2020

September, 2020

Moving Agricultural Policy Forward: Or, There and Back Again

By: Belasco, Eric
This paper discusses the relationship among agriculture, agricultural policy, and economic research. More specifically, this paper evaluates the relevance of current agricultural policy research on crop insurance in meeting the demands of modern agriculture. While forms of disaster assistance created as part of the New Deal persist today, it is argued that there are analytical tools available that allow for policy to be derived by utilizing better data and empirical methods.
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September, 2020

The On-Farm and Near-Farm Effects of Wind Turbines on Agricultural Land Values

By: Sampson, Gabriel S. ; Perry, Edward D. ; Tayler, Mykel R.
We estimate the effects of utility-scale wind turbines on agricultural land values in Kansas using parcel-level transaction data from 2001 to 2017 in a hedonic price model. By matching transaction data and wind turbine data at the common land units scale, we are able to ascertain on-farm effects as well as near-farm effects. Across all our analyses, the preponderance of results suggests that wind turbines do not affect agricultural property values, either on-farm or nearby, in a statistically significant way. Thus, our results cannot confirm that wind turbines will increase land values when installed on a parcel.
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September, 2020

Evaluating the Efficacy of Ambient Air Quality Standards at Coal-Fired Power Plants

By: Raff, Zach ; Walter, Jason M.
This study evaluates the health benefits and abatement costs of the PM2.5 National Ambient Air Quality Standards (NAAQS) at coal-fired power plants. We find that the emission reductions from the PM2.5 NAAQS between 1995 and 2016 are sizable and that the health benefits from these reductions far exceed the abatement expenditures of affected plants. We then use this ex post analysis to simulate future health benefits and abatement costs in this sector from more stringent PM2.5 standards. Our policy simulation shows that tightening these standards to levels recommended by the World Health Organization also passes a benefit-cost test.
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September, 2020

The Economic Value of Camping using Administrative Data

By: Lloyd-Smith, Patrick ; Becker, Marcus
This paper implements a seasonal travel cost model using administrative data from an online camping reservation system on over 71,500 individuals taking 144,000 trips to 68 campgrounds in Alberta, Canada. Using a KuhnÐTucker modeling framework, the per trip welfare impacts of campground closures ranges from $46 to $144. The substantial heterogeneity in welfare measures across campgrounds in per trip welfare measures for the same recreational activity in the same jurisdiction raises caution about the use of simple unit transfers of recreation values. Furthermore, we assess how the value of campground trips is associated with park attributes, campground amenities, and available activities nearby.
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September, 2020

Consumer Willingness to Pay for Organic and Animal Welfare Product Attributes: Do Experimental Results Align with Market Data?

By: Lai, Yufeng ; Yue, Chengyan
This study estimates distributions of consumer willingness to pay (WTP) for organic and animal welfare product attributes using the store scanner data and compares the results to existing experiment-based findings. We find that the WTP premium estimated for organic eggs is consistent with experimental results, while estimated WTP premiums for animal welfare attributes are significantly lower than experimental findings. The results suggest the importance of considering biases when estimating the price premium for animal welfare attributes in experiments. In addition, consumers are not always willing to pay premiums for organic products. Our results also show that WTP premiums are heterogeneous across store brands.
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September, 2020

Immersive Virtual Reality and Willingness to Pay

By: Meyer, Kevin
This paper illustrates how to improve the immersiveness of an environmental valuation study using virtual reality (VR) headsets and real video footage. Recent research has used Òvirtual environmentsÓ to study this issue, but technological advances in VR headsets allow for a far greater degree of immersion. In this study, subjects were randomly shown either a VR video or static pictures of a polluted lake, before and after cleanup. They were then asked to indicate whether they would be willing to pay a random amount to improve lake water quality to the level shown. A discrete choice model is used to estimate and compare the willingness to pay for both groups. In this case study, there was no detectable effect on willingness to pay estimates. However, the technology may be beneficial for other valuation scenarios, particularly when the environmental change is complex or difficult for participants to evaluate.
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September, 2020

Consumer Preferences for Labels Disclosing the Use of Neonicotinoid Pesticides: Evidence from Experimental Auctions

By: Wei, Xuan ; Khachatryan, Hayk ; Rihn, Alicia
Neonicotinoid pesticide use in the U.S. ornamental horticulture industry continues to capture attention due to the potential health risks to pollinator insects. While several retailers have announced mandatory labeling policies for plants treated with neonicotinoids, little is known about how individual consumers react to a firmÕs disclosure of neonicotinoid use in production and the extent to which this additional information is valued. Here, we use a laboratory experiment to assess consumersÕ preferences for environmentally friendly production practices, focusing on neonicotinoid labeling. Despite broad consumer unfamiliarity with neonicotinoids, results show that consumers have differentiated preferences for neonicotinoid-related labels and information disclosure.
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September, 2020

Temporal Changes in Angus Bull Attribute Valuations in the Midwest

By: Tang, Minfeng ; Thompson, Nathanael ; Boyer, Christopher N. ; Olynk Widmar, Nicole J. ; Stewart, Terry S. ; Lofgren, Donna L. ; Minton, Nick
Past attempts to price bull attributes have relied on static marginal valuations due to cross-sectional data limitations. This analysis investigates whether bull buyersÕ marginal valuations of Angus bull attributes have changed over time using 17 years of bull auction data from Indiana. Results indicate statistically significant time effects on some traits (e.g., ribeye area, percentage intermuscular fat, ribeye-area expected progeny difference [EPD], and maternal-milk EPD). Not all of these effects align with prior expectations. Nonetheless, results have important implications for the beef industry in terms of signaling quality ques and incorporating proven information in the form of EPDs.
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September, 2020

Spatially Smoothed Crop Yield Density Estimation: Physical Distance vs Climate Similarity

By: Park, Eunchun ; Brorsen, B. Wade ; Harri, Ardian
Many crop insurance studies have pointed out that considering spatial yield similarity can help provide more precise premium rating. We use Bayesian Kriging for spatial smoothing to consider such similarities when estimating crop yield densities. This articleÕs innovation is that the spatial smoothing is based on climate space, which is composed of climatological measures. We compare the climate-space smoothing with a general physical space (longitudeÐlatitude space) smoothing. The test results are favorable to the proposed climate-smoothing method. Climate smoothing performs particularly well in states that have many missing counties and varied climate due to varying topography.
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September, 2020

Firm Decision Making under Both Input and Output Price Uncertainty

By: Harri, Ardian ; Maples, Joshua G. ; Riley, John Michael ; Tack, Jesse B.
Theory of the firm suggests that optimal production levels decrease as output price becomes random. Firms operating in industries with long production lags are also exposed to input price uncertainty. This paper provides a novel decision-theoretic model in the presence of both input and output price uncertainty and uses U.S. beef sector data to test theoretical propositions concerning firm behavior. Our findings confirm that, in a two-stage production, the introduction of input price uncertainty leads to increased use of the input and an increased level of output in stage one and a decreased level of output in stage two.
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September, 2020

Food Safety Modernization Act and Differential Revenues to Differently Sized U.S. and Foreign Tomato Producers

By: Zhang, Lisha ; Seale, James L. Jr. ; Paggi, Mechel S. ; Schmitz, Troy G.
The Food Safety Modernization Act (FSMA) provides new U.S. food safety standards to lower the incidence of foodborne diseases. We analyze the FSMA in terms of adoption effects on differently sized domestic and foreign farms producing fresh tomatoes for the U.S. market. Findings indicate that adoption of the FSMA will negatively affect the revenues of very small farms the most as well as small U.S. farms. However, it will positively affect the revenues of foreign farms (especially Canadian) and large U.S. farms. This may lead to the restructuring of tomato production and distribution in the U.S. tomato market.
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September, 2020

Choice of Contract Farming Strategies, Productivity, and Profits: Evidence from High-Value Crop Production

By: Khanal, Aditya R. ; Mishra, Ashok K. ; Mayorga, Joaquin ; Hirsch, Stefan
This study examines the impact of the choice of contract farming (CF) conditions on the productivity and profitability of ginger growers. Using farm-level data from Nepal and the selectivity-corrected multinomial endogenous switching regression (MESR) method, we found that ginger growers increased yields by 16%, 19%, and 15% by participating in CF with input conditions (IC), with output conditions (OC), and with input and output conditions (BC), respectively. Ginger growers also increased profits by participating in CF. Price difference in spot and contract markets, distance to market and transportation facilities, and farm location are important factors affecting participation in any form of CF.
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May, 2020

Is This Food Local? Evidence from a Framed Field Experiment

By: Li, Tongzhe; Ahsanuzzaman; Messer, Kent
This experimental research studies consumer preferences for local food accompanied by various label definitions. 374 adult participants made purchase decisions for local oysters characterized by multiple definitions of the term local. Results show consumers are less willing to pay for local oysters when local is defined as harvested within 400 miles than they are for oysters harvested within 100 miles or 25 miles. Willingness to pay (WTP) also increases when local is defined as being harvested in a watershed from the same state of the purchase location rather than in an adjacent state. Interestingly, the highest WTP is when no definition of local is provided.
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May, 2020

Grower Willingness to Pay for Fruit Quality versus Plant Disease Resistance and Welfare Implications: The Case of Florida Strawberry

By: Li, Zongyu; Gallardo, R. Karina; McCracken, Vicki; Yue, Chengyan; Whitaker, Vance; McFerson, James R.
We assess decision making when growers choose to invest in a new fruit cultivar, given the tradeoffs between superior fruit quality and improved disease resistance. We also estimate the welfare effects of adopting a cultivar with improved disease resistance. Florida strawberry growers are more willing to pay for fruit quality relative to improved disease resistance. When adopting a cultivar with improved disease resistance, Florida strawberry growers save between $182.40 and $204.50 per 1,000 plants every annual harvest period. Our findings improve the understanding of how strategic decisions are made to meet increasing marketplace demands for superior fruit quality and reduced chemical applications.
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May, 2020

Consumers Response to Food Fraud: Evidence from Experimental Auctions

By: Meerza, Syed Imran Ali; Gustafson, Christopher R.
This study uses a laboratory valuation experiment to examine whether food fraud occurring in one country affects the valuation of products from that country as well as products from other countries. We use a between-subject experiment design to compare consumersÕ valuation of extra virgin olive oil (EVOO) from different countries with and without exposure to information about olive oil fraud occurring in one of the countries. Results show that information about olive oil fraud in one country negatively affects the valuation of EVOO not only from that country but also from other countries, indicating negative spillover effects of food fraud.
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May, 2020

Tradeoffs in Farm to School Implementation: Larger Foodsheds Drive Greater Local Food Expenditures

By: Plakias, Zoe T.; Klaiber, H. Allen ; Roe, Brian E.
Local food offerings differ within and across school districts with farm-to-school programs. Using two waves of nationwide data, we estimate the relationship between two supply chain indicatorsÑ local foodshed size and length of local food supply chainÑand districtsÕ local food expenditures. We find that increasing foodshed radius by 50 miles and sourcing from intermediaries increases the average districtÕs local spending by 8% and 26%, respectively. DistrictsÕ actions to increase student access to local foods by widening definitions of local or sourcing through intermediaries thus have the potential to reduce localized benefits to nearby farmers and community members.
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