Volume 34, Issue 3, December 2009

By: Nguyen, Quang; Leung, PingSun
Field experiment and household survey data are combined to investigate whether working in a risky occupation such as fishing makes fishermen have different risk preferences than individuals in other occupations. Prospect theory is utilized as the main analytical framework and a structural model approach is developed to simultaneously correlate the parameters of the utility function under prospect theory with other socioeconomic variables. The key finding is that working in fishing makes economic agents less risk averse than others. Fishermen also tend to be less sensitive to probability weighting changes in the experiment. It is possible that fishermen have adapted to their unique environment by using specific heuristics for decision making under conditions of uncertainty.
By: Nguyen, Quang; Leung, PingSun
One of the most prominent features of remuneration in Hawaii’s longline fisheries industry has been the norm of share contract regimes. This paper investigates whether the use of the share contract regime is positively correlated to increased economic returns. The principal-agent framework is applied to develop a theoretical model for the remuneration choice. Empirical estimation is conducted using a switching regression model that accounts for the effects of certain vessel characteristics on revenue, depending on remuneration regime used (i.e., share contract or flat wage), as well as the potential selection bias in the vessels’ contractual choice. Key findings from counterfactual simulations indicate: (a) a negative selection related to choosing share contracts, and (b) flat wage vessels would experience significantly higher revenues if they switched to share contracts. Thus, even though the labor market in Hawaii’s longline fisheries relies upon foreign crew members, the results suggest that owners of flat wage vessels would benefit by applying share contracts to increase their revenues.
By: Park, Timothy A.
Organic farmers face heightened pressure in developing a portfolio of different marketing channels and in bargaining competitively with increasingly sophisticated marketing participants in the supply chain for organic products. This research assists producers by identifying specific farm and demographic factors that enhance earnings given the choice of marketing outlet. The two significant selectivity coefficients confirm that organic earnings when marketing through a single outlet are biased upward since farmers who are better suited to market through multiple outlets have already moved away from this marketing strategy. An accurate evaluation of the projected earnings from any marketing strategy must account for selectivity effects.
By: Richards, Timothy J.; Nganje, William E.; Acharya, Ram N.
Despite the economic damage inflicted by a foodborne disease outbreak, firms at all points in the supply chain appear to be reluctant to invest in the necessary food safety technologies and practices. We argue that these investments are subject to both hysteretic and public good effects, and construct a theoretical model of food safety investment, calibrated to describe the 2006 E. coli outbreak in California spinach. Both effects are found to induce delays in food safety investments, but the public good effect dominates. We suggest a number of policy options that improve incentives to contribute to the public good.
By: Ivehammar, Pernilla
This paper examines the effect of the payment vehicle on the valuation of an environmental good with the contingent valuation method (CVM). Results from three CV studies comparing different payment vehicles by using split samples when valuing environmental encroachment caused by roads in Sweden are presented and compared to results from other such split-sample studies of payment vehicle effects. The results are consistent and show that the payment vehicle affects the valuation, but not always the way expected when considering incentives to behave strategically.
By: Weldesilassie, Alebel B.; Fror, Oliver; Boelee, Eline; Dabbert, Stephan
In developing countries the use of wastewater for irrigation can cause considerable harm to public health and the environment. This paper uses contingent valuation to estimate the economic value of safe use of wastewater for crop production on farms within and around Addis Ababa, Ethiopia. We estimate a surprisingly large welfare gain from policies for safe use of wastewater for irrigation. Our study highlights the potential and the possible pitfalls of using nonmarket valuation techniques as an input into public decision making where traditional resource use interacts with public health and environmental concerns in complex ways.
By: Gillespie, Jeffrey M.; Nehring, Richard F.; Hallahan, Charles B.; Sandretto, Carmen L.
U.S. dairy operations are sorted via a multinomial logit model into three production systems - pasture-based, semi-pasture-based, and conventional. Region, farm size, financial situation, and production intensity measures impact system choice. Analysis follows to determine the impact of production system on enterprise profitability. Region, farm size, and demographic variables impact profitability, as does system choice - semi-pasture-based operations were less profitable than conventional operations on an enterprise, per hundredweight of milk produced basis. Significant differences were not found in the profitability of pasture-based operations versus those using other systems.
By: Ding, Ya; Schoengold, Karina; Tadesse, Tsegaye
The paper combines panel data techniques with spatial analysis to measure the impact of extreme weather events on the adoption of conservation tillage. Zellner’s SUR technique is extended to spatial panel data to correct for cross-sectional heterogeneity, spatial autocorrelation, and contemporaneous correlation. Panel data allow the identification of differences in adoption rates. The adoption of no-till, other conservation tillage, and reduced-till are estimated relative to conventional tillage. Extremely dry conditions in recent years increase the adoption of other conservation tillage practices, while spring floods in the year of production reduce the use of no-till practices.
By: Young, Douglas L.
Nearly all western states lack comparative advantages for producing corn for ethanol and oilseeds for biodiesel. Despite this disadvantage, most western states have legislated incentives for production of biofuels. Unfavorable changes in price relationships, high transportation costs for imported feedstocks, and tight credit markets in 2008 and 2009 led to bankruptcies and plant closures at a disproportionate rate in the western biofuel industry. Policy makers in western states are advised to fund research and development for bioenergy and biofuel feedstocks in which they have a comparative advantage. These include forestry by-products, food processing and crop residues, and livestock wastes.
By: Boland, Michael A.
Crafting and executing strategy are key tasks to be carried out by a manager of an enterprise. Unit leaders are managers of an academic enterprise called a department. The objective of this paper is to provide an overview of information collected from interviews with unit leaders of departments of agricultural economics and discuss challenges being faced by these unit leaders in March 2009.
This section includes: Abstracts of 2009 WAEA Invited and Selected Papers and Organized Symposia, WAEA Annual Meetings, Kanuai, Hawaii, June 24-26, 2009; JARE Editors' Report December 2009, WAEA 2008 Award Winners, WAEA Past Presidents 1927-2009, WJAE/JARE Past Editors