2004

December, 2004

By: Nahuelhual, Laura; Loureiro, Maria L.; Loomis, John B.
To test for preference heterogeneity in dichotomous choice contingent valuation responses, a random parameter logit (RPL) specification is used in this analysis. The RPL model confirms heterogeneity in respondents' preferences for protection of public open space, as reflected in statistically significant standard deviations of the normally distributed random parameters. Results show that while the majority of respondents indicate a positive willingness to pay (WTP), a minority of those surveyed report a negative WTP. Some of this variation in tastes remains even after individual characteristics and attitudinal variables are included in the model.

December, 2004

By: Ball, V. Eldon; Lovell, C.A. Knox; Luu, H.; Nehring, Richard F.
Agricultural production is known to have environmental impacts, both adverse and beneficial, and it is desirable to incorporate at least some of these impacts in an environmentally sensitive productivity index. In this paper, we construct indicators of water contamination from the use of agricultural chemicals. These environmental indicators are merged with data on marketed outputs and purchased inputs to form a state-by-year panel of relative levels of outputs and inputs, including environmental impacts. We do not have prices for these undesirable by products, since they are not marketed. Consequently, we calculate a series of Malmquist productivity indexes, which do not require price information. Our benchmark scenario is a conventional Malmquist productivity index based on marketed outputs and purchased inputs only. Our comparison scenarios consist of environmentally sensitive Malmquist productivity indexes that include indicators of risk to human health and to aquatic life from chronic exposure to pesticides. In addition, we derive a set of virtual prices of the undesirable by-products that can be used to calculate an environmentally sensitive Fisher index of productivity change.

December, 2004

By: Norwood, F. Bailey; Lusk, Jayson L.; Brorsen, B. Wade
Little research has been conducted on evaluating out-of sample forecasts of discrete dependent variables. This study describes the large and small sample properties of two forecast evaluation techniques for discrete dependent variables: receiver-operator curves and out-of-sample log-likelihood functions. The methods are shown to provide identical model rankings in large samples and similar rankings in small samples. The likelihood function method is better at detecting forecast accuracy in small samples. By improving forecasts of fed cattle quality grades, the forecast evaluation methods are shown to increase cattle marketing revenues by $2.59/head.

December, 2004

By: Feuz, Dillon M.; Umberger, Wendy J.; Calkins, Chris R.; Sitz, Bethany M.
In a study of beef quality, consumers tasted steak samples and participated in an experimental auction to determine their willingness to pay. Steaks differed in marbling, tenderness, country of origin, and aging method. Marbling and tenderness had statistically significant impacts on consumers' palatability ratings for steaks. Tenderness significantly impacted consumers' willingness-to pay values. There appear to be threshold levels of marbling and tenderness, below which consumers discount steaks. Steaks from Australia were rated lower for overall acceptability, and bids were lower than for the U.S. steak samples. Dry-aging methods negatively impacted taste panel ratings and bids.

December, 2004

By: Hoag, Dana L.; Lacy, Michael G.; Davis, Jessica
Little is known about producers' willingness to use manure. Past studies have focused on substitutability for fertilizers. We surveyed crop producers in a cattle-dense region of the Colorado Plains about whether and why they apply manure, focusing on how pressures (like owning cattle) or preferences (pro and con) affect their adoption. Using logistic regression, findings show that pressure and preference (PS/PF) significantly affect adoption. A producer with high PS/PF was 10 times more likely to use manure than one with low PS/PF. Policy and decision makers can use such findings to inform education and policy aimed at increasing the land application of manure.

December, 2004

By: Vedenov, Dmitry V.; Barnett, Barry J.
This study analyzes efficiency of weather derivatives as primary insurance instruments for six crop reporting districts that are among the largest producers of corn, cotton, and soybeans in the United States. Specific weather derivatives are constructed for each crop/district combination based on analysis of several econometric models. The performance of the designed weather derivatives is then analyzed both in- and out-of-sample. The primary findings suggest that the optimal structure of weather derivatives varies widely across crops and regions, as does the risk-reducing performance of the optimally designed weather derivatives. Further, optimal weather derivatives required rather complicated combinations of weather variables to achieve reasonable fits between weather and yield.

December, 2004

By: Smith, Aaron D.; Goe, W. Richard; Kemey, Martin; Morrison Paul, Catherine J.
This study uses data from a 2001 survey of Great Plains farmers to explore the adoption, usage patterns, and perceived benefits of computers and the Internet. Adoption results suggest that exposure to the technology through college, outside employment, friends, and family is ultimately more influential than farmer age and farm size. Notably, about half of those who use the Internet for farm-related business report zero economic benefits from it. Whether a farmer perceives that the Internet generates economic benefits depends primarily on how long the farmer has used the Internet for farm business and for what purposes.