willingness to pay for the green food in china abstract with use of payment card survey data of willingness to pay wtp for the green food a unique food certification in china this study finds that age and income are important for the wtp for the green food in china there are structural differences in consumer preference for green food between the large city and the small county consumers in china on average are willing to pay 47 more for green vegetables and 40 more for green meat than for their conventional counterparts compared with the real markets and the previous studies our results are very consistent and reliable

measuring excess capital capacity in agricultural production we introduce the concept excess capital capacity and employ a stochastic input requirement frontier to measure excess capital capacity in agricultural production we also propose a two step estimation method that allows endogenous regressors in stochastic frontier models the first step uses generalized method of moments to get consistent estimates of the frontier parameters in the presence of endogenous regressors the second step uses maximum likelihood to measure excess capital capacity and evaluate the factors that influence it the empirical application to dutch cash crop farms found varying degrees of excess capital capacity the policy implications of excess capital capacity are discussed

a hedonic travel cost analysis for valuation of multiple components of site quality the recreation value of forest management abstract one benefit of managing forests is that one can alter the qualities of sites the value of changing site qualities however is generally not known this paper develops a formal hedonic travel cost model which can be used to estimate the value of both marginal and non marginal changes to sites the approach accommodates multiple simultaneous changes in site characteristics estimating this model using a set of permits from wilderness areas leads to revealed preference estimates of the recreational value of clear cuts old growth and nine other wilderness attributes

explaining the choice of organic produce cosmetic defects prices and consumer preferences the choice between organic and conventional produce was estimated empirically using a two equation probit model data were collected in store on cosmetic defects produce prices and consumers demographic and economic traits store choice displayed a significant impact on the probability of purchasing organic produce shoppers at the specialty grocer were sensitive to price differences between organic and conventional items households with children under eighteen were more likely to purchase organic produce while shoppers with graduate or professional degrees were less likely to do so differences in cosmetic defects had statistically significant albeit small effects on the probability of purchasing organics

eco efficiency as a sustainability measure for kiwifruit production in new zealand abstract assessing the sustainability of orchards focuses on quantifying environmental impacts and resource consumption sustainable orchards also have to be profitable and socially responsible we aimed to identify sustainable kiwifruit production in the bay of plenty new zealand by considering orchards environmental and economic performance we conducted a survey of 40 orchards with different cultivars actinidia deliciosa hayward green v actinidia chinensis hort16a gold and management integrated v biogro certified organic assessment of environmental performance was restricted to greenhouse gas emissions carbon footprint of the orchard phase we defined eco efficiency on an area basis as nzd net profit per kg greenhouse gas emissions 1 nzd 0 83 usd 31 10 2013 carbon footprints for the cultivars and management systems were comparable the choice of functional unit namely land area and 1 kg of produce did not affect the result our analysis revealed fertilizer use and the n associated emissions as hot spots for greenhouse gas emissions opportunities to reduce greenhouse gas emissions arise in the background system of fertilizer production packaging storage and transport and the optimization of nutrient use efficiency in the orchard the integrated system had insignificantly higher greenhouse gas emissions than the organic system taking into account the profitability of the orchards the eco efficiency of organic orchards was significantly higher than that of integrated orchards we demonstrated that the metric of eco efficiency can enhance product differentiation for customers and can also assist orchardists to find the most sustainable management system however the volatility of commodity markets and changing consumer preferences remain challenges

production and investment decisions under sunk cost and temporal uncertainty building on glenn johnson s asset fixity theory this article introduces sunk cost and temporal uncertainty in jorgenson s neoclassical theory of investment under the assumption of risk neutrality we show sunk cost and temporal risk affect the implicit rental value of capital and investment and entry exit decisions results suggest there are important interactions between sunk cost and the effects of temporal uncertainty on production behavior

determinants of pro environmental consumption the role of reference groups and routine behavior abstract this paper investigates the determinants of pro environmental consumption focusing on the role of reference groups and routine behavior we study the factors that explain whether or not people have installed residential solar energy equipment or have subscribed to green electricity programs and the factors that influence the intensity of buying organic food in addition to demographic characteristics and environmental attitudes we consider the following categories of determinants economic and cognitive factors income estimated price premium level of information on environmentally friendly goods consumption patterns of reference persons own consumption patterns in the past using a unique data set from a survey conducted in the region of hanover germany we find the following 1 economic and cognitive factors are significant covariates of all three kinds of pro environmental consumption their influence is greatest in the case of green electricity 2 consumption patterns of reference persons are significant covariates of all three kinds of pro environmental consumption their influence is greatest in the case of organic food 3 the intensity of buying organic food is greater the longer people have been consumers of these goods

the demand for organic foods in the south of italy a discrete choice model abstract this paper analyses organic food consumer s demand that can help advising on implementing organic food policies at european level or for a particular european country in particular it investigates the main factors explaining organic food demand in the south of italy following the lancaster consumer s demand theory we assume that consumer s utility depends on product characteristics instead of the product itself thus consumers will choose the product organic versus conventional that possesses the combination of attributes that maximises its utility consumer s choice for organic foods is analysed within the random utility discrete choice model and a bivariate probit model has been specified the data were collected through a questionnaire conducted in the italian region of campania naples in 2003 findings indicate that economic factors are still factors limiting the growth of organic demand in europe moreover the consumers perceived benefits of organic food environmental and health are factors promoting organic food demand in addition greater information on organic food products is crucial to expand its demand in the south of italy because this information will increase the consumer s organic knowledge then higher organic knowledge will increase the probability to buy organic foods and to a larger extent the level of consumption among existing consumers

valuing environmental amenities through inverse optimization theory and case study abstract amenity values of private forests are implicit but play a critical role in decision and policy making this study presents an innovative valuation approach integrating techniques of operations research and economic theory of pricing environmental goods a forest planning problem was inversed through altering its reward function of timber values so that the observed harvesting behavior became optimal the discrepancy between the original and new rewards uncovered amenities values which were linked to forest attributes via hedonic models this method was applied to a case study of the u s southern pine region depending on forest conditions total economic values of amenities varied from zero to just under one thousand dollar per ha at a discount rate of 3 a typically managed forest generated on average 243 ha 1 of amenities values per annum more than twice of harvested timber values structural diversity and density of large pine trees were the key determinants to preserving forests for environmental amenities

testing asset fixity for u s agriculture comment whether a farmer considers an asset fixed or variable as plans are made for managing the farm depends on current opportunity costs three opportunities are particularly relevant at the time a farm management decision is made the value of an asset in use on the farm the cost of acquiring more of the asset and the benefits of disposing of some of the asset already owned by the farmer in the event that an asset can be disposed of at the same price that it can be acquired that asset is not subject to fixity and the three costs will equal one another on an optimally organized farm consider a pair of shoes acquired on a department store charge account if after taking them home the buyer finds they pinch his feet he may return them the next day and get his money back the difference between acquisition cost and salvage value at this time is negligible it is only the inconvenience of making another trip to the store suppose he discovers that the shoes pinch as he wears them at work the next day the use value is now below the acquisition cost of another pair of shoes but the salvage value of this pair has dropped precipitously his current salvage opportunities now include giving the shoes to a relative selling them to a used clothing merchant or taking an income tax deduction by giving them to charity shoes were considered a variable asset when the buyer shopped for them he expected them to be worth more to him than he paid for them they were not subject to fixity until after he wore them but that bit of history becomes irrelevant whether the shoes are a fixed or variable asset depends on whether the buyer can salvage them for more than the value he might get by tossing them in the closet with the expectation of wearing them occasionally in the event that the current salvage value of an owned asset is below the acquisition cost of an additional and comparable one the asset is subject to fixity whether it is fixed or not in a given situation depends on a comparison among opportunity costs that apply at the time the decision is made if the opportunities for using the asset on the farm exceed the cost of acquiring more of the asset the asset is variable and the profit maximizing farmer will acquire more of it if the opportunities for selling the asset in the salvage market exceed the value in use on the farm the asset is variable and the profit maximizing farmer will dispose of some or all of it when the level of use of an asset is not worth changing the farmer considers it fixed the use value is less than or equal to the acquisition cost so expansion is not profitable and the use value equals or exceeds the salvage value so it is not profitable to sell it the three relevant costs have the following relationship on an optimally organized farm acquisition cost equals or exceeds the opportunity cost of using the asset on the farm and on farm opportunity cost equals or exceeds the salvage value these ideas are readily incorporated into economic analyses of individual farms a farm manager need not decide prior to analysis what is to be fixed and what is variable the list of fixed assets is determined endogenously as part of the farm management plan the list of fixed assets varies with the initial farm organization in place at the time the planning process begins and with opportunity costs associated with buying selling and using assets subject to fixity the difficulty with fixed asset theory is in its aggregation from firm to industry problems the uniqueness of each individual farm organization is lost in the aggregation to all farms and the off farm opportunity costs which are appropriate to individual farm situations are not included in the aggregate price series used by economists to analyze the allocation of natural resources and purchased farm inputs among alternative uses the aggregation problems and data limitations make fixed asset analysis difficult at the aggregate level despite its complete simplicity at the farm level for example farm machinery is subject to fixity during a given interval the level of machinery use may increase on some farms decrease on some and remain fixed on others the net change in the aggregate whether positive negative or zero says little about the role of the fixed asset in aggregate production some degree of disaggregation is required but these difficulties do not make the consideration of fixed assets in the supply response of u s agriculture any the less important as chambers and vasavada put it asset fixity must exist at the aggregate level p 764 inasmuch as asset fixity affects the supply functions of individual farms it requires no great leap of imagination to suppose that asset fixity affects the aggregate supply function as well the difficulty arises in trying to measure and test the statistical significance of asset fixity in the aggregate supply function to illustrate for a situation of price reversal supclark edwards is an economist with the economic research service u s department of agriculture review was coordinated by peter berck associate editor

does education increase pro environmental behavior evidence from europe abstract it is often observed that individuals with higher education levels tend to be more environmentally friendly yet the causal evidence is lacking because there may well be omitted variables that cause individuals to attain more education and also cause individuals to be environmentally conscious we implement a regression discontinuity design to estimate the increase in educational attainment due to changes in compulsory education laws in 20th century europe this allows us to overcome the identification problem of endogenous educational attainment using two waves of eurobarometer surveys we find a positive local average treatment effect for 7 of the 8 pro environmental behaviors an analysis of related questions on the survey supports the notion that education causes individuals to be more concerned with social welfare and to accordingly behave in a more environmentally friendly manner

a meta analysis of contingent valuation forest studies abstract forest ecosystems provide a variety of valuable goods and services this paper presents a meta analysis of forest studies using the contingent valuation cv method to value the provision of forest values around the world in this meta analysis we estimate the marginal value of different management programs that provide a variety of forest goods and services our results show that willingness to pay wtp estimates for forest management programs are sensitive to the program s objectives particularly when linked to the provision of recreational services other variables such as the type of forest location survey mode or the type of respondent were also found to significantly affect the wtp estimates

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities abstract the hedonic property value model is among our foremost tools for evaluating the economic consequences of policies that target the supply of local public goods environmental services and urban amenities we design a theoretically consistent and empirically realistic monte carlo study of whether omitted variables seriously undermine the method s ability to accurately identify economic values our results suggest that large gains in accuracy can be realized by moving from the standard linear specifications for the price function to a more flexible framework that uses a combination of spatial fixed effects quasi experimental identification and temporal controls for housing market adjustment

an adjustment cost rationalization of asset fixity theory this article integrates a classic concept in production economics g l johnson s asset fixity theory with the dynamic adjustment cost model until now the literature has considered these two to be incompatible by relaxing the smoothness assumption of the adjustment cost function at the origin the theory of costs of adjustment can provide a rigorous endogenization of asset fixity g l johnson and edwards results are then obtained when the linearity assumption of the adjustment cost function is imposed the work reported here also indicates that both smoothness at the origin and symmetry of adjustment cost function should be subject to empirical tests

production economics of private forestry a comparison of industrial and nonindustrial forest owners 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

an opportunity cost view of fixed asset theory and the overproduction trap comment in a 1981 ajae article johnson and pasour criticize the works of edwards and glenn johnson 1972 and earlier publications for attributing persistent excess production in agriculture to an asset fixity theory which at its crux relies on divergences between asset acquisition costs and asset salvage values johnson and pasour mjp pinpoint their critique of edwards and johnson ej when they state p 3 the conclusion of fixed asset theory that excess resources are trapped in production can be traced directly to selection of acquisition prices of resources as a benchmark for equilibrium production but there is no reason to expect the opportunity cost of a resource once acquired to equal its historical acquisition price in his 1982 ajae reply to mjp glenn johnson contends that the ej formulation does contrary to the mjp assertion allocate resources on the basis of opportunity costs including the cases where opportunity cost is equal to current not historical acquisition cost or ourrent not historical salvage value the primary purpose of this paper is to discuss briefly how mjp s article is lacking in a key respect it ignores intertemporal opportunity costs of durable resources to achieve brevity and expositional clarity other aspects of differences between mjp and ej are avoided insofar as the specifics of this paper allows conventional resource adjustment theory is reviewed by mjp their equations 1 4 pp 1 2 stress is placed on the usual hypothesis that the equilibrium use of durable resources similar to nondurables occurs when each durable s value of marginal product just equals its marginal factor cost this equilibrium relation is hypothesized for a profit maximization firm to hold for each durable resource or asset in each production or planning period t but this engine of analysis while acceptable for nondurable resources lacks crucial detail for dealing with the multiperiodicity of durable resources essentially it is a monoperiodic engine or at best it is a sequential monoperiodic engine it avoids defining the time horizon the finite or infinite span of t hence it avoids a precise definition of the relevant set of investment disinvestment and production activities to be considered by the decision maker more specifically even if t can be limited to a finite number of periods s intertemporal opportunity costs associated with each durable resource are ignored assumed by implication to not exist or assumed to equal zero to paraphrase perrin who mjp acknowledge as having reviewed their paper these are the costs of postponing the earnings which will be forthcoming from the series of replacement or new investment durable assets for the currently owned or currently considered asset moreover if the appropriate span of t is infinite it becomes even more important not to ignore intertemporal opportunity costs this point was illustrated conceptually by perrin in his figure 1 p 61 when considering optimal investment disinvestment in and use of durables multiperiod models which explicitly account for time money relationships are judged by most economic analysts to be preferable to conventional static monoperiodic models wealth maximization becomes the norm as opposed to one period profit maximization present value equations which model flows of acquisition prices ensuing quasi rents and salvage values of durables or their derived first order marginal optimizing inequalities take over the role of simple static vmp mfc equalities in what follows the resource adjustment rule hypothesized by mjp is compared with the marginal rules derived by perrin rules and logic which are presented in various earlier and subsequent texts and other publications on capital investment equation 3 in mjp p 2 summarizes their durable resource adjustment rule as follows

voting for environmental policy under income and preference heterogeneity we examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic food products as an example two instruments are considered a price subsidy for the organic food products and a tax on the conventional products under income disparity consumers with high income always prefer a socially optimal subsidy to a socially optimal tax while low income consumers prefer a tax on conventional products when environmental policy is determined by the median voter the policies implemented tend to be stricter than socially optimal policies if income differences are large

asymmetric adjustment of dynamic factors at the firm level presents a study which addressed the deficiencies of previous studies the specification and estimation in the modeling of asymmetry and zero gross investment in the agricultural industry reference to previous studies on asymmetry information on the standard dual model results of the study

estimating investment rigidity within a threshold regression framework the case of u s hog production sector this article addresses the issues of investment disinvestment asymmetry and a possible existence of a sluggish regime in the demand for a quasi fixed input in the u s hog production sector adopting a new threshold estimation procedure quarterly data from 1970 through 2002 are used to estimate a regimedependent investment demand equation for a quasi fixed input taking sows as a proxy the results support the existence of three regimes over alternative specifications precluding the sluggish regime confirming the existence of asset fixity in hog production the results also highlight the importance of accounting for investment rigidity when estimating hog supply and variable input demands the importance of the u s swine industry is far reaching and can be highlighted by its economic contribution to different sectors along the supply chain involving hog producers pork processors and consumers according to the national pork producers council nppc 2002 the industry supported an estimated 800 000 domestic jobs in 2002 and generated more than 72 billion in total domestic economic activities furthermore the united stated is a leading pork exporter with its exports valued at 1 5 billion in 2002 of the 72 billion worth of domestic economic activities receipts from hog sales account for more than 11 billion per year the hog sector also contributes an additional 27 billion from the utilization of corn soybean and other inputs nppc the structure of the hog production sector has changed dramatically during the past decade with large hog operations becoming increasingly dominant between 1994 and 2004 the proportion of hog operations with more than 2 000 hogs has doubled from 38 to 79 of all hogs

putting their money where their mouths are consumer willingness to pay for multi ingredient processed organic food products in response to dramatically increasing adoption in consumer markets the national organic program nop initiated novel labeling standards for food products in the us in 2002 this program is a particularly relevant standardization effort for multi ingredient processed foods rather than a simple binary message organic or not gradations of organic content are now codified no existing published study evaluates consumer willingness to pay or motivation to purchase in response to such a rich organic label this article presents evidence of the impact of the nop through analysis of data collected in seven central ohio usa grocery stores results suggest that consumers are willing to pay premium prices for organic foods even those with less than 100 organic ingredients the magnitudes of wtp premia varied significantly among consumer groups suggesting that targeted marketing may be effective for organic merchandisers

market and welfare effects of second generation consumer oriented gm products we examine the economic effects of the introduction of consumer oriented genetically modified gm products into the food system by developing a model of heterogeneous consumers and producers that allows for vertical and horizontal differentiation between the products available to consumers the model facilitates the estimation of consumer and producer surpluses in the product utility and product net returns spaces results show that the introduction of consumer oriented gm products can change the relationship between gm and conventional and organic products from one of vertical to one of horizontal product differentiation and can enhance both economic welfare and the market acceptance and growth of agricultural biotechnology

pesticide risk valuation in empirical economics a comparative approach abstract pesticide use in agriculture poses several risks to both human health and nontarget agro ecosystems due to lack of information on the monetary value of reducing pesticide risks it is difficult to perform an economic analysis that addresses social efficiency of policy and draws conclusions about the appropriate degree of regulation the aim of the current paper is to present a critical overview of the empirical literature on pesticide risk valuation that provides disaggregate willingness to pay estimates wtps of pesticide risks reduction recent multidimensional classification methods such as coined decision tree analysis are used in a comparative approach as tools for explaining the differences in empirical research findings the analysis shows that the order of magnitude of wtps is related to both the valuation technique and to the data available from biomedical and ecotoxicological literature it also shows that wtp estimates of pesticide risks cannot be simply averaged over several empirical studies the order of magnitude of a wtp estimate is in fact related to the specific type of risk and to the nature of the risk scenario considered as well to lay people s subjective perception of risks

the character of demand in mature organic food markets great britain and denmark compared abstract we investigate the organic food market in two selected european countries great britain and denmark identifying main differences and similarities we focus particularly on consumer perceptions and priorities labelling schemes and sales channels as a basis for assessing market stability and prospects for future growth we employ a unique set of household panel data that includes information on stated values and concerns as well as registered purchasing behaviour most organic food on both markets is produced and processed by large scale industrialised units and distributed through mainstream sales channels consumer confidence being sustained at present by organic labelling schemes that appear to function well however a parallel market based on the supply of goods through various direct sales channels to heavy users prevails we find that organic food purchase decisions are primarily motivated by private good attributes such as freshness taste and health benefits attributes that may be perceived as being compatible with modern production and sales structure mature markets for organic foods nevertheless appear to be vulnerable to consumer dissatisfaction particularly among heavy users of organic food products

do voluntary biotechnology labels matter to the consumer evidence from the fluid milk market this article examines the effects on the demand of voluntary labeling for the use of genetically modified growth hormone for retail fluid milk using supermarket scanner data retail fluid milk tracks one of the first biotechnology products approved is fairly standardized and ubiquitous and allows for cross sectional differentiation between labeled and unlabeled products and between conventional and organic brands the results indicate that voluntary labeling increases the demand for recombinant bovine growth hormone free milk in addition the estimated effects of labeling appear to have increased over time innovations through biotechnology enable agricultural producers to reduce production costs and or enhance product quality for many livestock and crop commodities at the same time however these innovations may affect the demand for the products that utilize those commodities many individuals for example are concerned about potential risks to human health although by no means all consumers have such concerns burton metcalfe and smith heiman just and zilberman the use of the recombinant bovine growth hormone rbgh in milk production has been a particular concern for some consumers as approximately one third of the united states dairy herd about 3 million dairy cows currently receive rbgh supplements monsanto product labeling particularly with respect to the provision of health and environmental information is increasingly being used to provide information about product characteristics such as biotechnology content that

investment in u s agriculture resource adjustment problems in u s agriculture are motivated against the background of the farm problem the adjustment cost hypothesis is invoked to specify and estimate consistently a system of dynamic investment demand and output supply equations by utilizing recent advances in dynamic duality theory the investment demand equations assume the form of a multivariate flexible accelerator results indicate that labor capital services and land exhibited quasi fixity while intermediate materials were a variable factor this can be construed as a form of asset fixity within aggregate u s agriculture the univariate flexible accelerator hypothesis is rejected

an opportunity cost view of fixed asset theory and the overproduction trap in fixed asset and exit barrier theories durable asset valuation is based upon acquisition prices yielding downwardly biased rate of return estimates and erroneous implications that excess resources become trapped in production when product price expectations fall conventional asset valuation based on opportunity cost shows that excess resource applications are incompatible with rational producer behavior market failure conclusions of overproduction trap models are shown to be unfounded a review of recently published agricultural economics texts illustrates how use of fixed asset theory in the college classroom obscures the concept of choice influencing cost and the rule of resource allocative efficiency

willingness to pay for natural organic and conventional foods the effects of information and meaningful labels vague food labels and distorted product claims have persisted in the natural food industry while organic claims can be certified by the u s department of agriculture usda using experimental methods and a sample of randomly selected subjects we test food label and information treatment effects on subjects willingness to pay wtp for organic natural and conventional foods random nth price auctions are used to elicit wtp after subjects received one of five randomly assigned information treatments we find large information effects including asymmetric cross market effects for natural and organic foods perhaps surprising is that organic premiums increase in response to subjects seeing the natural foods industry s perspective on its products demographics effects are also important the results have practical implications for natural and organic food marketing and valuing products where there are vague claims about their attributes