Volume 45, Issue 3, September 2020

September, 2020

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.

September, 2020

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.

September, 2020

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.

September, 2020

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.

September, 2020

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.

September, 2020

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.

September, 2020

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.

September, 2020

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.

September, 2020

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.

September, 2020

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.