in "American Journal of Agricultural Economics in 1993"
TL;DR: In this article, the authors used household survey data from Ghana, Kenya, and Rwanda to test if the indigenous land rights systems in sub-Saharan Africa are a constraint on agricultural productivity, finding that with few exceptions, land rights are not a significant factor in determining investments in land improvements, use of inputs, access to credit, or the productivity of land.
Abstract: This article uses household survey data from Ghana, Kenya, and Rwanda to test if the indigenous land rights systems in sub‐Saharan Africa are a constraint on agricultural productivity. Rights which farmers hold over individual parcels of land vary widely, and are in many cases surprisingly privatized. Yet with few exceptions, land rights are not found to be a significant factor in determining investments in land improvements, use of inputs, access to credit, or the productivity of land. These results cast doubt on the need for ambitious land registration and titling programs at this time.
464 citations
TL;DR: This article examined how crop insurance affects corn farmers' fertilizer and pesticide use in the U.S. Midwest and found that those with insurance applied significantly more nitrogen per acre (19%), spent more on pesticides (21%), and treated more acreage with both herbicides and insecticides (7% and 63%).
Abstract: This paper examines how crop insurance affects corn farmers' fertilizer and pesticide use in the U.S. Midwest. Crop insurance might be expected to affect chemical use because of "moral hazard"; insured farmers may undertake riskier production than do uninsured farmers. Results suggest that insurance exerts considerable influence on corn farmers' chemical use decisions. Those purchasing insurance applied significantly more nitrogen per acre (19%), spent more on pesticides (21%), and treated more acreage with both herbicides and insecticides (7% and 63%) than did those not purchasing insurance. These results suggest that both fertilizer and pesticides may be risk-increasing inputs.
361 citations
TL;DR: In this article, a repeated three-level nested-logit model is used to model participant and site choice for Atlantic salmon fishing in the context of a repeated 3-Level NN model.
Abstract: Participation and site choice for Atlantic salmon fishing are modeled in the context of a repeated three-level nested-logit model. Consumer's surplus measures are derived for different levels of species availability in the Penobscot River, the most important salmon river in New England. For comparison, six other travel-cost models are estimated. These include restrictive cases of the nested-logit model, a partial demand model, and two single-site demand models. Comparisons across these models indicate the importance of modeling the participation decision, including income effects, and of adopting a nested-logit structure rather than a single-level logit structure.
344 citations
TL;DR: In this article, an empirical assessment of the demand for crop insurance by Iowa corn producers is presented, which suggests that producers with differing levels of loss risk have different demand elasticities.
Abstract: Knowledge of factors affecting farmer purchases of crop insurance is essential for evaluating the soundness and profitability of crop insurance programs. Despite this importance, the demand for crop insurance has received limited empirical attention. The present paper reports on an empirical assessment of the demand for crop insurance by Iowa corn producers. Adverse selection in the insured pool suggests that producers with differing levels of loss-risk have different demand elasticities. Loss-risk is included in the empirical analysis and is found to influence the elasticity of demand. Results show average demand elasticities of about −0.32 for relative insured acres and −0.73 for liability per planted acre. Implications for the actuarial soundness of the industry are provided.
311 citations
TL;DR: In this paper, a new utility function called expo power was proposed that exhibits decreasing, constant, or increasing absolute risk aversion and decreasing or increasing relative risk aversion, depending on parameter values.
Abstract: A new utility function, which I call expo‐power, is proposed that exhibits decreasing, constant, or increasing absolute risk aversion and decreasing or increasing relative risk aversion, depending on parameter values. Numerical analysis suggests that the expo‐power function performs well in incorporating these risk preference structures, and that arbitrary risk preference specifications may lead to biased risk response estimates.
300 citations
TL;DR: In this article, the authors developed a theoretical foundation for using count data models in travel cost analysis and developed two micro models: a restricted choice model and a repeated discrete choice model.
Abstract: The paper develops a theoretical foundation for using count data models in travel cost analysis. Two micro models are developed: a restricted choice model and a repeated
discrete choice model. We show that both models lead to identical welfare measures.
251 citations
TL;DR: The authors compare the informational efficiencies of contingent rating, contingent ranking, and two contingent paired-comparison methods as alternatives to the referendum contingent valuation method, and conclude that the contingent rating method is hypothesized to be the most efficient because ratings convey information on preference intensities and can uniquely represent respondent indifference or ambivalence.
Abstract: I compare the informational efficiencies of contingent rating, contingent ranking, and two contingent paired‐comparison methods as alternatives to the referendum contingent valuation method. The contingent rating method is hypothesized to be most efficient because ratings convey information on preference intensities and can uniquely represent respondent indifference or ambivalence. Survey data on hunters' ratings of alternative hypothetical hunting trips are used to estimate four alternative indirect utility models from which marginal willingness‐to‐pay measures for individual trip attributes are derived. Model comparison, WTP estimates, and their confidence intervals confirm the relative efficiency of the contingent rating approach.
242 citations
TL;DR: In this paper, the potential economic and agronomic impacts of gradual climate warming are examined at the farm level, and three models of the relevant climatic, agRONomic, and economic processes are developed and linked to address climate change impacts and agricultural adaptability.
Abstract: The potential economic and agronomic impacts of gradual climate warming are examined at the farm level. Three models of the relevant climatic, agronomic, and economic processes are developed and linked to address climate change impacts and agricultural adaptability. Several climate warming severity. The results indicate that grain farmers in southern Minnesota can effectively adapt to a gradually changing climate (warmer and either wetter or drier) by adopting later maturing cultivars, changing crop mix, and altering the timing of field operations to take advantage of a longer growing season resulting from climate warming.
227 citations
TL;DR: This paper used the double-hurdle model to analyze household expenditures on food away from home with the use of the BLS' 1989 Consumer Expenditure Survey and found that households with working wives and those with higher income are more likely to consume more than others, while education has conflicting effects on probability and conditional level of consumption.
Abstract: Household expenditures on food away from home are analyzed with the use of the BLS' 1989 Consumer Expenditure Survey. Parameterization and distributional assumptions of Cragg's double‐hurdle model are generalized for this purpose, and the resulting model outperforms the more traditional ones. Results suggest households with working wives and those with higher income are more likely to consume food away from home and also to consume more than others. Wife's age and household size increase the conditional level of consumption. Education has conflicting effects on probability and conditional level of consumption.
225 citations
TL;DR: In this article, a structural model of land prices is developed, which includes the multidimensional effects of inflation on capital-erosion, savings-return erosion, and real debt reduction as well as the effect of changes in the opportunity cost of capital.
Abstract: This paper develops a structural model of land prices which includes the multidimensional effects of inflation on capital-erosion, savings-return erosion, and real debt reduction as well as the effect of changes in the opportunity cost of capital. The results show that inflation and changes in the real returns on capital are major explanatory factors in farmland price swings in addition to returns to farming. Additionally, the effects of credit market constraints and expectations schemes are considered explicitly in the analytical model.
200 citations
TL;DR: This article developed a test to find whether open-ended and closed-ended contingent valuation mechanisms lead to significantly different results, based on joint estimation of willingness to pay responses to open and closedended questions asked of the same sample of individuals.
Abstract: A test is developed to find whether open‐ended and closed‐ended contingent valuation mechanisms lead to significantly different results. The test is based on joint estimation of willingness to pay responses to open‐ and closed‐ended questions asked of the same sample of individuals. In a public good example, individuals do respond differently depending on question format. Possible explanations include different incentives for strategic behavior and respondents' lack of familiarity with the open‐ended question type. No differences in willingness to pay were found in a private good example.
TL;DR: In this paper, the authors compared the producrion behavior of industrial and non-industrial privateforestland owners in the southeastern U.S. using a restricted profit function and found that nonindustrial owners appear to place a higher value on their standing timber and forestland than do industrial owners.
Abstract: This paper compares the producrion behavior of industrial and nonindustrial privateforestland owners in the southeastern U.S. using a restricted profit function. Profits aremodeled as a function of two outputs, sawtimber and pulpwood. one variable input,regeneration effort. and two quasi-fixed inputs, land and growing stock. Although anidentical profit function is rejected, the results indicate behavior consistent with pmfit-maximizing motives under both ownerships. The two ownerships have similar responsesto input and output price changes, both in the shon-run and in the long-run. However,nonindustrial owners appear to place a higher value on their standing timber andforestland than do industrial owners. The difference in estimated shadow valuesindicates that significant nonmarket benefits are being captured by nonindustriai ownersand the benefits are reflected in their production behavior.
TL;DR: In this article, an integrated analytical system simulating the hydrologic, institutional, and economic relationships for a case study area in northeast Colorado is developed to evaluate the economic feasibility of water supply option contracts.
Abstract: Option contracts for temporary use of irrigation water rights are evaluated as a less-expensive institutional arrangement for providing drought insurance for urban water agencies Desirable option contract provisions are suggested and a framework for evaluating the economic benefits of water supply options is proposed An integrated analytical system simulating the hydrologic, institutional, and economic relationships for a case study area in northeast Colorado is developed to evaluate the economic feasibility of water supply option contracts Estimated present value benefits and sensitivity analyses indicate that dry year water options are economically viable over a considerable range of conditions
TL;DR: In this article, the authors show that a producer-financed program that leads to either an increase in retail demand from promotion or a decrease in marketing costs from research will generate returns to producers that are generally smaller than returns generated through an equivalent change in producer supply from research.
Abstract: A producer-financed program that leads to either an increase in retail demand from promotion or a decrease in marketing costs from research will generate returns to producers that are generally smaller than returns generated through an equivalent change in producer supply from research. The distribution of gains depends on the degree of substitutibility between farm and nonfarm inputs. Comparative statics of equal absolute changes in demand, supply, and marketing costs in the U.S. beef and pork industries show the significance of input substitutibility for distribution of gains, and sensitivity of the results to beef and pork demand interrelationships.
TL;DR: The Linear Approximate (LA) Almost Ideal Demand System and the Rotterdam model have been adopted by agricultural economists as the demand systems of choice in most applications.
Abstract: During the past decade, the Linear Approximate (LA) Almost Ideal Demand System and the Rotterdam model have been adopted by agricultural economists as the demand systems of choice in most applications. The apparent explanation is that the two models are both (second-order) locally flexible and compatible with demand theory, they have identical data requirements and are equally parsimonious with respect to parameters, and both are linear in the parameters. While the two models are thus equally attractive in most respects, and indeed appear very similar in structure, they lead to different results in some applications. This article develops a test of each against the other. In an illustrative application to U.S. meat demand, the Almost Ideal model is rejected while the Rotterdam model is not.
TL;DR: In this article, the optimal trading ratio depends on the relative costs of enforcing point versus nonpoint reductions and on the uncertainty associated with nonpoint loadings, and the uncertainty does not imply a lower bound for the optimal trade ratio.
Abstract: In programs for trading pollution abatement between point and nonpoint sources, the trading ratio specifies the rate at which nonpoint source abatement can be substituted for point source abatement. The appropriate value of this ratio is unclear because of qualitative differences between the two classes of sources. To identify the optimal trading ratio, we develop and analyze a model of point/nonpoint trading. We find the optimal trading ratio depends on the relative costs of enforcing point versus nonpoint reductions and on the uncertainty associated with nonpoint loadings. The uncertainty does not imply a lower bound for the optimal trading ratio.
TL;DR: In this article, the central tendency of the distribution with a stochastic trend model and allowing for nonnonnality within the Stochastic trend through an inverse hyperbolic sine distribution are modeled.
Abstract: Randomness in crop yields can be decomposed into two broad modeling focuses: the estimation of the mean or central tendency of the distribution and the dispersion around that central tendency. We propose modeling the central tendency of the distribution with a stochastic trend model and allowing for nonnonnality within the stochastic trend through an inverse hyperbolic sine distribution. Results are consistent with this construction. First, residuals around the stochastic trend model are found to be non normal. Second, the inverse hyperbolic sine modification of the stochastic trend model corrects both skewness and kurtosis of corn yields.
TL;DR: An inverse of the almost ideal demand system, the IAIDS, was developed in this paper to test the endogeneity of prices and quantities in the U.S. meat demand system.
Abstract: An inverse of the Almost Ideal Demand System, the IAIDS, is developed in order to test the endogeneity of prices and quantities in the U.S. meat demand system. The IAIDS has all the desirable theoretical properties of the AIDS except aggregation from the micro to the market level. Using annual data, both prices and quantities appear to be endogenous within the entire meat market. Including livestock production costs and technical change indicators as instruments eliminates evidence of a mid 1970s demand change.
TL;DR: The authors examined the relationship between farm income, land values, and capital asset pricing theory and found that land prices and land rents do not have the same time-series representations, a necessary condition for the simple capital assets pricing theory to hold.
Abstract: This paper examines relationships that exist between farm income, land values, and capital asset pricing theory. Using two commonly referenced data sets, it is shown that land prices and land rents do not have the same time‐series representations, a necessary condition for the simple capital asset pricing theory to hold. This suggests that a fundamental rethinking of the way in which land prices are viewed and modeled is needed. More complex models that allow for rational bubbles, risk aversion, and future shifts in government policy or commodity prices may be required.
TL;DR: In this paper, a nonlinear programming model was developed to simulate agricultural decision-making in a drainage problem area in California's San Joaquin Valley, and it was shown that a 30% drainage goal is achievable through improvements in irrigation practices and changes in cropping patterns induced by a water market.
Abstract: In addition to improving the allocative efficiency of water use, water markets may reduce irrigation-related water quality problems. This potential benefit is examined with a nonlinear programming model developed to simulate agricultural decision-making in a drainage problem area in California's San Joaquin Valley. Results indicate that a 30% drainage goal is achievable through improvements in irrigation practices and changes in cropping patterns induced by a water market. Although water markets will not generally achieve a least-cost solution, they may be a practical alternative to economically efficient, but informationally intensive, environmental policies such as Pigouvian taxes.
TL;DR: The authors used survey data from southeastern U.S. adults in a double-hurdle model to evaluate effects of health risk and other attribute perceptions on shellfish demand and found that attribute perceptions were important in both participation and consumption decisions, but responses to new health risk information were not the same for each decision.
Abstract: Individuals' perceptions of food product attributes such as safety may influence decisions about whether to consume and how much to consume. Survey data from southeastern U.S. adults were used in a double-hurdle model to evaluate effects of health risk and other attribute perceptions on shellfish demand. Results indicate that attribute perceptions were important in both participation and consumption decisions. However, responses to new health risk information were not the same for each decision. Findings suggest that efforts to reduce shellfish health risks with an improved U.S. inspection program may have little influence on existing shellfish demand.
TL;DR: In this paper, the explanatory power of theories on land relations hinges on the complexity, market imperfections, and distortions admitted in the analysis, and the complexity of the analysis is not the only limitation of these theories.
Abstract: In this paper we draw on a number of methodological approaches which have been used to explain land relations-tenancy, sharecropping and interlinking, distress sales, dualistic land ownership distributions, classes, and land reform-and their variations over space and time. We indicate that the explanatory power of theories on land relations hinges on the complexity, market imperfections, and distortions admitted in the analysis.
TL;DR: In this article, a linear-quadratic, dynamic feedback oligopoly model that nests various market structures is used to estimate the degree of competitiveness and the adjustment paths of the two largest coffee exporters, Brazil and Colombia.
Abstract: A linear-quadratic, dynamic feedback oligopoly model that nests various market structures is used to estimate the degree of competitiveness and the adjustment paths of the two largest coffee exporters, Brazil and Colombia. Their estimated behavior is relatively competitive. This subgame perfect dynamic model is-compared to a standard static oligopoly model and the open-loop model (the dynamic generalization of the standard static model). Both classical and Bayesian tests of open-loop and feedback dynamic models are reported.
TL;DR: The food system of the future promises to be more nimble in responding to consumer needs as mentioned in this paper, and the food system is becoming more tightly integrated, shortening the path from farm to grocery.
Abstract: Fundamental changes are underway in the U.S. food system, changes that are altering traditional marketing relationships linking consumers, food retailers and wholesalers, food processors and farmers and ranchers. Parts of the food system are becoming more tightly integrated, shortening the path from farm to grocery. Thus, the food system of the future promises to be more nimble in responding to consumer needs.
TL;DR: In this article, the expected utility maximization problem is solved for producers with both price and production uncertainty who have access to both futures and options markets, and simulation results lend support to the practice of hedging the minimum expected yield on the futures market and hedging remaining expected production against price risk using put options.
Abstract: The expected utility maximization problem is solved for producers with both price and production uncertainty who have access to both futures and options markets. Introduction of production uncertainty alters the optimal futures and options position and almost always makes it optimal for the producer to purchase put options and to underhedge on the futures market. Simulation results lend support to the practice of hedging the minimum expected yield on the futures market and hedging remaining expected production against downside price risk using put options. The results are strengthened if the producer expects local production to influence national prices and if risk aversion is higher at low income levels.
TL;DR: In this article, a rural-urban interregional computable general equilibrium (CGE) model is constructed to simulate the effects of terminating farm subsidies on household incomes, employment rates, farm and non-farm sectoral activity, regional costs of living, and other economic indicators.
Abstract: A rural-urban interregional computable general equilibrium (CGE) model is constructed to simulate the effects of terminating farm subsidies on household incomes, employment rates, farm and non-farm sectoral activity, regional costs of living, and other economic indicators. The magnitudes of the effects depend on regional factor and goods market segmentation. Robust short-run implications are that ceasing farm subsidies would cause rural nonfarm (particularly household service sector) employment to fall and lead to lower household income. On the other hand, rural manufacturing activity expands and the cost of living falls relative to urban. Urban employment, household income, and land rents rise. Although termination of farm subsidies causes a decline in rural real product, the urban real product gain outweighs rural losses.
TL;DR: In this paper, the authors examined the consequences of agricultural insurance for expected supply and showed that the effect of insurance decomposes into a risk reduction effect as well as a moral hazard effect, depending on the parameters of the insurance contract, producer's risk preferences, and the underlying technology.
Abstract: This paper examines the consequences of agricultural insurance for expected supply. The effect of insurance is shown to decompose into a "risk reduction" effect as well as a "moral hazard" effect. The direction and magnitude of these effects depend on the parameters of the insurance contract, producer's risk preferences, and the underlying technology. Two models are considered for this purpose. In the first model, widely employed in the literature, a producer controls only one input. The second model uses a dual approach to extend the results to the case where a producer controls multiple inputs.
TL;DR: In this article, the authors show that the explicit inclusion of safety characteristics in the farm decision model indicates that not all safety aspects of pesticide use are external to farmers, and that leaching potential and user toxicity are statistically significant, but their elasticities are small relative to broadleaf and grass weed control efficacy.
Abstract: Farmers may value water quality and user safety characteristics of herbicides as they select among products to obtain weed control. Expenditures per application in the U.S. corn and soybean herbicide markets are explained by several safety characteristics in addition to market and weed control characteristics. The explicit inclusion of safety characteristics in the farm decision model indicates that not all safety aspects of pesticide use are external to farmers. Leaching potential and user toxicity are statistically significant, but their elasticities are small relative to broadleaf and grass weed control efficacy.
TL;DR: In this article, a model of the farm-retail marketing margin is tested using producer and retail prices of a perishable product in which time during season and quality characteristics are variable.
Abstract: A model of the farm-retail marketing margin is tested using producer and retail prices of a perishable product in which time during season and quality characteristics are variable. Empirical analysis verifies that the marketing margin of California fresh peaches decreases during the season and increases with improved quality. Results identify potential producer gains from improving product quality early in the season, and from price signals compensating producers for quality characteristics other than weight.