on the estimation of an implicitly additive demand system motivated by a lack of engel flexibility in commonly used demand systems rimmer and powell developed a new demand system this system referred to aidads is implicitly directly additive possesses marginal budget shares and thus engel elasticities that vary nonlinearly with expenditure such that predicted budget shares are restricted to the 0 1 interval due to these attractive engel properties aidads represents a significant contribution to the literature on demand analysis this paper presents an alternative estimation procedure to the one used by rimmer and powell and examines its properties via a case study the proposed approach avoids a linear approximation employed in rimmer and powell s estimation framework based on a small monte carlo study it appears that the approach produces more accurate estimates of the parameters and engel elasticities

statistical efficiency of double bounded dichotomous choice contingent valuation the statistical efficiency of conventional dichotomous choice contingent valuation surveys can be improved by asking each respondent a second dichotomous choice question which depends on the response to the first question if the first response is yes the second bid is some amount greater than the first bid while if the first response is no the second bid is some amount smaller this double bounded approach is shown to be asymptotically more efficient than the conventional singlebounded approach using data from a survey of californians regarding their willingness to pay for wetlands in the san joaquin valley we show that in a finite sample the gain in efficiency can be very substantial

implications of bid design and willingness to pay distribution for starting point bias in double bounded dichotomous choice contingent valuation surveys we examine starting point bias in double bounded dichotomous choice contingent valuation surveys we investigate 1 the seriousness of the biases for the location and scale parameters of the willingness to pay wtp in the presence of starting point bias 2 whether or not these biases depend on the distribution of wtp and on the bid design and 3 how well a commonly used diagnostic for starting point bias a test of the null that bid set dummies entered in the right hand side of the wtp model are jointly equal to zero performs under various circumstances monte carlo simulations suggest that the effect of ignoring starting point bias depends on the bid design and on the true distribution of wtp a well balanced symmetric bid design may result in very modest biases even when the anchoring mechanism is very strong the power of bid set dummies in detecting starting point bias is low they tend to account for misspecifications in the distribution assumed by the researcher for the latent wtp rather than capturing the presence of starting point bias

agroindustrialization globalization and international development an overview of issues patterns and determinants this paper offers an overview for a special issue on agroindustrialization globalization and international development it sets out a conceptual framework for understanding the links among these three broad phenomena and then discusses emerging issues and evidence concerning the factors conditioning agroindustrialization in developing countries and the subsequent effects on employment poverty and the natural environment we conclude with a research agenda

short versus long run implications of trade liberalization for poverty in three developing countries the impacts of global trade reform on poverty are a key concern in the current trade negotiations under the doha development agenda the aggregate poverty impacts of trade reform are in turn strongly linked to the impacts of such reforms on the rural population as they constitute the overwhelming majority of the poor in almost all developing countries this paper uses a new micro simulation methodology designed to analyze this critical issue the methodology is first explained and then applied to three developing countries of particular interest chile malawi and vietnam a key feature is the distinction between the short run impacts of reform where many factors most importantly selfemployed labor of the poor tend to be immobile between sectors and the longer run impacts when factors find their highest return regardless of the sector of employment this distinction makes an enormous difference and

examining crop price effects on production decision and resource allocation an ex ante approach this article examines the output price effects on the us crop production employing an ex ante approach to the differential systems of input demand and output supply the estimation results of the

evaluating the impact of rising fertilizer prices on crop yields because of tensions on fossil energy and phosphorus markets the rise in fertilizer prices observed during the last decades may continue in the future putting into question production pathways relying heavily on crop intensification to evaluate how in this context economic choices may alter crop yields we first construct different fertilizer price scenarios to 2050 based on an econometric relation with oil and gas prices other possible scenarios such as the continuation of historical trends are also considered the resulting changes in fertilizer price range between 0 8 and 3 6 per year over the 2005 2050 period these scenarios are tested in a global land use model incorporating an endogenous representation of the land fertilizer substitution we find that the supply side response to rising fertilizer prices could lower crop yields in 2050 from 6 to 13 with a corresponding increase in global cropland area ranging between 100 and 240 mha if the demand for food and nonfood products has to be met the sensitivity of these results is tested with regard to assumptions on food consumption change in potential yield and nutrient use efficiency resume d auteur

the global supply and demand for agricultural land in 2050 a perfect storm in the making the number of people which the world must feed is expected to increase by another 2 billion people by 2050 when coupled with significant nutritional improvements for the 2 1 billion people currently living on less than 2 day this translates into a very substantial rise in the demand for agricultural production most past growth in the demand for food has been met by improvements in productivity but there is evidence of declining growth rates for agricultural yields climate change is likely to have important impacts on productivity through changes in temperature and precipitation land based climate mitigation policies are also projected to lead to increasing pressure on agricultural lands meanwhile supplies of water for irrigation are under pressure urban land use is on the rise and demands for setting aside land for environmental purposes continue to increase clearly an enormous amount of additional research on ways to deal with this potential perfect storm is needed this paper highlights the explores the roles of biophysical and economic uncertainty in these projections of long run land use change using this to suggest a future research agenda

why do you hate me on the survival of spite abstract spite involves harming others without good reasons it may survive in small populations or on markets with strategic substitutes we consider situations where selfishness helps efficiency here spite endangers efficiency but is wiped out by evolutionary forces

global land use implications of first and second generation biofuel targets recently an active debate has emerged around greenhouse gas emissions due to indirect land use change iluc of expanding agricultural areas dedicated to biofuel production in this paper we provide a detailed analysis of the iluc effect and further address the issues of deforestation irrigation water use and crop price increases due to expanding biofuel acreage we use globiom an economic partial equilibrium model of the global forest agriculture and biomass sectors with a bottom up representation of agricultural and forestry management practices the results indicate that second generation biofuel production fed by wood from sustainably managed existing forests would lead to a negative iluc factor meaning that overall emissions are 27 lower compared to the no biofuel scenario by 2030 the iluc factor of first generation biofuels global expansion is generally positive requiring some 25 years to be paid back by the ghg savings from the substitution of biofuels for conventional fuels second generation biofuels perform better also with respect to the other investigated criteria on the condition that they are not sourced from dedicated plantations directly competing for agricultural land if so then efficient first generation systems are preferable since no clear technology champion for all situations exists we would recommend targeting policy instruments directly at the positive and negative effects of biofuel production rather than at the production itself

meat consumption and production analysis of efficiency sufficiency and consistency of global trends abstract the sustainability challenges that the food system is facing are ever increasing the traditional approach to monitoring these changes considers economic societal and environmental sustainability a strong case has been made however that a fourth dimension ethical should also be considered conventionally two main strategies have been used to assess the improvements in sustainability efficiency and sufficiency efficiency is usually linked with technological improvements and sufficiency is connected with a reduction in production or consumption we introduce a third strategy to the analysis namely consistency that is related mainly to the ethical dimension of sustainability trends of the indicators related to the three strategies are calculated on both a global and regional scale from 1962 to 2009 efficiency measured as land requirement for animal products has increased by about 13 percent globally sufficiency measured as the amount of meat consumed has declined by 91 percent and consistency measured as the number of animals slaughtered has declined by 264 percent in addition convergence analysis emphasizes that industrialized and developing countries are moving towards similar patterns of animal products consumption such results suggest that measures should be taken to develop a food system that is not only efficient but also ethically just

combining results of different models the case of a levy on the dutch nitrogen surplus economic instruments such as levies are considered by the dutch government for reducing the harmful effects of the production and application of manure to analyse these levies a framework which makes it possible to combine and to choose among different types of research is developed the results are integrated along the line of the marginal abatement cost curve the problems related to integrating different types of research are taken into account the method developed allows every farmer to react to a levy differently a levy turns out to be more effective to reduce the nitrogen surplus on farm level in the pig fattening sector when compared to the pig breeding sector but even a levy of 2 guilders kg of nitrogen does not remove the total manure surplus in the pig sector and results in large profit losses further research is needed to underpin the empirical input required by the model

contingent valuation a practical alternative when prices aren t available a person may be willing to make an economic tradeoff to assure that a wilderness area or scenic resource is protected even if neither that person nor perhaps anyone else will actually visit this area this tradeoff is commonly labeled passive use value contingent valuation studies ask questions that help to reveal the monetary tradeoff each person would make concerning the value of goods or services such surveys are a practical alternative approach for eliciting the value of public goods including those with passive use considerations first i discuss the exxon valdez oil spill of march 1989 focusing on why it is important to measure monetary tradeoffs for goods where passive use considerations loom large although discussions of contingent valuation often focus on whether the method is sufficiently reliable for use in assessing natural resource damages in lawsuits it is important to remember that most estimates from contingent valuation studies are used in benefit cost assessments not natural resource damage assessments those working on benefit cost analysis have long recognized that goods and impacts that cannot be quantified are valued implicitly by giving them a limitless value when government regulations preclude certain activities or giving them a value of zero by leaving certain consequences out of the analysis contingent valuation offers a practical alternative for reducing the use of either of these extreme choices i put forward an affirmative case for contingent valuation and address a number of the concerns that have arisen

would freeing up world trade reduce poverty and inequality the vexed role of agricultural distortions trade policy reforms in recent decades have sharply reduced the distortions that were harming agriculture in developing countries yet global trade in farm products continues to be far more distorted than trade in nonfarm goods those distortions reduce some forms of poverty and inequality but worsen others so the net effects are unclear without empirical modeling this paper summarizes a series of new economy wide global and national empirical studies that focus on the net effects of the remaining distortions to world merchandise trade on poverty and inequality globally and in various developing countries the global linkage model results suggest that removing those remaining distortions would reduce international inequality largely by boosting net farm incomes and raising real wages for unskilled workers in developing countries and would reduce the number of poor people worldwide by 3 percent the analysis based on the global trade analysis project model for a sample of 15 countries and nine stand alone national case studies all point to larger reductions in poverty especially if only the non poor are subjected to increased income taxation to compensate for the loss of trade tax revenue

forest conservation in costa rica when nonuse benefits are uncertain but rising stochastic dynamic programming is used to investigate optimal holding of primary tropical forest in humid costa rica when future nonuse benefits of forest conservation are uncertain and increasing the quasi option value of maintaining primary forests is included as a component of investment in natural capital although the impact of uncertainty on conservation incentives is substantial our results indicate that a rising trend in future benefits and compensation by the international community for beneficial spillovers are more important factors in determining optimal holdings of forest stocks without compensatory payments however further deforestation may be warranted

energy projects in iceland advancing the case for the use of economic valuation techniques to evaluate environmental impacts decision making in iceland has occurred without reference to economic valuations of the environmental impacts of energy projects environmental impact assessments a legal requirement for nearly all energy projects in iceland since 1994 have played an important role in identifying the environmental impacts of energy projects and proposing mitigation measures however a purely qualitative description of environmental impacts is insufficient to ensure that they are accounted for equivalently with all of the other costs and benefits of a proposed project instead as monetary information concerning the welfare gains or losses of proposed projects is not currently required to be provided to the licensing body orkustofnun there is the potential for sub optimal decision making to occur as this paper sets out a broad variety of non market valuation techniques already exist and could be applied to estimate the value of environmental benefits sacrificed to accommodate such developments these methods and their outcomes could be incorporated within mandatory cost benefit assessments for proposed icelandic energy projects communicating an estimate of the full welfare implications of approvals to decision makers and the public alike and fulfilling an oecd demand for the country to commence such processes

changes in the structure of global food demand may 1998 purdue agec staff paper 98 5 a newly developed demand system is used to estimate the response of food and food product demand to per capita expenditure changes the resulting engel elasticities are then used to project food and food product demand in 2020 assuming per capita expenditure and population changes results suggest that while food expenditure is projected to grow it accounts for a smaller proportion of total expenditure further analysis indicates change in the composition of food demand away from a grain and towards livestock is projected to occur in lower income countries in 2020

the contingent valuation study of the wind farm burfellslundur willingness to pay for preservation abstract following the success of two trial wind turbines the national power company of iceland landsvirkjun proposed a wind farm at burfellslundur on the edge of the icelandic highlands the farm would comprise of 67 turbines with combined production capacity of 200 mw the environmental impact assessment for the development raised concerns about the visual impacts of the proposals on the surrounding countryside in this study the contingent valuation method was applied to evaluate preferences and estimate willingness to pay to preserve burfellslundur this study represents only the third contribution in the international academic literature concerning the economic value of the environmental costs of developing wind farms and the first focused on onshore resources in addition this paper fulfills a call by the oecd who have requested that iceland commence economic valuation of the environmental impacts of energy projects a web based contingent valuation survey was developed and issued by the university of iceland s social science research institute receiving 690 respondents of these 28 were willing to pay for preservation interval regression using log transformation was applied to estimate mean willingness to pay which was 12 549 isk approximately us 128 when scaled up to the icelandic population of taxpayers the economic value of preserving burfellslundur was estimated to be 3 17 billion isk approximately us 32 3 million these results are of a scale that could have a significant impact on the social welfare gains or losses associated with burfellslundur and inform the international land use management debate concerning the trade offs of developing wind farms

dynamic fertilizer nutrient demands for corn a cointegrated and error correcting system past studies of the demand for fertilizer have typically been based on static models which assume that adjustments toward equilibrium are instantaneous this article builds on past studies by developing a dynamic model of nutrient demands of corn unit root and cointegration tests demonstrate that fertilizer demands of corn are dynamic therefore statistically correct estimates can be obtained using a dynamic model a set of error correction models for nitrogen phosphate and potash use in corn production are estimated results provide strong statistical evidence that nutrient demands of corn are price inelastic both in the short and the long run

the recreational value of lake mckenzie fraser island an application of the travel cost method lake mckenzie is one of the most highly used and popular visitor destinations of all fraser island s natural sites attracting 2000 visitors a day in peak periods many consider this level of visitation to be unsustainable and the management authority is currently considering a range of management options to address this issue in assessing the alternatives it is useful to have some idea of the recreational use value of the lake under the current regime as it is this value that is at risk if visitor numbers are to be reduced this paper using the zonal travel cost method estimates the recreational use value of fraser island and lake mckenzie for australian resident independent visitors

the effect of the value of time on food consumption patterns in developing countries evidence from sri lanka this study shows that the opportunity cost of women s time can affect household food consumption patterns in developing countries demand equations for rice bread and the ratio of bread to total cereal consumption are estimated for urban sri lankan households the demand specification which is based on the new household economics includes as explanatory variables the woman s estimated market wage and the household s full income and alternatively observed income wages are estimated using the heckman procedure to correct for sample selection bias

the research cost of adapting agriculture to climate change a global analysis to 2050 investments in agricultural research and development r d made over the next few decades will likely prove critical in offsetting adverse climate change impacts on the global food system in this study we offer cost estimates of public r d led adaptation to climate change grounded in an explicit framework relating the flow of annual r d expenditures to building knowledge capital and thereby raising productivity in agriculture our research uses a comprehensive collection of historical public agricultural r d expenditure and a literature review of elasticity estimates linking knowledge stocks to agricultural productivity growth for key world regions given climate driven crop yield projections generated from extreme combinations of crop and global circulation models we find that offsetting crop yield losses projected by climate and crop models over 2006 2050 would require increased r d adaptation investments of between 187 billion and 1 384 billion in 2005 ppp if we invest between 2020 and 2040 this is 16 118 higher than global r d investment if present spending trends continue although these costs are significant worldwide r d led climate adaptation could offer favorable economic returns moreover r d led adaptation could deliver gains in food security and environmental sustainability by mitigating food price increases and slowing cropland expansion

nitrogen land substitution in corn production a reconciliation of aggregate and firm level evidence in this paper we seek to reconcile low farm level substitution elasticity between nitrogen fertilizer and land with larger industry level values for the corn sector this is accomplished with a micro simulation model which identifies twenty three heterogeneous groups of corn farmers based on survey data for indiana after controlling for soil quality slope crop rotation and natural nitrogen sources considerable variation in fertilizer application rates remains model simulations indicate that the estimated substitution elasticity at the state level 1 15 is consistent with very low farm level substitutability the difference is attributable to compositional changes in the wake of relative price shocks these compositional effects are potentially very important but they are ignored in most policy analyses

the social costs of second best policies evidence from agricultural ghg mitigation abstract this paper investigates the social costs of second best agricultural greenhouse gas ghg mitigation policies adjustments along the land use and input intensity margins are represented within a regionalized optimization model of california crop production calibrated to economic and agronomic information second best policies relying on spatially aggregated ghg emission factors lead to small abatement efficiency losses while policies targeting a single ghg lead to moderate losses in contrast policies targeting a single input entail large abatement efficiency losses which nonetheless can be reduced by combining instruments

rice in asia is it becoming an inferior good empirical results using time series and cross sectional data indicate that rice in asia is becoming an inferior good income elasticities declined and in some cases became negative between 1961 and 1985 in most of the fourteen asian countries studied accordingly domestic demand for rice in these countries is not likely to grow as rapidly as it has in the past as a consequence there is a potential for excess supplies of rice to develop in asia putting downward pressure on rice prices while governments in asian countries may need to adjust their rice policies in the future world rice suppliers may need to develop new markets for rice

universal health insurance in the clinton plan coverage as a tax financed public good the financing arrangements embodied in the clinton health reform plan involve some important differences in the way in which public goods are usually financed the subsidies to small low wage firms mandated to provide benefits distort markets in both labor and products and offer incentives for the creation of small firms in addition the financing scheme implicitly envisions a head tax on families at modest income levels but offers a possible rationale for it nevertheless the main reason for many of the financing features appears to be an attempt to hold down the apparent budgetary cost of universal coverage

the costs of carbon sequestration a revealed preference approach increased concem by policy makers with the threat of global climate change has brought with it considerable attention to the possibility of encouraging the growth of forests as a means of sequestering carbon dioxide national academy of sciences nas 1992 james p bruce et al 1996 1 the kyoto protocol to the united nations framework convention on climate change 1997 which establishes emission reduction targets for the united states and other industrialized nations states that carbon sequestration can be used by participating nations to achieve their targets moreover even before the kyoto agreement this approach had become an explicit element of both u s and intemational climate policies u s department of energy 1991 united nations general assembly 1992 william j clinton and albert gore 1993 this high level of interest has been due in part to suggestions that sufficient lands are available to use the approach to mitigate a substantial share of annual carbon dioxide c02 emissions greg marland 1988 daniel a lashof and dennis a tirpak 1989 mark c trexler 1991 and claims that growing trees to sequester carbon is a relatively inexpensive means of combating climate change roger a sedjo and allen m solomon 1989 daniel j dudek and alice leblanc 1990 nas 1992 in other words the serious attention given by policy makers to carbon sequestration can partly be explained by implicit assertions about respective marginal cost functions i develop and demonstrate a method by which the costs of carbon sequestration can be estimated on the basis of evidence from landowners behavior when confronted with the opportunity costs of alternative land uses the simplest of previous economic analyses derived single point estimates of average costs associated with particular sequestration levels marland 1988 sedjo and solomon 1989 dudek and leblanc 1990 edwin s rubin et al 1992 omar masera et al 1995 often it has been assumed that land opportunity costs are zero g van kooten et al 1992 j k winjum et al 1992 new york state energy office 1993 robert k dixon et al 1994 another set of studies essentially engineering costing models has constructed marginal cost schedules by using information on revenues and costs of production for altemative uses on representative types or locations of land and then sorting these in ascending order of cost robert j moulton and kenneth r richards 1990 richards et al 1993 simulation models include a model of the lost profits due to removing land from agricultural production peter j parks and ian w hardie 1995 a mathematical programming model of the agricultural sector and the timber market richard m adams et al 1993 a related model incorporating the effects of agricultural price support programs j m callaway and bruce mccarl 1996 and a dynamic simulation model of forestry susan swinehart 1996 lastly an analysis by andrew j plantinga 1995 adopts land use elasticities from an econometric study to estimate sequestration costs we draw on some of the best features of the previous studies including the carbon levelization method of moulton and richards john f kennedy school of government harvard university 79 john f kennedy street cambridge ma 02138 and resources for the future richard newell supplied excellent research assistance and valuable comments on a previous version were provided by lawrence goulder william nordhaus andrew plantinga kenneth richards two anonymous referees participants in seminars at the universities of california at los angeles and santa barbara the university of maryland the university of michigan the university of texas harvard university stanford university yale university resources for the future and the national bureau of economic research the author alone is resdonsible for any errors 1 after fossil fuel combustion deforestation is the second largest source of carbon dioxide emissions estimates of annual global emissions from deforestation range from 0 6 to 2 8 billion tons compared with slightly less than 6 0 billion tons annually from fossil fuel combustion cement manufacturing and natural gas flaring combined r a houghton 1991 t m smith et al 1993

estimating the use and preservation values of national parks tourism resources using a contingent valuation method abstract the korean national parks authority has questioned whether natural resources have enough economic value to justify an increase in admission fee in the case of inadequate assistance from the government alternatively they also question whether the national parks have sufficient value to contribute to citizens welfare in order to receive continuing support from the government hence the purpose of this research is to estimate the use and preservation values of natural and or cultural resources in five distinctive national parks using a dichotomous choice contingent valuation method the empirical results show that natural and or cultural resources of the sample national parks possessed considerable use and preservation values outweighing current admission fees and maintenance costs per visitor thus these values provide enough justification for the national park authority to increase admission fees to maintain the quality of natural environment and avoid degrading natural resources in the event of no assistance by the government the findings may provide guidance to national park managers and practitioners who establish pricing policies the results also show that values of natural and or cultural resources were different across five distinctive national parks indicating the possibility of employing differential admission fees according to park characteristics

demand for cereal grains in asia the effect of urbanization abstract this paper analyzes the effects of urbanization on demand for cereal grains rice wheat and coarse grains in nine asian countries a complete demand system almost ideal demand system in linear form is estimated in two stages based on aggregate time series data from 1960 to 1988 in the high income countries i e japan and south korea urbanization was observed to significantly reduce demand for cereal grains in the lower income countries demand for cereal grains either increased or remained the same with urbanization among cereal grains urbanization has had negative effects on demand for rice and coarse grains but consistently positive effects on demand for wheat only japan and thailand among the countries studied have negative income elasticities of demand for total cereal grains and for rice in particular hence rice remains a necessity and a normal good in most asian countries previous estimates of income elasticities of rice based on time series aggregate data tend to be lower than those based on cross section household level data when urbanization is explicitly specified in the demand model the estimates of income elasticities from time series data turn out to be consistent with those from cross section data

valuing a wind farm construction a contingent valuation study in greece abstract our analysis is based on data from a double bounded dichotomous choice contingent valuation study implemented to elicit public attitudes towards renewable energy generation and their willingness to pay for the construction of a wind farm in the area of messanagros in the island of rhodes greece results indicate that there are significant positive values deriving from the proposed project respondents report a mean willingness to pay a premium in their bi monthly electric bills of 8 86 for the sole purpose of the construction of the wind farm the estimated economic benefits to the local population are weighed against the investment cost in a cost benefit analysis to inform policy making and implications for eu energy policy are provided

the evolution of walrasian behavior consider an evolutionary context where a given number of quantity setting oligopolists tend to mimic successful behavior occasionally experimenting with some small probability in this context it is shown that the unique long run outcome of the process has all firms playing walrasian i e choosing an output that maximizes profits when taking the market clearing price as given

on the social dimension of time and risk preferences an experimental study when explaining risk taking intertemporal allocation and distributing behavior economists rely on risk time and other regarding preferences but offer no guidance on how these three crucial aspects are interrelated we report on an experiment exploring such interrelation for this sake we compare evaluations of several prospects each of which allocates certain or risky and immediate or delayed payoffs to the actor and to another participant we find that individuals are selforiented as to social allocation of risk and delay and other regarding with respect to expected payoffs jel c91 d63 d81 there is ample empirical evidence that people do not behave rationally when rationality implies maximization of one s own material rewards to gain flexibility economists have taken into account nonlinear evaluation of material rewards e g in the familiar form of utility of money functions as well as social utilities including other regarding concerns like altruism as in andreoni and miller 2002 inequality aversion as in fehr and schmidt 1999 and bolton and ockenfels 2000 or quasi maximin preferences as in charness and rabin 2002 undeniably this provides a rich toolbox for neoclassical repair which allows aligning rational choice predictions with empirical data on decision behavior nonetheless this toolbox may be

the indirect land use impacts of united states biofuel policies the importance of acreage yield and bilateral trade responses recent work has highlighted agricultural land conversion as a significant debit in the greenhouse gas accounting of ethanol as an alternative fuel this work has at the same time sparked considerable debate on the role of crop yield growth as a means of avoiding rapid land conversion we examine the agricultural land use impacts of mandate driven ethanol demand increases in the united states in a formal economic equilibrium framework which allows us to examine the importance of yield price relationships we find that the standard assumption of trend yield growth is likely restrictive for analysis of equilibrium response to significant demand increases for fuel feedstocks furthermore we identify both the acreage response and bilateral trade specification of a multi country model as important sources of variability in terms of parametric uncertainty in predicting global land use change from the biofuels boom

is variety the spice of life implications for calorie intake the income elasticity of calories generally is substantially smaller than the income elasticity of food expenditure one reason may be an increasing concern for food variety as incomes increase food variety can be linked with two characteristics of food indifference curves 1 curvature and 2 location of the curves relative to the axes estimates suggest increasing taste for variety as food budgets increase therefore such taste for variety apparently underlies in part the low income elasticities for calorie demand which in turn cast doubt on the world bank assertion that the nutrient intakes of poor populations will improve rapidly with income copyright 1989 by mit press

information and the concept of option value this paper examines the arrow fisher henry concept of option value and analyzes its properties including its relationship to the value of information and the effects of increasing uncertainty about the future consequences of irreversible development it is shown that this option value is distinct from but bounded by the value of information in the overall decision problem also it is distinct from a concept of option value that appears in b s bernanke quart j econom 98 85 106 1983 however when there is a continuum of development levels rather than a binary choice between full development and no development some of these conclusions need to be modified

a modified implicit directly additive demand system a recently developed demand system nicknamed aidads an implicit directly additive demand system offers an approach to capturing consumer preferences across a wide range of expenditure levels aidads generalizes the les by assuming marginal budget shares vary with utility and hence with expenditure like the les aidads includes subsistence parameters that define minimum consumption levels here we present a modified aidads maidads that replaces the constant subsistence parameters with functions that also vary with utility these transformed subsistence levels are referred to as minimum consumption quantities this model is applied to the 1996 international consumption project data as these data span a wide range of expenditure levels maidads offers a viable alternative for the estimation of a global demand system results suggest minimum consumption quantities for staple grains livestock other food products alcohol and tobacco clothing and footwear and transport and transport services vary

resource use and technological progress in agriculture a dynamic general equilibrium analysis we analyze the global effects of economic and population growth and the impact of a slowdown in agricultural total factor productivity tfp on agriculture and forest resources using a dynamic multi region computable general equilibrium model with land use and cover detail given the current consensus about the growth of the world economy our results suggest that food security will not be threatened and agricultural activities will not encroach on forest resources over the next decade a slowdown in agricultural tfp growth might lead to higher crop prices in all regions with south east asia facing the steepest increases a slowdown in agricultural tfp growth also might be accompanied by higher conversion rates of forestland to farmland as well as by greater environmental or ecological damages on the remaining forestland

re examining the reported rates of return to food and agricultural research and development reply hurley rao and pardey 2014 analytically and empirically evaluate the internal rate of return irr vis a vis the modified internal rate of return mirr for investments in agricultural research and development r d they find that estimates of the irr are 2 5 to 5 times larger than the mirr for a wide range of assumptions leading them to question the value of the irr as a metric to represent the rate of return to agricultural r d oehmke 2016 defends the irr by arguing that it has important properties that the mirr does not possess in this article we critically examine these properties demonstrating that some are not inherent to the mirr for other properties we simply disagree with oehmke s assessment of their desirability therefore we are not compelled to change our original recommendation

an implicitly additive demand system the problem of endowing large applied general equilibrium models with numerical values for parameters is formidable for example a complete set of own and cross price elasticities of demands for the monash model of the australianeconomy involves in excess of 50000 items invoking the minimal assumptions that demand is generated by utility maximization reduces the load to about 26000 obviously still a number much too large for unrestrained econometric estimation to obtain demand systems estimates for a dozen or so generic commodities at a top level of aggregation categories like food clothing and footwear etc typically johansen s lead has been followed and directly additive preferences imposed upon the underlying utility function with the move beyond one step linearized solutions of applied general equilibrium models the functional form of the demand system adopted becomes an issue the most celebrated of the additive preference demand systems the linear expenditure system les has one

welfare impacts of alternative public policies for agricultural pollution control in an open economy a general equilibrium framework a general equilibrium approach is used to evaluate the welfare impacts of alternative policies for reducing agricultural pollution in an open economy with preexisting distortions caused by income taxes and agricultural subsidies the policies examined here include the removal of distortionary agricultural subsidies we find that even though these distortions are small compared to others in the economy removing them and imposing nitrogen reduction subsidies and or output taxes can enhance welfare and reduce nitrogen pollution thereby leading to a substantial double dividend the relative efficiency of the alternative policies examined here depends on the level of the nitrogen reduction target copyright 2008 oxford university press

the return of malthus resource constraints in an era of declining population growth abstract will natural resources comprise an important constraint on economic development in the 21st century we use a macroeconomic model mava to demonstrate the precise nature of this problem first we employ the model to demonstrate that resource constraints do not substantially limit future economic growth under parametric conditions prevailing in the period 1960 2010 second we examine the sorts of changed conditions that are unavoidable in the coming century and demonstrate that declining population growth and the increased dependency rates this implies is likely to result in increasingly important resource constraints ironically it is the decline in population growth rates and not the opposite that may occasion the return of malthusian constraints 1

spatial heterogeneity and the choice of instruments to control nonpoint pollution because it is difficult to monitor emissions and to implement differentialtaxes and standards uniform taxes and standards on agricultural chemicaluse are often proposed and used to control nonpoint source pollution thisarticle analyzes the relative efficiency of these uniform instruments in thepresence of spatial heterogeneity we show that the relative slopes of themarginal pollution cost and marginal profit of chemical use are only one ofthe factors that affect the relative efficiency other factors includecorrelation between marginal pollution costs and marginal profits and theslope and variability of marginal profits in addition a uniform tax mayresult in some farmers not using the chemical and a uniform standard mayhave no effect on low input land we show empirically that the presence ofcorner solutions can reverse a conventional finding of tax or standardsuperiority based on the relative slop rule

induced innovation and energy prices this paper uses u s patent data from 1970 to 1994 to study the impact of energy prices on energy efficient innovations theories of technological change have focused both on demand side factors which spur innovative activity by increasing the value of new innovations and supply side factors such as scientific advancements that make new innovations possible data on demand side factors are easily obtained but data on supply side factors that influence innovation are not readily available this paper uses patent citations as a measure of the usefulness of the existing base of scientific knowledge citations to previous patents are used to construct productivity estimates which measure the usefulness of the existing stock of knowledge to inventors in a given energy field for any given year these estimates are then combined with data on demand side factors to estimate a model of induced innovation in energy technologies the results indicate that both energy prices and the supply of knowledge have strongly significant positive effects on innovation the paper concludes with a discussion of the implication of this work for environmental policy

nutrition transition and the structure of global food demand estimating future demand for food is a critical aspect of global food security analyses the process linking dietary changes to wealth is known as the nutrition transition and presents well identified features that help to predict consumption changes in poor countries this study proposes to represent the nutrition transition with a nonhomothetic flexible in income demand system known as the modified implicitly directly additive demand system maidads the resulting model is transparent and estimated statistically based on cross sectional information from faostat it captures the main features of the nutrition transition rise in demand for calories associated with income growth diversification of diets away from starchy staples and a large increase in caloric demand for animal based products fats and sweeteners the estimated model is used to project food demand between 2010 and 2050 based on a set of plausible futures trend projections and shared socioeconomic pathways scenarios the main results of these projections are as follows 1 global food demand will increase by 46 less than half the growth in the previous four decades 2 this growth will be attributable mainly to lower middle income and low income countries 3 the structure of global food demand will change over the period with a 95 increase in demand for animal based calories and a much smaller 18 increase in demand for starchy staples and 4 the analysis of a range of population and income projections reveals important uncertainties depending on the scenario the projected increases in demand for animal based and vegetal based calories range from 78 to 109 and from 20 to 42 respectively

evolution in economic games abstract this paper examines the conditions under which evolutionary processes select equilibrium strategies of agents or firms under plausible dynamics optimal selection takes place provided that economic agents are small relative to the environment that is each such agent has a negligible effect on others payoffs however when this assumption is not met survival need not imply optimality examples in the contexts of bargaining bidding and market competition are presented

westernization of asian diets and the transformation of food systems implications for research and policy abstract rapid economic and income growth urbanization and globalization are leading to a dramatic shift of asian diets away from staples and increasingly towards livestock and dairy products vegetables and fruit and fats and oils while the diversification of diets away from the traditional dominance of rice with rising incomes is expected and observed current food consumption patterns are showing signs of convergence towards a western diet the diet transition is characterized by increased consumption of wheat temperate fruit and vegetables and high protein and energy dense food globalization and the consequent global interconnectedness of the urban middle class is the driving force behind the convergence of diets the rapid spread of global supermarket chains and fast food restaurants is reinforcing the above trends the growing demand for diet diversity cannot be met solely by the traditional food supply chain it requires the modernisation of the food retail sector and the vertical integration of the food supply chain in effect linking the consumers plate to the farmers plow as a consequence asian agriculture is on an irreversible path leading away from its traditional pre occupation with cereal crop production especially rice towards a production system that is becoming increasingly commercialized and diversified this paper describes the determinants and trends in the diversification and westernization of asian diets implications of the evolving demand trends for food supply and retail systems are presented the paper discusses the prospects for small farmer participation in the emerging food supply system with a particular emphasis on asian rice production systems finally the paper considers emerging challenges for food policy small holder welfare and agricultural research and development priorities

the demand for ethanol as a gasoline substitute abstract this paper estimates household preferences for ethanol e85 as a gasoline e10 substitute i develop a theoretical model linking the shape of the ethanol demand curve to the underlying distribution among households of willingness to pay for ethanol i estimate the model using instrumental variables techniques and data from many retail fueling stations i find that a 0 10 per gallon increase in ethanol s price relative to gasoline leads to a 12 16 decrease in the quantity of ethanol demanded my findings imply that preferences for ethanol are heterogeneous and that a substantial fraction of households are willing to pay a premium for the fuel this reduces substantially the simulated efficiency cost of an ethanol content standard since some households choose ethanol without large subsidies mitigating deadweight losses

optimal conservation extinction debt and the augmented quasi option value abstract optimal conversion defines rules that determine the rate at which land is irreversibly moved out of conservation into production what are the implications on these rules of allowing for a feedback between conversion decisions and the stochasticity of conservation benefits we address this question using the well known ecological mechanism of extinction debt as an illustration this yields a model with a controlled diffusion process at its core we solve this model using a real options approach which leads to the conventional conversion rule as a special case calibrating the model to a specific case costa rica we demonstrate the presence of an augmented quasi option value the size of this value depends on the strength of the feedback

cost benefit analysis and environmental policy the use of cost benefit analysis cba in british environmental policy has gone through several stages early applications of cba tended to ignore environmental impacts altogether leave them for a subsidiary impact analysis or provide only a partial monetization of impacts currently cba is the subject of renewed interest in government departments in the environment agency and among other agencies providing guidance and advice to government while the amount of cba being undertaken has increased its influence on policy making is open to question obstacles remain much cba is expensive and this means that benefits transfer is widely regarded as essential currently however the validity of much benefits transfer is questionable other problems arise from misunderstandings about the nature of economic values and the links to individuals self interest and from concerns that cba results will crowd out flexibility in decision making especially the likely context of multiple political objectives over and above economic efficiency none the less cba has begun to have influence in the setting of environmental taxes and alternative decision rules appear to suffer as many if not more shortcomings as those faced by cba copyright 1998 by oxford university press

the long run impact of biofuels on food prices more than 40 of us corn is now used to produce biofuels which are used as substitutes for gasoline in transportation biofuels have been blamed universally for past increases in world food prices and many studies have shown that these energy mandates in the us and eu may have a large 30 60 impact on food prices in this paper we use a partial equilibrium framework to show that demand side effects in the form of population growth and income driven preferences for meat and dairy products rather than cereals may play as much of a role in raising food prices as biofuel policy by specifying a ricardian model with differential land quality we find that a significant amount of new land will be converted to farming which is likely to cause a modest increase in food prices however biofuels may increase aggregate world carbon emissions due to leakage from lower oil prices and conversion of pasture and forest land for farming

agricultural commercialization and diversification processes and policies abstract agricultural commercialization and diversification involve the gradual replacement of integrated farming systems by specialized enterprises for crop livestock poultry and aquaculture products changes in product mix and input uses are determined largely by the market forces during this transition commercialization of agricultural production is an endogenous process and is accompanied by economic growth urbanization and withdrawal of labor from the agricultural sector this paper provides a selective overview and synthesis of the issues involved in the commercialization and diversification process of agriculture drawing in significant part from the papers in this volume based on an assessment of the process observed in selected countries we show that the commercialization process should not be expected to be a frictionless process and significant equity and environmental consequences may occur at least in the short to medium term particularly when inappropriate policies are followed however we highlight that appropriate government policies including investment in rural infrastructure and crop improvement research and extension establishment of secure rights to land and water and development and liberalization of capital markets can help alleviate many of the possible adverse transitional consequences

world food demand long term projections of global food demand are heavily dependent on which functional form of the food demand equation is used given that real incomes can change substantially over the long term key elements are the dependence of the income elasticity on income which ensures that the food budget share always lies within the 0 1 range and the role of income inequality this article analyzes these issues proposes a new functional form that deals with them and presents estimates of income and price elasticities for food in 138 countries copyright 2012 oxford university press

are profit maximisers the best survivors a darwinian model of economic natural selection abstract this paper demonstrates that the friedman conjecture that profit maximisation summarises appropriately the conditions for firm survival is not generally true if firms have market power profit maximisers are not necessarily the best survivors because of the possibility of spiteful behaviour of the following kind say a firm forgoes profit maximisation and thus decreases its survival chances but its deviation from maximisation harms its profit maximising competitors more than itself though the firm will be less likely to survive than it would if it maximised its profits it will still be more likely to survive than its competitors

confronting the food energy environment trilemma global land use in the long run economic agronomic and biophysical drivers affect global land use so all three influences need to be considered in evaluating economically optimal allocations of the world s land resources a dynamic forward looking optimization framework applied over the course of the coming century shows that although some deforestation is optimal in the near term in the absence of climate change regulation the desirability of further deforestation is eliminated by mid century although adverse productivity shocks from climate change have a modest effect on global land use such shocks combined with rapid growth in energy prices lead to significant deforestation and higher greenhouse gas emissions than in the baseline imposition of a global greenhouse gas emissions constraint further heightens the competition for land as fertilizer use declines and land based mitigation strategies expand however anticipation of the constraint largely dilutes its environmental effectiveness as deforestation accelerates prior to imposition of the target

inference and optimal design for a welfare measure in dichotomous choice contingent valuation this paper considers the use of contingent valuation to estimate non market benefits from separately valued nested goods survey respondents were asked referendum wtp questions regarding either a scheme to protect the whole area of a wetland or a

long term crop productivity response and its interaction with cereal markets and energy prices abstract crop yields are endogenous as long as economic agents adjust to permanent changes in expected prices the literature however does not offer a definitive value of how much yield would change in response to sustained price changes to fill the gap we use available scientific findings and data to estimate yield elasticities that enable agricultural commodity and food policy analysis using a world market model with short to long run yield response we show the impacts of sustained energy price shocks on global cereal supply and demand the results highlight substantial differences in quantity and price effects depending on the yield elasticities these results demonstrate the need to recognize yield response when assessing impacts of energy prices or biofuel production on food uses or more generally on food security in the face of income and population growth evolving dietary patterns climate change implications or other long run pressures

a new justification of monopolistic competition abstract this note offers an evolutionary justification for monopolistic competition sellers act on a symmetric heterogenous market entertain beliefs about the market structure and maximize conjectural profit functions we show that conjectural profit functions neglecting strategic interdependence are neutrally evolutionarily stable

does realism matter in contingent valuation surveys the importance of stressing the realism or policy relevance of a contingent valuation cv survey is commonly recognized by cv researchers this paper focuses on the relationship between the probability that a subject s response will result in real consequences and the subject s accurate reporting of willingness to pay results from experiments support the argument that efforts to make contingent valuation surveys real are important however our results also suggest that the connection between the survey and the likelihood of a payment must be rather powerful before surveys generate accurate reporting of willingness to pay for a public good

contingent valuation from dubious to hopeless abstract approximately 20 years ago peter diamond and i wrote an article for this journal analyzing contingent valuation methods at that time peter s view was that contingent valuation was hopele

estimating consumer demands across the development spectrum maximum likelihood estimates of an implicit direct additivity model abstract this paper characterizes consumer demand patterns across the development spectrum using elasticity estimates from a demand system possessing non linear engel effects demands for six broadly defined goods are then projected under the assumption that per capita expenditure growth rates differ across the development spectrum such projections illustrate the extent to which non linear income effects generate more plausible demand responses estimated marginal budget shares for food decline in a logistical manner and range from about 0 5 for ethiopia to less than 0 05 for the usa engel elasticities for food range from 0 95 for ethiopia to less than 0 1 for the usa

agricultural research spending must increase in light of future uncertainties abstract agricultural productivity depends critically on investments in research and development r d but there is a long lag in this response failing to invest today in improvements of agricultural productivity cannot be simply corrected a few decades later if the world finds itself short of food at that point in time this fundamental irreversibility is particularly problematic in light of uncertain future population income and climate change as portrayed in the ipcc s shared socio economic pathways ssps this paper finds the optimal path of agricultural r d spending over the 21st century for each ssp along with valuation of those regrets associated with investment decisions later revealed to be in error the maximum regret is minimized to find a robust optimal r d pathway that factors in key uncertainties and the lag in productivity response to r d results indicate that the whole of uncertainty s impact on r d is greater than the sum of its individual parts uncertainty in future population has the dominant impact on the optimal r d expenditure path the robust solution suggests that the optimal r d spending strategy is very close to the one that will increase agricultural productivity fast enough to feed the world under the most populous scenario it also suggests that society should accelerate r d spending up to mid century thereafter moderating this growth rate

world product and income international comparisons of real gross product the volume reports on the third phase of the united nations international comparison project icp the main results provide comparisons of real gross domestic product gdp per capita for thirty four countries in 1975 quantity and price comparisons are given also for personal consumption capital formation and public consumption and further subdivisions of final expenditures on gdp are estimated