Volume 39, Issue 1, April 2014

April, 2014

Wetlands Retention and Optimal Management of Waterfowl Habitat under Climate Change

By: Withey, Patrick; van Kooten, G. Cornelis
We develop a positive mathematical programming model to investigate the impact of climate change on land use in the prairie pothole region of western Canada, with particular focus on wetlands retention. We examine the effect of climate change and biofuel policies that are implemented to mitigate climate change on wetlands retention. Simulation results indicate that a drier climate could decrease wetlands by as much as 38% if the externality benefits of wetlands are considered, but by nearly 80% if they are not. Reductions in wetlands are most pronounced in the south-central areas of the region.
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April, 2014

Reference-Dependent Preferences in Gulf of Mexico Shrimpers’ Fishing Effort Decision

By: Ran, Tao; Keithly, Walter R., Jr.; Yue, Chengyan
This paper provides empirical evidence that reference-dependent preferences help to explain the amount of effort exerted by shrimpers in the Gulf of Mexico. Using survival analysis, the authors find that shrimpers tend to prolong their trip when their current trip revenue goal remains unattained. Furthermore, this tendency became more pronounced after 2001 in association with a significant decline in the shrimp price. This may partially explain the less obvious decrease in fleet effort vis-à-vis sharp decline in fleet size following the price change.
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April, 2014

2013WAEA Keynote Address: Strategies for Overcoming Hypothetical Bias in Stated Preference Surveys

By: Loomis, John B.
In some, but not all, contexts, respondents to stated preference valuation studies state a willingness to pay (WTP) higher than what lab or field experiments indicate is the actual amount they would pay. However, several ex ante survey design strategies and ex post calibration techniques can be used to minimize or eliminate hypothetical bias. This article reviews and presents evidence on the effectiveness of these ex ante and ex post approaches. The ex ante approaches lead to recommendations to modify survey designs to minimize the bias up front. If the analyst desires, ex post calibration of WTP using certainty scales can be used to reduce stated WTP to the point at which it will match actual cash contributions.
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April, 2014

Association between Total Diet Cost and Diet Quality Is Limited

By: Carlson, Andrea; Dong, Diansheng; Lino, Mark
There is a common perception that it costs more to eat a healthy diet than a less healthy one. We derive a panel data model that accounts for unobserved specific individual effects to estimate the relationship between diet quality and total daily food expenditure. Since total daily diet cost and diet quality are both calculated from the foods chosen in our data, we account for the fact that there is an endogenous relationship between diet quality and cost. We find that while total daily food expenditure is statistically significant in relation to diet quality, the degree of association is very small.
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April, 2014

Does Agritourism Enhance Farm Profitability?

By: Schilling, Brian J.; Attavanich, Witsanu; Jin, Yanhong
The impacts of agritourism on farm profitability are poorly understood. Using Census of Agriculture records, we employ propensity score matching to estimate the effects of agritourism on the net cash income per acre of New Jersey farms. We find that agritourism has statistically significant and positive effects on farm profitability. Profit impacts are highest among small farms operated by individuals primarily engaged in farming. Positive but smaller effects are observed for lifestyle farms. Profit effects among larger farms are not statistically significant.
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April, 2014

The Value of USDA Crop Progress and Condition Information: Reactions of Corn and Soybean Futures Markets

By: Lehecka, Georg V.
This paper investigates the informational value of USDA crop progress and condition information by analyzing reactions of corn and soybean futures markets from 1986 to 2012. Results show significant differences between close-to-open return variabilities on report-release trading days and pre- and postreport days. Additionally, market prices tend to react rapidly and rationally to new crop-condition information. Strongest reactions are found for July and August, when weather conditions are most critical for the crop, and reactions have increased over time. Overall, these results suggest that reports have substantial informational value.
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April, 2014

Adoption and Frequency of Precision Soil Testing in Cotton Production

By: Lambert, Dayton M.; English, Burton C.; Harper, David C.; Larkin, Sherry L.; Larson, James A.; Mooney, Daniel F.; Roberts, Roland K.; Velandia, Margarita; Reeves, Jeanne M.
A 2009 survey of cotton farmers in twelve states collected information about the use of georeferenced precision soil testing (PST). Adoption of PST technology and the interval until retesting were examined with a Poisson hurdle regression. Survey data were calibrated using a post-stratification weighting protocol. Farming experience, farm size, land ownership, variable rate fertilizer management plans, and the use of soil electrical conductivity devices were correlated the with period until PST adopters retested soil. Understanding how producers perceive the useful life of soil-test information may be important for monitoring the effectiveness of best nutrient management practice adoption.
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April, 2014

Reducing Self-Selection Bias in Feeder Cattle Premium Estimates Using Matched Sampling

By: Williams, Brian R.; DeVuyst, Eric A.; Peel, Derrell S.; Raper, Kellie Curry
Past value-added research employs hedonic pricing models to estimate premiums associated with value-added feeder cattle characteristics. However, hedonic pricing models require restrictive assumptions and impose a functional form. Producers also self-select into a treatment group, potentially biasing estimates. Using propensity score matching, we reduce potential bias from producer self-selection and from imposing a functional form. Results suggest that hedonic pricing models may be negatively biased in estimates of premiums received by value-added calf producers. Current adopters receive a premium of $5.38/cwt from participation in a certified preconditioning program, while nonadopters would realize $5.17/cwt by adopting certification. Hedonic model values range from $0.52/cwt to $4.32/cwt, for similar or identical preconditioning programs.
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April, 2014

Value of Genetic Information for Management and Selection of Feedlot Cattle

By: Thompson, Nathanael M.; DeVuyst, Eric A.; Brorsen, B. Wade; Lusk, Jayson L.
We estimate the value of using information from genetic marker panels for seven economically relevant feedlot cattle traits. The values of using genetic information to sort cattle by optimal days-on-feed are less than $1/head for each of the traits evaluated. However, the values associated with using genetic information to select cattle for placement are as much as $38/head. The most economically relevant genetic traits are average daily gain and marbling. It would not be profitable at the current testing cost of $38/head to sort cattle by optimal days-on-feed, but it could be profitable to use the genetic tests for breeding cattle selection.
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