This article develops an economic model to analyze how the risk of water shortages affects farmers' land irrigation decision and how the priority-based water sharing arrangement redistributes such a risk among farms with different water rights priorities. The analysis brings together an array of comprehensive data files on irrigation rights, water supplies, and agricultural land use from eastern Idaho. Results indicate that a more left-skewed distribution of streamflow significantly discourages land irrigation among farmers except the most senior rights holders. The priority-based water sharing arrangement redistributes the macroscale risk of water shortages and thus exposes farmers of different water rights priorities to heterogeneous levels of risk: senior water rights holders are affected the least and such a risk is instead passed mostly on to junior water rights holders. The role of water rights in risk redistribution is more significant when the probability distribution of water shortage risk is asymmetric rather than symmetric. The historical development pattern of water rights influences how the priority of water rights takes effect on land irrigation decision.
The relationship between farm size and productivity has long been a topic of debate in development economics. Using farm-level panel data from 2003 to 2013, we investigate the relationship between maize yield and farm size in Northern China. After controlling for farm-specific characteristics, we restore a mild U-shaped relationship between maize yield and cropping area from the apparent inverse U-shaped curve. This suggests that an inverse farm size-productivity relationship persists for most small-sized farms. Further analyses demonstrate that farmer input choice between labor and capital is likely to smooth the non-linear farm size-productivity relationship, with capital use being more likely to affect the farm size-productivity relationship at a larger scale. The findings imply that subsidizing farmers to rent land without helping them become better-equipped could result in resource misallocation towards larger farms using less-efficient labor-intensive technologies.
Using data from the Living Standards Measurement Study in Malawi, we examine the spillover effects of tobacco farms on children's labor supply, education, and health. To address potential endogeneity, the share of tobacco farms in a community is instrumented by the change in tobacco buyers following termination of the intermediate buyer system. We find that, as tobacco cultivation is labor-intensive, children in communities with more tobacco growers spend more time as casual laborers and are less likely to advance to the next grade. Adverse health effects, measured by the likelihood of suffering from illnesses related to green tobacco sickness, are estimated to be larger than previously documented. This affects not only "working-age" children but also children too young to work on tobacco farms. Moreover, exposure to large-scale tobacco cultivation is estimated to reduce the height-for-age z-score of children aged 6-60 months. These findings highlight the importance of raising awareness and taking measures to protect children against green tobacco.
The decline of European honey bees (Apis mellifera) has been a prominent part of supporting pollinator conservation among the public and conservation efforts, even while honey bees are not native to North America and may compete for resources with native insect pollinators. However, little is known about what distinguishes support for native insect pollinators, including solitary bees, the majority of native bees, which provides use and non-use values distinct from honey bees even though some natives have faced even more precipitous die-offs. Using data collected from the general public and beekeepers in Louisiana, we adopt a contingent valuation method to investigate the value of conserving solitary bees. Results suggest modest to moderate positive willingness to pay for solitary bee conservation, and possibly higher willingness to pay among honey beekeepers versus the general public. Significant heterogeneity exists between the general public and beekeepers in terms of their knowledge and attitudes of honey bees and other pollinators.
Collective labels are widespread in food markets, and are either separated or nested with private brands-the latter are known as "nested names". We propose a model to explain the rationale of nested names, with collective labels being effective in reaching unaware consumers, while individual brands help firms to reach aware consumers. We also incorporate decision-making within the group of producers joining collective labels, taking into account their heterogeneity in providing quality. We show that nested names emerge when consumers become more aware of information on the label's quality, as well as when producers become more heterogeneous. Welfare may decrease, however, when the group switches to nested names because they may lead to lower quality incentives for the majority of producers. Our results also provide insights into the historical and recent trends in food industries, such as within-label differentiation and label fragmentation, as well as their respective welfare implications.
We examine the role of teachers in explaining the urban-rural gap in educational outcomes. Using a large panel data set of students and teachers collected from China and explicitly controlling for the endogeneity of prior student academic achievement, we find that the urban-rural difference in teacher effects contributes in large part to the observed urban-rural gap in student academic achievement. In other words, if rural teachers were of the same quality as urban teachers, the urban-rural gap in student academic achievement would be reduced substantially.
The presence of hypothetical bias (HB) associated with stated preference methods has garnered frequent attention in the broad literature trying to describe and understand human behavior, often seen in environmental valuation, marketing studies, transportation choices, medical research, and others. This study presents an updated meta-analysis to explore the source of HB and methods to mitigate it. While previous meta-analysis on this topic often involves a few dozen articles, this analysis includes 131 studies after reviewing over 500 published and unpublished articles. This enables the inclusion of several important factors that have not been investigated before. These include relatively recent willingness to pay elicitation methods such as choice experiments and the Turnbull lower bound estimator. Newly emerged HB reduction techniques such as consequentiality and certainty follow-up treatments are also included. For explanatory variables that have been examined in previous studies, this analysis does not always report consistent findings. In particular, holding everything constant and contrary to commonly-held beliefs, the method of auction does not offer much reduction to HB compared to more conventional methods such as a referendum vote. However, choice experiment, cheap talk, consequentiality and certainty follow-up all significantly contributed to explaining and mitigating the magnitude of HB. These results help practitioners to understand HB's presence and choose appropriate methods for amelioration. The framework established through this study also enables future analyses targeted at understanding variations built upon one or multiple HB mitigation techniques.
We develop a theoretical model of optimal hedging that nests expected utility and expected target utility theories. We use this model to characterize optimal hedging with and without reference price dependence. The model's theoretical predictions are tested with a unique database consisting of every forward contract written with a major grain marketing firm by Iowa corn producers over a five-year period. Our results suggest that a current December futures price higher than a reference price triggers hedging activity. A likely candidate for producers' reference price is a rolling average of the current futures price. We then use trading activity implied by the producers to determine if they benefit from the way they hedge. The evidence is mixed. Finally, we compare the producer forward contract data to the only publicly available data on producer hedging: The Commodity Futures Trading Commission Disaggregated Commitment of Traders Report (DCOT) for Short Hedgers. A hedge ratio constructed from the open interest in new futures contracts of the DCOT report is highly correlated with the producer hedge series in the Iowa data, providing evidence that DCOT data represent farmers' hedging behavior reasonably well. This work has important implications for future research that uses the DCOT data, and provides new evidence about producers' hedging behavior that marketing specialists and extension agents can use to enhance their educational efforts related to risk management.
In 2010, 21% of the total food available for consumption in the United States was wasted at the household level. In response to this waste, a number of counties and U.S. localities have instituted policies (disposal taxes) directed toward reducing this waste. However, currently there is no federal food-waste disposal tax. The aim of this paper is to establish a theoretical foundation for household food waste, and based on this theory, to determine the social-optimal food-waste (disposal) tax, along with a government incentive. The theory unravels the interrelation between social food insecurity and external environmental costs, which is not generally considered by households when they waste food. A social-optimal disposal tax and government incentive involve Pigovian mechanisms and governmental expenditures. For a zero level of food waste, the social-optimal disposable tax and government incentive approach infinity.