evaluation of drought management in irrigated areas this paper focuses on the economic consequences of droughts for the irrigation sector we develop a dynamic recursive mathematical programming farm model that assumes imperfect mobility of capital and labour as well as rational expectations about future water availability the model is calibrated to 12 representative farms belonging to three irrigation communities of the guadalquivir basin south spain and used to simulate the 1991 1997 period which included 3 years of intense drought results indicate that the drought imposed significant costs on farmers but show also that water managers partly exacerbated these costs by allocating excessive amounts of water to irrigators in the abundant years the model is also used to evaluate the benefits of a perfect water supply forecast and to simulate the economic gains of a voluntary water banking scheme results show that the benefits resulting from the perfect forecast of water supply 1 year ahead would represent a relative gain of 5 however a voluntary banking system would allow farmers to increase their benefits by 32 82 depending on the supply system

are we risking too much perspectives on risk in farm modelling risk and uncertainty have been extensively studied by agricultural economists in this paper we question a the predominant use of static frameworks to formally analyse risk b the predominant focus on risk aversion as the motivation for considering risk and c the notion that explicitly probabilistic models are likely to be helpful to farmers in their decision making we pose the question for a risk averse farmer what is the extra value of a recommendation derived from a model that represents risk aversion compared to a model based on risk neutrality the conclusion reached is that for the types of the decision problems most commonly modelled by agricultural economists the extra value of representing risk aversion is commonly very little

water pricing policies public decision making and farmers response implications for water policy abstract the problems caused by water scarcity demand important changes in the criteria and objectives of water policies the agricultural sector in spain consumes up to 80 of all available hydric resources and the need to increase the efficiency of current uses of water in the agricultural sector is at the core of the country s national water policy one alternative would be to resort to water pricing policies with the aim of providing incentives to save water consumption although it would inflict a certain degree of income losses to the farmers and raise the revenue collected by the water authorities the objective of this research is to analyze the effect caused by the application of different water pricing policies on water demand farmers income and the revenue collected by the government agency to undertake this analysis a dynamic mathematical programming model has been built that simulates farmers behavior and their response to different water pricing scenarios empirical application of the model has been carried out in several irrigation districts in spain covering varied farm regions and river basins results show that the effects of alternative pricing policies for irrigation water are strongly dependent on regional structural and institutional conditions and that changing policies produce distinct consequences within the same region and water district thus equivalent water charges would create widespread effects on water savings farm income and collected government revenue across regions and districts

accounting rates of return many economic studies provide empirical evidence regarding cross sectional differences in firm profitability in most of these studies firm profitability is measured by an accounting rate of return net income dividend by the book value of assets hereafter arr rather than an economic rate of profit franklin fisher and john mcgowan define the firm s economic rate of profit irr as that interest rate which equates the present value of its net revenue stream to its initial outlay 1983 p 82 fisher and mcgowan examine the analytic relation between a firm s arr and its irr in a series of examples and conclude that the arr is such a bad surrogate for the irr that the results of arr based empirical studies are likely to be totally misleading p 91 william long and david ravenscraft 1984 have criticized the theoretical work of fisher and mcgowan because the nature of the analytic relationship between the arr and the irr in the context of highly simplified hypothetical examples may not be indicative of the nature of the relationship in empirical settings their criticism adopts the utilitarian view that the arr has to be treated as a suitable surrogate for the irr as long as no preferable alternative measure of profitability is available for empirical work this view has merit as long as the measurement error which is contained in the arr is random rather than systematic unfortunately the nature and extent of the measurement error which is contained in the arr in a particular empirical setting can only be determined unequivocally if the irr is unequivocally known in such a case of course there would be no need to rely on the arr at all due to this unhappy circle empirical research on firm profitability has continued to rely on the arr despite the fact that many persons reasonably believe that the results of such research may be totally misleading fisher and mcgowan g c harcourt 1965 while others reasonably believe that the results are reliable enough to form a basis for policy decisions long and ravenscraft recent work by y ijiri 1978 1979 1980 and by myself 1982 has shown that conditional irr estimates can be obtained from data in firms financial statements while these irr estimates are conditional they do abstract from certain extraneous factors that influence arrs and that differ across firms consequently the conditional irr estimates are free from some of the sources of measurement error which are known to contaminate the arr thus the conditional irr estimates can be used to provide evidence on whether these sources of measurement error have or have not affected the outcome of prior studies in which profitability was measured by the arr such evidence can help to objectively resolve the conflict between the opposing views on the reliability of arr based profitability research this paper uses conditional irr estimates to examine the properties of the measurement error in the arr in a study of the relationship between firm profitability and firm size the remainder of the paper is organized as follows in section i the theoretical work of fisher and mcgowan is used professor of accounting university of iowa iowa city ia 52242 i gratefully acknowledge the comments of william albrecht dan dhaliwal gary fethke franklin fisher scott linn william r kinney jr and the participants of a workshop at the university of florida on earlier versions of this paper 1 some authors for example william long and david ravenscraft 1984 have used the sales margin ratio earnings sales as a measure of profitability however if one views profitability as return per unit of sacrifice the sales margin ratio is not a profitability measure since it ignores the sacrifice or investment required to generate a dollar of sales consequently this paper does not attempt to shed any insight into prior studies that have relied on the sales margin ratio as a measure of profitability

effects of treatment beyond the treated a general equilibrium impact evaluation of lesotho s cash grants program africa s social cash transfer programs target the most resource constrained households unlikely to expand supply in response to transfer induced demand we propose a local economy wide impact evaluation model and use it to evaluate local spillovers from lesotho s child grants program we report monte carlo confidence bounds around impact simulation results we find significant spillovers to nonrecipient households and significant real income multipliers although the latter are dampened if factor supply constraints generate excessive inflationary pressures our findings raise questions about how to measure the impacts of cash transfers evaluations focusing only on eligible households are likely to significantly understate program impacts

adoption of improved maize varieties in southern ethiopia factors and strategy options abstract this paper identifies factors that influence the decision behavior of farmers in southern ethiopia in adopting improved maize varieties by estimating a logistic regression data for this study came from 222 farmers interviewed as part of a national adoption survey conducted in three selected maize growing administrative zones of southern ethiopia in 1998 the paper also assesses the impact of pure and mixed strategy options on the probability of adoption of improved maize varieties through simulation under different scenarios as far as pure strategies are concerned the credit strategy is more powerful than the others in terms of raising the probability of adoption however results from the analysis of pure versus mixed strategies imply that mixed strategies are no necessarily much better than pure strategies

who benefited from burundi s demobilization program this paper assesses the impact of the demobilization reinsertion and reintegration program in post war burundi two major rebel groups benefited from cash and in kind transfers the cndd fdd from 2004 and the fnl from 2010 a panel data of households collected in 2006 and 2010 is combined with official records from the national commission for demobilization reinsertion and reintegration regression analysis shows that the cash payments received by fnl demobilized households had a positive impact on consumption nonfood spending and investments the program also generated positive spillovers in the villages where fnl combatants returned ex combatants indeed spent a large part of their allowance on consumption goods and clothing thereby generating a short run economic boom in villages however the long run evolution of consumption indicators is negative for cndd fdd households as well as for villages where cndd fdd combatants returned suggesting that the direct impact and the spillovers of the program vanished in the long run

water markets design and evidence from experimental economics market mechanisms are gaining increasing acceptance all over the world as a way of making more efficient use of scarce water resources designing regulatory frameworks that ensure both inter and intra temporal efficient allocations is a daunting task especially if supply is stochastic and there is ample storage capacity in addition to defining tradable rights specific provisions must regulate the use of reservoirs commonly water statutes include provisions that establish asymmetries regarding the allocation of water and market restrictions that ban water trading across different users in this article we use data collected in a laboratory to test two specific market regulations included in the 1999 water reform in spain first junior right holders are not allowed to buy water from senior users second the law does not explicitly define water rights over units left in reservoirs for the following season results suggest that trading restrictions among water right holders lead to welfare losses for senior users it is shown that removing this restriction would increase senior right holders benefits without reducing those of junior users results show that defining water rights over saved units across periods would increase the average stock levels of reservoirs and reduce market price instability the lessons learned from the spanish experience are applicable to settings characterized by unstable natural water supply and the availability of large storage facilities

assessing the impact of unilateral trade policies eba and agoa on african beneficiaries exports using matching econometrics the existing literature studying the impact of non reciprocal preferential trade agreements nrptas assumes implicitly nrptas are non randomly assigned without showing the evidence of that using a matching methodology this paper investigates whether the african growth and opportunity act agoa and the everything but arms eba unilateral trade concessions have had an impact and in what magnitude on the exports of african beneficiary countries in the light of the evidence of the non random nature endogeneity of nrptas methodologically previous studies using the matching procedure focused on bi or multilateral trade agreements our work focuses on nrptas that depend only on donors conditions accordingly we show that for nrptas gravity covariates cannot be used for the matching procedure we propose to use political variables as determinants for obtaining non reciprocal trade preferences in order to address the endogenous nature of nrpta assignment our main results confirm that a country becomes eligible for a nrpta only when it meets certain conditions defined by their donors such as political stability and economic regulation for agoa and freedom of expression and human development for eba results also show that both agoa and eba policies have had a positive impact on african beneficiary countries exports to nrpta s providers even if the magnitude impact of eba is significantly lower than that of agoa

preferential market access design evidence and lessons from african apparel exports to the united states and the european union the least developed countries rely on preferential market access to benefit from these preferences proof of sufficient transformation must be provided to customs in importing countries by meeting the rules of origin requirements these rules of origin are complicated and burdensome to exporters in least developed countries since 2001 under the united states u s africa growth opportunity act agoa 22 african countries that export apparel to the u s have been able to use fabric of any origin single transformation and still meet the criterion for preferential access the so called special rule in contrast the european union eu has continued to require yarn to be woven into fabric and then made into apparel in the same country double transformation panel estimates for the 1996 2004 period exploit this quasi experimental change in the design of preferences estimates show that this simplification contributed to an increase in export volume of approximately 168 percent for the top seven beneficiaries or approximately four times as much as the 44 percent growth effect from the initial preferential access under the agoa without single transformation this change in design was also important for diversity in apparel exports because the number of export varieties grew more rapidly under the agoa special regime

accounting rates of return reply willem buijink and marc jegers have pointed out that the conditional internal rate of return estimates contained in my 1985 paper are dependent on estimates of the useful life of the firms depreciable assets and that my estimates of such useful lives are contaminated by depreciation method differences across the firms i think their point is correct and the intent of this reply is to use their formulas to obtain corrected useful life and conditional internal rate of return estimates and to report the impact of these corrections on the relationship between profitability and firm size for the sample of firms that was the focus of my 1985 paper

agriculture and economic growth in ethiopia growth multipliers from a four sector simulation model abstract agriculture accounts for over half of ethiopian gdp yet the case for agriculture as a focus of economic growth strategies must rely on identifying a set of intersectoral linkages through which agricultural growth contributes to the growth of non agriculture in the ethiopian economy this article develops a four sector numerical simulation model of economic growth in ethiopia which permits the calculation of macroeconomic growth multipliers resulting from income shocks to agriculture services modern industry and traditional industry the resulting growth multipliers are 1 54 for agriculture 1 80 for services 1 34 for modern industry and 1 22 for traditional industry these results depict an economy in which intersectoral linkages operate on a highly uneven basis these limits are reflected in the wide disparity between sectoral growth multipliers and by substantial differences in the patterns of their decomposition the policy relevance of these findings relate in part to the distributional implications of growth in particular sectors poverty in ethiopia is disproportionately rural an income shock to agriculture is clearly the most progressive choice indicating the need to highlight agricultural development in growth strategies for ethiopia yet the simulation results further indicate that doing so imposes relatively little trade off against total benefit while a 1 service sector income shock generates 0 80 in indirect benefits a 1 agricultural income shock still generates 0 54 in indirect gains a somewhat smaller benefit but one likely to make the greatest possible impact on poverty reduction

the economic impacts of droughts a framework for analysis abstract droughts are a specific type of natural hazard economic assessments of drought impacts require a framework capable of accounting for its unique and particular characteristics traditional conceptual frameworks used to assess the impacts of natural hazards do not adequately capture all of the factors that contribute to the economic impacts of droughts such as the importance of the level and composition of hydraulic capital the dispersion of economic impacts across different economic activities and agents the temporality of drought events and the critical importance of policy making in shaping the short and long term economic impacts of droughts nor do traditional frameworks take account of the complex interaction between factors within the domain of decision making and underlying climate conditions we propose a new conceptual framework based around two sources of economic impact green water and blue water and argue that because each source of drought impacts the economy in different ways they must be differentiated in any assessment of economic impact

district level economic linkages in kenya evidence based on a small regional social accounting matrix abstract this paper explores the nature and extent of the economic linkages in a small regional economy defined by a market center and its hinterland in kenya the analysis is based on a set of income and employment multipliers derived from a social accounting matrix estimated for the region issues considered include the impact of production activities on regional value added and employment the influence of sectoral production on the level of household income and the impact of household expenditure on regional value added and the relative significance of production and consumption linkages in terms of stimulating aggregate income the above questions are examined under the assumption of complete excess capacity in regional production and under the assumption of supply constraints in agriculture the usefulness of the analysis for district level economic planning is demonstrated

the economic impacts of drought on the economy of iran an integration of linear programming and macroeconometric modelling approaches in this paper we provide economy wide estimates of the costs of drought in the cropping sector of the iranian economy using a linear programming model to estimate the direct costs on agriculture and a macroeconometric model to trace the indirect impacts on the rest of the economy the results indicate that a severe drought such as the one that occurred in the crop year 1999 2000 imposes a direct cost of 1605 million usd equivalent to 30 3 of the total value added of the cropping sector in iran this in turn leads to a 12 7 reduction in the value added of other agricultural sub sectors livestock fisheries and forestry in the rest of the economy the manufacturing and service sectors experience value added declines of 7 8 and 3 7 respectively in addition there is a substantial decrease in investment in the agricultural manufacturing and service sectors thus such a drought reduces overall gdp by about 4 4 and it would also result in decreased non oil exports increased food imports and a rise in inflation the results of some drought mitigation simulations are reported in brief such estimates strengthen the case for increased attention to drought strategies and management in agriculture in iran and elsewhere

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

market access and welfare under free trade agreements textiles under nafta the effective market access granted to textiles and apparel under the north american free trade agreement nafta is estimated taking into account the presence of rules of origin first estimates are provided of the effect of tariff preferences combined with rules of origin on the border prices of mexican final goods exported to the united states u s and of u s intermediate goods exported to mexico based on eight digit harmonized system tariff line data a third of the estimated rise in the border price of mexican apparel products is found to compensate for the cost of complying with nafta s rules of origin and nafta is found to have raised the price of u s intermediate goods exported to mexico by around 12 percent with downstream rules of origin accounting for a third of that increase second simulations are used to estimate welfare gains for mexican exporters from preferential market access under nafta the presence of rules of origin is found to approximately halve these gains

effects of us biofuel policies on us and world petroleum product markets with consequences for greenhouse gas emissions abstract us biofuel policy includes greenhouse gas reduction targets regulators do not address the potential that biofuel policy can have indirect impacts on greenhouse gases through its impacts on petroleum product markets and scientific research only partially addresses this question we use economic models of us biofuel and agricultural markets and us and world petroleum and petroleum product markets to show that discontinuing biofuel tax credits and ethanol tariff lower biofuel use could lead to increased us petroleum product use and a reduction in petroleum product use in other parts of the world the net effect is lower greenhouse gas emissions under certain assumptions we show that biofuel use mandate elimination can have positive or negative impacts on greenhouse gas emissions the magnitude and the direction of effects depend on how us biofuel trade affects biofuel in other countries with different emissions context that determines how important use mandates are in the first place who pays mandate costs and the price responsiveness of global petroleum supplies and uses however our results show that counter intuitive effects are possible and discourage broad conclusions about the greenhouse gas impacts of removing these elements of us biofuel policy

automatic responses of crop stocks and policies buffer climate change effects on crop markets and price volatility abstract climate change has the potential to affect crop prices and price volatility however the economic models used in prior assessments largely do not include known automatic stabilizing factors crop storage can stabilize prices and u s crop policy tends to provide support that moves opposite prices we quantify effects of circa 2050 climate forcing on the inter annual variability of u s corn belt corn and soybean yields using statistical crop models and climate scenarios from regional and global climate models climate change generally reduces mean yields and increases the inter annual variability of yields in the midwestern u s using these yield impacts and an economic model with automatic market stabilizers we find only modest increases in price volatility although individual producers and states are negatively affected by the yield reductions the aggregate effect for all corn and soybean producer returns can be positive because of price increases moreover agricultural policies based on price levels or revenue variation offset some of the impacts of market variation on farm income our results differ from other recent results and temper concerns that increasing climate instability necessarily translates to greater uncertainty about agricultural commodity uses including as food and biofuels in the near future

preference utilisation and tariff reduction in eu imports from acp countries textabstractdespite the long relationship between the eu and the african caribbean and pacific acp countries aimed at encouraging their exports while stimulating growth and investment the acp states still face difficulties in integrating into the world economy this paper examines the non least developed acp countries preferential trade with the eu the objective is to explain the determinants of preferential exports of acp countries towards the eu and to assess the impact of preferences on trade volumes we also investigate the existence of a threshold in the offered duty reduction under which traders have no incentives to ask for preferences

farm nonfarm linkages in rural sub saharan africa this paper is an accumulation over the past 25 years of a body of detailed work examining the structure of africa s rural nonfarm economy first it systematically reviews empirical evidence on the nature and magnitude of the african rural nonfarm economy it then explores differences across locality and size across countries and over time in an effort to assess likely patterns of growth a subsequent review of key production and consumption parameters allows an estimate of the magnitude of the agricultural growth multipliers in africa the paper concludes with a brief discussion of policies and programs that will be necessary if farm nonfarm growth linkages are to achieve their full potential

are virtual water flows in spanish grain trade consistent with relative water scarcity abstract virtual water adds a new dimension to international trade and brings along a new perspective about water scarcity and water resource management most virtual water literature has focused on quantifying virtual water flows and on its application to ensure water and food security nevertheless the analysis of the potential gains from international trade at least from a water resources perspective needs to take into account both spatial and temporal variations of blue groundwater and stream flow and green soil moisture water as well as the socioeconomic and policy conditions this paper evaluates whether spanish international trade with grains is consistent with relative water scarcity for this purpose the study estimates the volume and economic value of virtual water flow through international grain trade for the period 1997 2005 which includes 3 years with different rainfall levels the calculations show that spain is a net virtual water importer through international grain trade the volume of net virtual water imports amounts to 3420 4383 and 8415 million m 3 in wet 1997 medium 1999 and dry 2005 years respectively valuing blue water at its shadow price or scarcity value blue water exports oscillate between 0 7 and 34 2 million euros for a wet and dry year respectively overall grain trade is apparently consistent with relative water scarcity as net imports increase in dry years however the evolution of grain exports expressed as a variation in quantity and volume does not match the variations in resource scarcity a disaggregated crop analysis reveals that there are other factors such as quality product specialization or the demand for a standardized product which also influence trade decisions and are not included in the notion of virtual water these facts among others can therefore create potential distortions in the application of virtual water to the analysis of specific trade patterns nevertheless from a water resources perspective virtual water can bring important insights across countries for improving water and land management globally fostering adaptation strategies to climate change and to transboundary resource management

agricultural technology and farm nonfarm growth linkages abstract agricultural growth stimulates rural nonfarm activity by boosting demand for production inputs and consumer goods but different kinds of agricultural technology promote different patterns of nonfarm linkages to explore how key features of agricultural technology affect growth in the rural nonfarm economy this paper reviews an array of cross section and time series evidence bearing on the dynamics of the rural nonfarm economy then using consumption and production parameters associated with different agricultural technologies it introduces a simple model which isolates the effects of different technologies on nonfarm growth linkages

multicrop production decisions in western irrigated agriculture the role of water price applying a model of the multioutput firm econometric results are reported for irrigated production in four multistate regions of the american west cross sectional microdata from the farm and ranch irrigation survey and limited dependent variable methods are used to estimate crop choice supply land allocation and water demand functions for field crops farm level water demand is decomposed into the sum of crop level water demands and crop level demands are further separated into an extensive margin land allocations and intensive margin short run water use response to water price measured as groundwater pumping cost occurs primarily at the extensive margin

the story of the moment risk averse cypriot farmers respond to drought management this article illustrates the importance of estimating risk preferences when evaluating water policy using agricultural production data from the kiti region of cyprus we estimate farmers risk preferences a la antle journal of business and economic statistics 1 192 201 1983 american journal of agricultural economics 69 509 22 1987 and show sensitivity to higher order moments of profit such as skewness we show that farmers in the kiti region are risk averse with risk premiums in the region of 20 of expected profit we use these estimates to analyse the impact of a water quota from the perspective of three policy makers who differ only in their understanding of farmers risk preferences we show in the case of kiti that policy makers who model risk preferences incorrectly that is either a assume risk neutrality or b ignore down side risk wrongly predict the magnitude and direction of input responses and therefore the magnitude of welfare changes this highlights the importance of accomm

water conservation policy analysis an interregional multi output primal dual optimization approach an interregional multi output normalized restricted equilibrium model of field crop agriculture is estimated within the context of a multistage programming based system estimation procedure implicit total economic cost functions endogenize behavioral opportunity adjustment costs of fixed and allocatable land and water resources crop specific marshallian water demand elasticities are estimated for restricted and unrestricted groundwater substitution environments and decomposed by water source elasticities are inelastic but water price policy reform can be an effective water conservation policy tool when groundwater use is unrestricted when groundwater use is restricted effective conservation policy requires more dramatic water price policy reform