Volume 45, Issue 1, January 2020

January, 2020

Crop Insurance Participation Rates and Asymmetric Effects on U.S. Corn and Soybean Yield Risk

By: Connor, Lawson; Katchova, Ani L.
Crop insurance and its related components, such as premium subsidies, have impacts on farm management decisions, production practices, and output. We use county-level USDA survey data combined with instrumental variables analysis to investigate asymmetric impacts of crop insurance on corn and soybean yield variance. Our results indicate an increase in yield downside risk as crop insurance participation rates increase. We also find an increase in drought susceptibility, likely due to expansion to lower-quality farmland and changes in input use. Increased yield variability could have effects on prices, farm income variability and farmer welfare.
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January, 2020

Valuation of Water Level: A Spatial Hedonic Analysis on Lakeshore Properties

By: Liu, Weiwei
White Bear Lake, Minnesota, has lost a large amount of water due to excessive groundwater extraction. Using a general nested spatial hedonic pricing model, this paper identifies and evaluates the impact of water loss in the lake on lakeshore properties. In addition to providing a quantitative estimate of property value loss, the results show that the marginal loss intensifies as water level persistently declines further. The findings of this study alert emerging urban areas to the negative externalities of failing to balance the tasks of meeting increased water demand as well as achieving sustainable water use.
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January, 2020

What Does the Future Hold for U.S. National Park Visitation? Estimation and Assessment of Demand Determinants and New Projections

By: Bergstrom, John C.; Stowers, Matthew; Shonkwiler, J. Scott
Using a first-difference econometric model, we estimate an aggregate demand model for assessing the determinants of the quantity of visits to the 47 national parks in the continental United States. The estimated model was then used to project visitation to these parks from the 2016 base year to 2026. Total visitation could see an average increase of about 1.2 million visitors per year through 2026, suggesting that congestion problems already experienced at many parks may get worse. Congestion and overuse strain already limited operation and maintenance budgets and can lead to environmental damage to park sites and reductions in visitor satisfaction.
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January, 2020

Bivariate MIMIC Analysis of Pasture Management and Prescribed Grazing Practices Used by Beef Cattle Producers

By: Holley, Kristen; Jensen, Kimberley L.; Lambert, Dayton M.; Clark, Christopher D.
This study applies a bivariate Multiple Indicator–Multiple Causation model to examine farm and operator characteristics associated with the likelihood of using pasture management (PM) and prescribed grazing (PGR) practices. Data are from a survey of cattle operations. Most commonly used practices included adjusting livestock and pasture fertilization. Least used were geotextiles in trafficked areas and buffering sensitive areas. Use of PM practices was income sensitive. Land stewardship and government conservation incentive views influenced PGR. Results suggest complementarities between most PGR and PM practices. However, those with higher opportunity costs and off-farm benefits (e.g., stream crossings) are not complementary with other practices.
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January, 2020

Reproductive Failure and Long-Term Profitability of Spring- and Fall-Calving Beef Cows

By: Boyer, Christopher N.; Griffith, Andrew P.; DeLong, Karen L.
We determined how reproductive failure impacts the long-term profitability of beef cows in spring- and fall-calving herds. Simulation models were established to generate distributions of net present value, payback periods, and breakeven prices of calves when a dam fails to wean zero, one, or two calves over her life. Results indicate that giving a dam another calving opportunity after failing to wean a calf would likely result in her being unprofitable. A producer would be better off selling the open dam than giving her another chance to breed. This illustrates the value in selecting replacement heifers based on fertility.
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January, 2020

How Do E. coli. Recalls Impact Cattle and Beef Prices?

By: Moon, Donghyun; Tonsor, Glynn T.
We conducted an event study to examine the effect of E. coli recalls on prices in the vertically connected U.S. beef industry. Our findings show that the resulting price changes of beef products vary across stages in the U.S. beef industry and that the prices of disaggregated beef products are more vulnerable to E. coli recalls than the prices of aggregated products. This suggests that downstream agents transacting specific ground beef products may be more adversely affected by E. coli recalls than upstream agents trading live animals.
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January, 2020

Impact of Hormone Use Perceptions on Consumer Meat Preferences

By: Yang, Ruoye; Raper, Kellie Curry; Lusk, Jayson L.
U.S. consumers see retail beef products with “no added hormones” (NAH) labels. However, similar labels appear on pork and chicken products, even though hormone use in their production is prohibited. This study assesses consumer perceptions of hormone use in different livestock species. Using choice experiment data, we then examine the impact of these perceptions on preferences for unlabeled meat products and willingness to pay for NAH-labeled meat products. Results suggest that consumer perceptions of hormone use in production are incorrect. Further, perceptions influence consumer preferences and willingness to pay for unlabeled products versus those with NAH labels.
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January, 2020

Investigating Consumer Participation Decision in Community-Supported Agriculture: An Application of Cumulative Prospect Theory

By: Zhao, Shuoli; Yue, Chengyan
Using the framework of cumulative prospect theory (CPT), we investigate consumers’ decision to participate in community-supported agriculture (CSA) under risk and uncertainty. We analyze discrete choice experiment data using a CPT framework that allows for flexible reference points and individual preference heterogeneity. Comparison between model specifications suggests that the CPT model with the control of all risk parameters generates better goodness of fit than the expected utility model. Market sensitivity analysis further indicates that, while CSA operators benefit from transferring production risk partially to consumers, the level of transferred risk has a great impact on market share.
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January, 2020

Access to Credit and Economic Well-Being of Rural Households: Evidence from Eastern India

By: Kumar, Anjani; Mishra, Ashok K.; Sonkar, Vinay K.; Saroj, Sunil
We evaluate the impact of access to credit on rural households’ annual income using an endogenous switching regression approach, an increasingly popular method of tackling the selection bias issue in impact analyses. Using a large survey of rural households in eastern India, we find that access to credit is strongly associated with rural households’ socioeconomic and demographic characteristics. Additionally, access to credit increases rural households’ economic well-being; nonborrower rural households would benefit the most from access to credit. Access to credit affects recipients heterogeneously, implying that credit policies should be adaptable to different rural household groups.
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January, 2020

Implications of U.S. Immigration Policies for North American Economies

By: Devadoss, Stephen; Zhao, Xin; Luckstead, Jeff
We develop a four-sector (labor-intensive agriculture, capital-intensive agriculture, service & construction, and manufacturing) general-equilibrium model of North American countries to analyze the effects of tighter U.S. immigration policies. Results show that these policies erode the comparative advantage of U.S. labor-intensive agriculture, causing U.S. production and exports to fall and other countries to expand their exports to the United States. In Mexico, low-skilled labor demand in labor-intensive agriculture increases as production rises. The effectiveness of U.S. tighter immigration policies depends on the substitutability between U.S. domestic and undocumented workers. Immigration policies exacerbate the wedge between Mexican low-skilled wage rate and the undocumented wage rate, intensifying the underlying cause for unauthorized entry.
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