Volume 31, Issue 2, August 2006

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.

August, 2006

By: Wilson, William W.; Huso, Scott R.
Release of a genetically modified (GM) crop variety would lower prices of competing pesticides used on conventional varieties. This causes an increase in surplus for those farmers who adopt the GM variety, as well as for those who plant the conventional variety. A Cournot model was developed to determine the equilibrium quantities of conventional pesticides. A market with conventional wheat was compared to a market with both conventional and GM wheat varieties to identify price decreases of the conventional pesticide as a result of the GM trait introduction.

August, 2006

By: Hennessy, David A.
Feeder animal prices depend on fed animal prices, the biological growth technology, and feed costs. In addition, daily maintenance costs can be avoided through accelerated feeding. These observations allow us to model optimal feeding under equilibrium feeder animal pricing. Our model enables a better understanding of regulation in feedstuff markets. The feeder animal price-weight schedule is likely decreasing and convex in weight. Prices for animals with better growth potential should be less sensitive to feed and fed animal prices. Prices for lighter animals should be more sensitive to these prices. Regression analyses on Southern Great Plains cattle prices provide support for this model.

August, 2006

By: Vedenov, Dmitry V.; Epperson, James E.; Barnett, Barry J.
This article makes an initial attempt to design catastrophe (CAT) bond products for agriculture and examines the potential of these instruments as mechanisms for transferring agricultural risks from insurance companies to investors/speculators in the global capital market. The case of Georgia cotton is considered as a specific example. The CAT bond contracts are based on percentage deviations of realized state average yields relative to the long-run average. The contracts are priced using historical state-level cotton yield data. The principal finding of the study is that the proposed CAT bonds demonstrate potential as risk transfer mechanisms for crop insurance companies.

August, 2006

By: Keplinger, Keith O.; Hauck, Larry M.
A model of manure utilization is developed and applied to four types of transportable manure. Model results highlight important response differences among manure types and generally illustrate the diseconomies of manure production. For example, as manure production increases, manure value decreases and excess phosphate applications increase, thereby increasing the potential for phosphorus runoff. Policy scenarios limiting the manure application rate reduce manure value and excess phosphate application. Increasing the ratio of land using manure increases manure value while reducing excess phosphate application. Buildup of soil nutrients reduces manure value, but either increases or decreases excess phosphate application depending on the scenario.

August, 2006

By: Hu, Wuyang; Zhong, Funing; Ding, Yulian
Information has been proven to have significant impacts on consumers' behavior and willingness to pay (WTP). In this study, information on GM soybean oil is given in the form of real-life cases involving GM food. These cases recorded from actual media reports. Using a hybrid of the double-bounded and payment care elicitation approaches, Chinese consumers' WTP for soybean oil is examined both before and after these cases are presented to them. Results indicate that media reports on positive cases do not increase consumers' WTP significantly, while reports on negative cases drastically lower their WTP.

August, 2006

By: Streicher, Gerhard; Schmid, Erwin; Salhofer, Klaus
This study presents a general model demonstrating how to measure the (in)efficiency of a policy intended to meet objectives. If it is assumed that the government has available only those policy instruments it actually utilizes, our method is a test as to whether the government combines these instruments efficiently. In addition, one could also include other policy instruments, which are not actually used, but are available to the government. Our general model is applied to bread grain policy in Austria. The primary result is that the policy was quite inefficient in meeting the two main objectives of farm income support and self-sufficiency. The stochastic nature of our efficiency measures is acknowledged by taking into account the inherent uncertainty of model parameters. A response surface function is used to identify those parameters which contribute most to model output uncertainty.

August, 2006

By: Good, Darrel L.; Irwin, Scott H.; Isengildina, Olga
This study investigates the impact of six major USDA reports in hog and cattle markets: Cattle; Cattle on Feed; Cold Storage; Hogs and Pigs; Livestock, Dairy, and Poultry Outlook (LDPO); and World Agricultural Supply and Demand Estimates (WASDE). A TARCH-in-mean model, with dummy variables to measure the impact of USDA reports and other external factors, is used to model close-to-open live-lean hog and live cattle futures returns from January 1985 through December 2004. The analysis revealed a statistically significant impact of all but Cattle and Cold Storage reports in live/lean hog futures, and all but Cold Storage reports in live cattle futures. Hogs and Pigs reports had the highest impact on live/lean hog returns by increasing conditional standard deviation 96%. Cattle, Cattle on Feed, and Hogs and Pigs reports had the highest impact on live cattle returns by increasing conditional standard deviation between 26% and 37.5%.