2006

December, 2006

By: Taylor, Mykel R.; Dhuyvetter, Kevin C.; Kastens, Terry L.; Douthit, Megan; Marsh, Thomas L.
This study estimates the price determinants of show quality quarter horses sold at auction. Several characteristics including genetic and physical traits, quality of pedigree, and performance record of the horse, as well as the horse's offspring, were found to significantly impact selling price. Sale order positively affected price and appears to be driven by buyers rather than intentional ordering of the horses. A common practice at horse auctions is for the seller to reject the final bid offered and buy back the horse. Model-predicted prices for these buy-back horses indicate they are not undervalued by the final bids, based on their characteristics.

December, 2006

This section includes: JARE Editor's Report December 2006; Reviewers November 2005-October 2006; WAEA 2005 Award Winners; WAEA Past Presidents, 1927-2006; Past Editors; JARE Author Index, Volumes 29-31, 2004-2006; JARE Key Words Index, Volumes 29-31, 2004-2006

December, 2006

By: Knapp, Keith C.; Baerenklau, Kenneth A.
An economic model of ground water salinization is developed. Starting from a full, high-quality aquifer, there is an initial extraction period, an intermediate waste disposal period, and a final drainage period. Drainage management is initially source control and reuse, but eventually culminates in evaporation basins and a system steady-state. This process occurs over long time scales but is consistent with historical observation. Efficiency is qualitatively similar to common property though quantitative magnitudes differ substantially. Regulatory pricing instruments are developed to support the efficient allocation. The system is not sustainable in that net returns generally decline through time until the steady-state.

December, 2006

By: Brester, Gary W.
The value, relevance, and efficacy of conducting and publishing research has been widely debated throughout the agricultural economics profession. On the one hand, some argue that the research process creates little value and directly competes with teaching/outreach output. On the other hand, others argue that research provides answers to important questions, improves human capital, and complements teaching/outreach activities. I argue that the research and publishing process develops human capital, improves the quality of teaching/outreach, reduces bias, generates new ideas, improves societal welfare, creates innovation, and is essential for public policy debate.

December, 2006

By: Ancev, Tihomir; Stoecker, Arthur L.; Storm, Daniel E.; White, Michael J.
This study presents a method to determine efficient environmental targets at a watershed level. Efficient targets are devised by estimating abatement cost and cost of environmental damages and minimizing their sum. The method was applied to a case study of phosphorus pollution in a watershed in Oklahoma. Several cumulative scenarios with alternative abatement options were simulated and efficient targets were determined. As the number of abatement options at disposal to agricultural sources increased, their optimal abatement expanded relative to the abatement at the point source. Efficient targets were found to be dependent on the choice of policy that stimulates abatement.

December, 2006

By: Grolleau, Gilles; Caswell, Julie A.
Some consumers derive utility from using products produced with specific processes, such as environmentally friendly practices. Means of verifying these credence attributes, such as certification, are necessary for the market to function effectively. A substitute or complementary solution may exist when consumers perceive a relationship between a process attribute and other verifiable product attributes. We present a model where the level of search and experience attributes influences the likelihood of production of eco-friendly products. Our results suggest that the market success of eco-friendly food products requires a mix of environmental and other verifiable attributes that together signal credibility.

December, 2006

By: Egelkraut, Thorsten M.; Garcia, Philip
Options with different maturities can be used to generate an implied forward volatility, a volatility forecast for non-overlapping future time intervals. Using five commodities with varying characteristics, we find that the implied forward volatility dominates forecasts based on historical volatility information, but that the predictive accuracy is affected by the commodity's characteristics. Unbiased and efficient corn and soybeans market forecasts are attributable to the well-established volatility during crucial growing periods. For soybean meal, wheat, and hogs, volatility is less predictable and investors appear to demand a risk premium for bearing volatility risk.

August, 2006

Communities throughout the Western United States are challenged by tight water supplies and swelling populations. Information is needed to better develop and target municipal water conservation programs. Significant water savings ranging from 35% to 70% are possible from changes in residential landscaping and improved management of outside watering, which often accounts for more than 50% of total residential water use. This study examines landscape choices of homeowners in three cities in New Mexico in order to identify and measure behavioral factors affecting water conservation. Using survey data, landscape choices are analyzed with a mixed logit model that assesses the effects of landscape and homeowner characteristics on choice probabilities. Model coefficients and implied elasticities indicate that water cost, education, and regional culture are significant determinants of landscape choices. In addition, the results suggest moral suasion can also have a positive influence toward water-conserving landscapes.

August, 2006

By: Devadoss, Stephen; Holland, David W.; Stodick, Leroy; Ghosh, Joydeep
The discovery of the first case of mad cow disease in the United States in 2003 reverberated across the beef and cattle industry. This study employs a general equilibrium model to analyze the potential economic effects of mad cow disease on the beef, cattle, and other meat industries under three scenarios, ranging form most favorable to most pessimistic. The scenario with 90% foreign demand decline and 10% domestic demand reduction generates results consistent with the actual outcomes after the mad cow disease outbreak. Only if domestic demand declines significantly will the economic hardship in the U.S. beef and cattle industry be very large.