Agricultural & Resource Economics Theses and Dissertations

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An Economic Study of 128 Dairy Farms on the Upper Eastern Shore of Maryland
(1938) Smith, Carl B.; DeVault, S.H.; Hamilton, A.B.; Agricultural & Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
This study analyzes the second year's survey or 128 dairy farms, representative of the dairy industry on the Upper Eastern Shore of Maryland. This area, which includes Cecil, Kent, Queen Anne's, Talbot, and Caroline counties, is a part of the Philadelphia Milk Shed.
A Calculus of Efficiency for Public Goods: The Case of Public Outdoor Recreation
(1972) Ulfat, Abderrahman; Tuthill, Dean F.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
The characteristics of public outdoor recreation as a public good are ascertained. A cost-benefit analysis is applied which ensures efficiency, while allowing for the pecuniary and technological externalities that exist in the development of outdoor recreation resorts. A total willingness to pay technique is utilized to approximate the consumer's valuation of benefits from recreation. Essential to the technique is the derivation of total willingness to pay curve which parallels the demand curve for private goods. Total willingness to pay is used instead of consumer's surplus, because the latter is associated with a market price which is not determined for public outdoor recreation. Since the total willingness to pay curve is a function of income distribution, once derived, the curve can be adjusted to rid the analysis of income distribution bias. The adjustment helps achieve equity in the allocation of recreational resorts. Fort Frederick State Park provided a case of application for the technique. A sample survey conducted in the Fort was the basis for the derivation of a total willingness to pay curve. The curve shows the relation between expenditures incurred, in time and money, to visits at Fort Frederick. The rates of growth for expenditures, income and population were the basis for the simulation of the total willingness to pay up to the year 2000. Integration of the areas under the simulated demand curves was an approximation of the future willingness to pay or benefits derived from recreational experience at the Fort. After dividing the discounted value of benefits by the estimated costs of developing the Fort, a benefit-cost ratio was obtained, which was a quantitative endorsement in favor of the development of Fort Frederick.
The Attitudes of Volunteer Leaders in Cecil, Harford and Kent Counties, Maryland Toward Involvement of Handicapped in 4-H Programs
(1982) Coleman, Bernardine Marie; Booth, Nan; Agricultural & Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
The purpose of this exploratory study was to determine if volunteer 4-H leaders in Cecil, Harford, and Kent Counties in Maryland were receptive towards involvement of handicapped youth in 4-H programs and if training was needed prior to program implementation. Seventy-four volunteer leaders in the three counties surveyed returned completed mail questionnaires. An attitude rating scale was used to assess leaders attitudes toward involvement of handicapped youth in 4-H programs. Demographic and personal data were requested in Part II of the survey instrument. Frequency distribution and the chi-square test were used to analyze data. Level of significance was set at .05. The majority of leaders had positive feelings about the involvement of handicapped youth in 4-H programs but felt training was needed before involvement took place. Significant relationships were found between age and the attitudes concerning, l) involvement of handicapped youth as being a good experience for other 4-H members, 2) handicapped youth being able to participate adequately in 4-H programs, 3) 4-H being a help to mentally retarded youth and, 4) the belief that other groups were meeting the needs of handicapped youth. Significant relationships were also found between education and the attitude concerning, l) involvement of handicapped youth as being a good experience for handicapped youth, 2) feeling comfortable with emotionally handicapped, educable and trainable mentally retarded children and, 3) having adequate training to work with handicapped youth.
THE ECONOMICS OF AGRICULTURAL LABOR EXCHANGE WITH EVIDENCE FROM INDONESIA
(2004-03-02) Gilligan, Daniel Orth; Lopez, Ramon E; Agricultural and Resource Economics
In agricultural labor exchange, farmers temporarily pool their labor into teams and complete a task on each team member's plot in succession. Labor time is exchanged between team members under strict reciprocity and without pay. The use of agricultural labor exchange in developing countries is widespread, but has received little attention from economists. This dissertation investigates the motivation for the formation of labor exchange teams by considering the individual farmer's decision to participate. The analysis focuses on the two most prominent motivations for labor exchange: credit and labor market imperfections and the technological benefits of teamwork. A theoretical model of demand for labor exchange under factor market imperfections generalizes existing models of the organization of agricultural production by allowing for returns to teamwork and labor exchange. This generalization accounts for empirically relevant modes of production that were previously ruled out. The model establishes positive marginal returns to teamwork as a necessary condition for labor exchange when non-household labor exhibits moral hazard. The empirical analysis tests the implications of the model using primary data on agricultural households from Indonesia. Production function estimates demonstrate positive returns to teamwork for a sample of rice and corn farmers, establishing the necessary condition for labor exchange. Estimates of the farmer's decision to participate in labor exchange subject to unobserved working capital constraints are estimated for alternative constraint status assignment rules and via the EM algorithm. Results show that the effect of working capital holdings on the probability of participating in labor exchange has the inverted-U shape predicted by the model for working capital constrained households. Also, labor exchange use is responsive to wages in the paid labor market, and is constrained by the local distribution of land and crop choice. These findings imply that labor exchange operates in conjunction with paid labor markets; that labor exchange is a source of productivity growth for poor capital constrained farmers; and that the institution of labor exchange is likely to persist much later into the process of development than suggested by previous studies.
Using Tontines to Finance Public Goods: Experimental Evidence
(2004-04-20) Price, Shannon; List, John A; Agricultural and Resource Economics
Relying upon voluntary contributions for public goods provision generally results in the under-provision of the good relative to first-best levels due to the free-rider problem. Taxation/allocation schemes have been designed which solve the free-rider problem, but are too complex to implement. Lotteries and auctions are frequently used to fund public goods, as they diminish the incentive to free-ride. This thesis examines the use of a tontine to finance public goods. I will demonstrate that the tontine, a life-contingent annuity with survivorship benefits, maintains many of the properties of the single fixed-prize lottery. Additionally, I propose that the tontine outperforms the single fixed-prize lottery with symmetric, risk averse agents via some analogue of the Rothschild/Stiglitz effect. Laboratory experiments lend support to both of these conjectures. The results suggest that the tontine can be a more effective mechanism than the single fixed-prize lottery for increasing public goods provisions above voluntary levels.
Tenure Security, Land Markets, and Household Income: Procede and the Impact of the 1992 Reform in Mexico
(2004-04-27) Bresciani, Fabrizio; Gardner, Bruce L; Agricultural and Resource Economics
In 1992, the Salinas administration launched a major reform liberalizing several aspects of Mexico's ejido sector. The reform is to be understood as a major effort at introducing and enforcing clearly defined property rights in Mexico's agrarian landscape. Compared to the private sector, the ejido sector was characterized by a higher rate of poverty and a higher labor to land ratio. A basic proposition is that weak property rights were an underlying cause of that gap. As an implementing tool, a program of land rights certification and registration, Procede, was launched in 1993. A key objective of the reform was to improve the efficiency of the ejido factor markets, raise farm productivity, and increase household income. Activation of land markets was instrumental in the short term to that objective while out-migration from ejido communities was seen as an inevitable outcome of the adjustment process. This research analyzes the Procede's impact on the ejidos' land rental markets and on the sources of household income. The empirical analysis starts by examining how the program was delivered to the ejido communities and its acceptance by the ejidatarios. It then studies participation in land leasing markets and the Procede's influence on the amount of land transacted in the rental market. The impact that the Procede has had on farm, non-farm, and agricultural labor household income is then estimated. It is found that although the Procede has indeed helped ejido land markets to work better, several institutional factors are still a limiting factor in transferring land from less to more productive farms. Ejido households have began a process of diversification of their income sources as a result of the Procede, signaling that improved tenure security has raised the return to uses of labor off the farm relative to on farm uses. Local agricultural labor markets have become a more important source of income, as well as non-farm employment in non-agricultural activities. Finally, it is found that the criteria followed in delivering the Procede to the ejido communities responded more to the interests of the bureaucracy entrusted with the program than to social welfare concerns.
A GENERAL MODEL OF BARRIER ISLAND EROSION MANAGEMENTWITH APPLICATION TO OPTIMAL RESPONSE UNDER SEA LEVEL RISE
(2004-04-29) Landry, Craig Elliott; McConnell, Kenneth E; Agricultural and Resource Economics
This dissertation lays out a conceptual model for managing beach erosion on barrier islands. Households affected by erosion management are identified as beach visitors and coastal homeowners. The returns from beach quality accruing to beach visitors are assessed via travel cost theory, combining revealed preference and contingent behavior data, while the returns from beach quality accruing to coastal homeowners are assessed using hedonic price theory and data from multiple housing markets. An optimal control model is formulated, which takes into account (i) distinct beach user groups, (ii) joint services of beaches (both recreational and loss-mitigating), (iii) active and passive beach management options, (iv) costs of beach maintenance, and (v) the dynamic motion of beach quality. Optimality conditions define efficient beach nourishment operations, as well as the optimal terminal time for active management (i.e. beach nourishment) on barrier island beaches. Empirical results illustrate the optimal beach width for a particular site and the schedule of nourishment operations detailing the amount of sand to be placed on the beach in each time period. The analysis presents estimates of the terminal time of active management for a particular site, and how the terminal time varies with (i) the rate of sea level rise, (ii) the value of threatened coastal property, and (iii) the magnitude of fixed beach nourishment costs.
Learning-by-Doing and Contracts in New Agricultural Industries
(2004-05-24) Choiniere, Conrad Joseph; Lichtenberg, Erik; Agricultural and Resource Economics
The dissertation develops a theoretical model to examine the effects of limited liability contracting on learning-by-doing and capital investment within a new agricultural industry. The theoretical model applies to many new bio-based industries, where novel crops are being used to produce goods, such as chemicals and energy, which would not be considered traditional agriculture. Limited-liability contracts create an environment of moral hazard in learning investment and adverse selection in the production of the intermediate good. These two features of the contracting environment present difficulties for the principal to benefit from the learning-induced cost reductions realized at the intermediate stage of production. Thus, the principal under-invests in the industry and requires less of the intermediate good. Reduced feedstock orders decrease the incentives for the agent to invest in learning, and so the ultimate cost of production of the intermediate good is higher than optimal. The dissertation adapts the theoretical model to construct a simulation of investment and production decisions within an industry for the generation of electricity using biomass. The results of the simulation show that an industry formed around limited liability contracts realizes project scales 25-30% smaller than optimal. Learning-induced cost reductions in the production of biomass are 20% less than predicted by engineering analyses. Limited-liability contracts raise the price paid by the principal for the feedstock by 25% above optimal. The analysis reveals that the price of electricity necessary for a project to break even is 5% higher under limited liability contracts. Sensitivity analysis illustrates that the problem of underinvestment increases under conditions favorable to grower learning. A capital subsidy paid to processors that invest in technology encourages over-investment in capital relative to feedstock utilization. The Renewable Energy Production Credit or a feedstock subsidy paid to growers increase project scales by about 30%, yet they are still 20% smaller than optimal. These subsidies do not have a significant impact on the price of the feedstock to the processor. The government may seek to explore policies that encourage forward vertical integration in the industry.
A Least-Cost Mechanism to Achieve Agricultural Income and Conservation Targets under Asymmetric Information
(2004-11-23) Sheriff, Glenn David; Chambers, Robert G; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Two policy goals dominate United States' agricultural programs: voluntary land retirement for environmental purposes and countercyclical income support. Traditionally, these goals have been pursued with separate policies. This policy separation is efficient with perfect information regarding farm productivity. A more realistic assumption, however, is that farmers have better information regarding their own productivity than the government. The focus of the dissertation is to analyze least cost agricultural policy with this type of asymmetric information. I first use a mechanism design framework to show that it is optimal to have a combined income support-land retirement program rather than separate programs. For land retirement, farmers have an incentive to overstate productivity in order to receive a higher rental payment. For income support, farmers have an incentive to understate productivity to receive a higher income support payment. With high output prices, the first effect dominates. With low prices, the second dominates. Farmers' ability to use private information to their advantage increases the cost to the government of reaching its targets. If contract commitment takes place when output prices are uncertain, the two incentives can countervail each other, reducing the cost of the policy to the government. In the second part of the dissertation, I extend the literature by showing how one can implement the policy using actual data. I conduct a numerical simulation to determine the exact payment and land set aside for each farmer. To calibrate the simulation, I apply stochastic frontier analysis to a data set of US farmers. I thus obtain consistent estimates of the key determinants of the contracts: the farm profit function and the probability distribution of profitability levels across the sector. Simulation results show that unlike current programs, the least cost contract is likely to involve pooling. Farmers with different profitability levels receive identical expected payments for idling identical acreage. The countervailing incentives created by the least-cost policy almost eliminate the information advantage of farmers, significantly reducing cost relative to current programs.
Public intervention and household behavior.
(2005-02-09) Djebbari, Habiba; Alberini, Anna; Smith, Jeffrey A.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
How does the distribution of power within the household affect the nutrition of its members? In 1998, the largest social program in rural Mexico (PROGRESA) designed a random experiment for the purpose of evaluation. Exploiting the experimental nature of the data, I estimate calorie demand equations based on the predictions from different models of household behavior. There are three main findings in the first chapter. First, I reject the income pooling restriction and the Pareto-efficiency assumption for the nutrition decisions of families assuming that only the head of household and his spouse participate in decision-making. Second, I reject the income pooling restriction in the context of the extended family, for which all income earners contribute to decision-making. Third, I show that changing the wife's non-labor income has little effect on the levels of food consumption in households with two decision-makers. In the extended family setting, I find that, for a given level of household income, an increase in the number of income earners is associated with a decrease in calorie consumption. Yet, when a female household member starts earning income, family calorie consumption increases. When it is a male household member who starts earning income, family calorie consumption decreases. In the second chapter, we investigate heterogeneity in program impact for the Mexican social program PROGRESA, which is a means-tested conditional cash transfer program implemented in rural regions of the country. The "common effect" model in program evaluation assumes that all treated individuals have the same impact from a program. Does the program have the same effect on everyone? Will some groups benefit more from the program than others? The design of PROGRESA provides a theoretical motivation for exploring heterogeneity in program impacts. We examine the program targeting mechanism and find heterogeneity in the eligible population along the criteria used for beneficiary selection. We also investigate the overall heterogeneity of program impacts, which includes both observed and unobserved heterogeneity. Experimental data are sufficient to identify mean program impacts or impacts on subgroups, but do not identify unobserved heterogeneity in impacts. Using a non-parametric technique, we find evidence against the "common effect" model. This result does not rely on any assumption and thus is particularly strong evidence of heterogeneous treatment effects. Additional assumptions allow us to further analyze the distribution of impacts.
ON THE EVALUATION OF CONSERVATION COST-SHARING PROGRAMS. AN APPLICATION OF A MONTE CARLO EM ALGORITHM
(2005-06-22) Smith-Ramirez, Ricardo; Lichtenberg, Erik; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
The 2002 Farm Bill has placed a great emphasis on programs cost-sharing the adoption of conservation practices on working land. Empirical evaluation of these programs, however, has received little attention. Reasons explaining this gap in the literature may be the voluntary nature of participation and the multi-objective quality of these programs, which complicate econometric analyses. An adequate assessment of cost-sharing programs requires the modeling of multivariate responses that frequently involve limited-dependent variables and other types of unobserved information. In this study I formulate an algorithm that solves such a problem and then I use this tool to evaluate two cost-sharing programs. I begin this Dissertation by formulating a Monte-Carlo Expectation-Maximization (MCEM) algorithm that solves a variety of models involving unobserved information in systems of linear-in-parameter equations. Subsequently, I use the MCEM algorithm to solve a multiple adoption model and evaluate the extent at which cost-sharing payments have influenced cropping operations in Maryland. I find that soil conservation practices expand cropping both at the extensive and the intensive margin. I also prove that farmers implement practices that provide on-farm benefits preferentially. Finally, I show that cost sharing has a perverse effect: since farmers prefer to implement practices that provide private benefits, the expansion in cropping induced by cost-sharing those practices reduces the extent at which practices that provide public goods are used. In a second empirical analysis, I analyze policy implications of ignoring nutrient dynamics in the targeting strategy of programs cost-sharing soil fertility recovery. The analysis focuses on the phosphorus fixation problem in soils derived from volcanic ash. Using an optimal control framework, I conclude that, conditional on individual characteristics, the optimal fertilization path leads either to follow a low-yield fertilization strategy or to maintain a high-yield phosphorus level in the soil. Empirical estimations on Chilean data show that program impact differs among the two regimes and that program efficiency can be improved by targeting preferentially those farms financially or technologically constrained on the low-yield fertilization path instead of allocating the funds conditional on whether or not phosphorus stock is below or above an exogenously determined target level.
Essays in Natural Resource Economics
(2005-07-28) Price, Michael; McConnell, Kenneth E; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Allocation decisions in many natural resource markets are governed by mechanisms designed to alleviate information asymmetries and other types of market imperfections. For example, the crew in most commercial fisheries is remunerated via a lay system of payments designed to alleviate a potential team agency problem. The four essays in this dissertation explore the use of mechanisms in natural resource and environmental economics. The first essay examines the lay system of payments in commercial fisheries. Under the lay system, the harvesting crew is remunerated via a share of total vessel revenues less a portion of trip expenditures. The essay has two goals. First, the essay provides an explanation for the lay system as an incentive mechanism to alleviate a potential team agency problem. This explanation of the lay system explains anomalies that are at odds with the theory of pure risk sharing. Second, the essay shows the implications of the lay system for econometric modeling of fisheries and for understanding firm behavior. The second and third essay, examine bidder behavior in auctions for cutting rights of standing timber in British Columbia. The second essay provides an empirical framework for estimating treatment assignment of observations given data on outcomes. The framework is used to explore whether bidder collusion was evident in a data set of nearly 3,000 auctions (over 10,000 individual bids) for cutting rights of standing timber in British Columbia from 1996-2000. The third essay examines the role of ex ante uncertainty over private values and ex post resale opportunities on bidder behavior. The essay extends the theoretical work of Haile (2003) by allowing for risk-averse bidders. The theoretical model is tested by examining both field data and experimental data from the lab. The fourth essay provides a formal model of individual contribution decisions under a tontine mechanism. The essay analyzes the performance of tontines and compares them to another popular fundraising scheme: lotteries. Individual contribution decisions under the optimal tontine, an equivalent valued single-prize lottery, and the voluntary contribution mechanism are compared using a controlled laboratory experiment.
Valuing Climate Amenities In Brazil Using A Hedonic Pricing Framework
(2005-08-04) Mueller, Valerie Ann; Alberini, Anna; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
In this dissertation, I measure the amenity value of climate in Brazil. The value is useful for the measurement of one consequence of greenhouse gas emissions, climate change. A basic hedonic framework shows that "good" climate is of value to workers and consumers of housing. Workers accept lower wages and pay greater housing rents (all else equal) to work and live in a city with better climate. To measure the impact of reducing emissions, I estimate the variations in wage and rents attributable to cross-sectional differences in climate. Studies typically evaluate the effect of variations in climate on housing prices or income. They do not account for the effect of climate on firms' costs, however. If climate affects production, then the value of a marginal change in the climate amenity is the difference between the effects on housing price and wages. In Chapter 2, I describe this result from the Roback model (1982). Empirical results from hedonic studies suggest that there is still no consensus on the impact of climate change. One potential cause of the discord is the correlation between climate and amenities omitted from models. Estimates suffer from bias due to data limitations and incomplete information on preferences. A second cause is the correlation of amenities included in the model. Consequences of multicollinearity are implausible and imprecise parameter estimates. The severity of the impact of multicollinearity will depend on the model and dataset. In Chapters 5 and 6, I perform sensitivity analyses on the rent and wage models and show the unreliability of climate parameter estimates. Hedonic studies also ignore the potential correlation between unobservables in the rent and wage equations. By contrast, I estimate the equations as a system of seemingly unrelated regression equations. In Chapter 7, I compare the results from the single-equation and system methods. I find that the values of climate amenities obtained from the single-equation method are larger in magnitude. The overestimation of amenity values has implications for evaluating the benefits of an improvement in environmental quality.
USING PREDICTED MARKET VALUES FOR ECOLOGICALLY VALUABLE NATURAL LANDS IN LAND PRESERVATION PROGRAM OPTIMAL TARGETING SCHEME: APPLICATION TO MARYLAND'S GREENPRINT PROGRAM
(2005-08-10) Palm, Karen; Lynch, Loretta; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Thirty-eight U.S. states have programs to preserve land with ecological value yet few consider land acquisition costs in their selection criteria although targeting could improve the efficiency of these programs. To demonstrate this, a hedonic model is estimated on land characteristics including those that contribute to ecosystem services from recent arms' length market transactions. The estimated parameters are used to predict market values of parcels greater than 10 acres in three southern Maryland counties. The study compares targeting packages developed through overall benefits optimization, specific benefits optimization, and acreage optimization subject to projected budgets. The results suggest including market values permits Maryland's GreenPrint program, designed to protect ecologically valuable land, to preserve more acreage among parcels rated "excellent" for ecological characteristics. Comparing unconstrained parcel choice sets with the study's three county, unimproved parcel, and 100+ acre parcel constraints highlights the benefits of developing targeting packages from unconstrained parcel choice sets.
Renewable Resources as a Factor of Production in International Trade
(2005-11-04) Anriquez Nilson, Gustavo Adolfo; Lopez, Ramon E; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This work provides an extensive review of the literature on trade and environmental issues that has been growing since the early 1990s. The gaps in this literature are identified and generalizations are provided from results that are scattered. Next, we contribute to this literature by studying a Ricardian model of trade, in which one of the sectors uses a renewable resource as a factor of production. The contribution lies in the study of trade and welfare through the full horizon of the welfare maximization problem, not relying in equilibrium analysis. This study is divided into small country case and a 2 country - 2 factor model. In the first case, we show how trade prevents extinction, and if the assumption of full open access environmental externality is relaxed the welfare expected results change substantially. In the 2 x 2 model we show that equilibrium is actually not possible invalidating many such analyses existing in the literature. This lack of equilibrium may lead the country that is free from environmental externalities to actually lose with trade vis-à-vis autarky.
The Impact of the Washington Metro on Development Patterns
(2005-12-05) Vinha, Katja Pauliina; Bockstael, Nancy; Cropper, Maureen; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
It is a tenet of urban planning that transportation networks help shape the spatial configuration of cities. In the case of heavy rail systems, a common belief is that building a subway system will promote employment and population density, thereby discouraging urban sprawl and its negative consequences. This dissertation examines the impact of the Washington Metro rail system in 1990 and 2000 on the distribution of employment and population in two counties in the Washington, DC metropolitan area--Montgomery County and Prince Georges County. It asks whether employment and residential construction increased more rapidly near Metro rail stations than in other parts of the metropolitan area. It also examines the impact of the Metro on the socio-demographic composition of population near Metro stations. Evaluating the impact of the Metro system on employment and population density is complicated by the fact that stations along the Metro line may be located in areas of high population and/or employment density to begin with, or in areas with significant amounts of developable land available. To deal with this issue I use a propensity score matching estimator. The technique is an improvement over the traditional methods of evaluation as it acknowledges the endogeneity of the location of Metro stations. Furthermore, matching estimators relax the functional form assumptions of OLS estimators. The research finds statistically significant impacts on employment and overall development density from proximity to a Metro station and does not find consistent impacts on population or dwelling unit densities. However, for Prince George's County a negative impact on the percentage of the population belonging to a minority is found. The results also suggest that impacts on development are greater closer to the station than farther away and that they are greater the longer the stations have been in operation.
Factors Affecting Agricultural Expansion in Forest Reserves of Thailand: The Role of Population and Roads
(2006-04-27) Puri, Jyotsna; Cropper, Maureen L; Bockstael, Nancy; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
In this dissertation, I examine the role of population and transportation costs in determining agricultural expansion in 670 villages located in Forest Reserves of Thailand, over the period 1986-1996. Specifically, I examine the role of population and transportation costs as drivers of agricultural decisions regarding crop adoption and area planted, and in determining the intensity of cultivation and agricultural expansion. I also contrast the impact of these variables on two groups of villages in Forest Reserves - villages whose residents 'have no secure property rights' and those whose 'land rights are ambiguous'. I examine Feder et al.'s (1988) conclusions about the importance of property rights in Thai forest reserves and find that there is some evidence supporting their conclusions in this study. Differences in property rights account for some difference in the agricultural decisions of the two groups of villages, but that the nature of data does not allow a sharper distinction. Results reported in the study are consistent with other studies of the area. The study suggests that decisions regarding crop adoption and crop area are sensitive to population but the magnitudes of impact are small. Lack of significance of transport costs in determining cropping decisions suggests that rural road building programs will not necessarily promote deforestation in the study area, contrary to evidence in other parts of the world. This is particularly important given the large number of Forest Reserve residents in Thailand, and the fact that, Forest Reserves are the last bastions of forests, and consequently of biodiversity, in Thailand. One policy implication of this is that investments in roads that help to increase access to markets and aid poverty alleviation may not have the deleterious effects on forests that would otherwise be expected.
Self-regulation, productivity, and nonlinear pricing. Three essays on quality production in agricultural markets
(2006-05-16) Zago, Angelo; Chambers, Robert G.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
In this dissertation I analyze the quality choices of a group of producers. In the first essay I use mechanism design to study the interaction of asymmetric information and the democratic process in the quality choices of a group of heterogeneous producers facing an opportunity to gain from establishing a reputation for their quality products. I find an asymmetry in the possible equilibria between the high and the low quality majorities. The quality level provided by the group with a low quality majority is lower than the first best, and the minority producers get rents. With high quality majority, if demand and group conditions are favourable, the quality level provided by the group is higher than the first best and the minority's type left with rents. Otherwise, the quality level provided by the group is first best and no rents are left to the low-quality producers in the minority. The second essay proposes a methodology to measure the characteristics of intermediate products when quality is multidimensional. It uses a general representation of the multioutput technology via directional distance functions and constructs quality indicators based on differences. The quality indicators may be used to evaluate firms' output taking into account the whole set of quality attributes. I explore the relationships among the different quality attributes and the yields by a systematic investigation of the disposability properties of the technology. In addition, I show how aggregate quality may vary with the production level. The third essay designs an optimal payment system for a group of producers implementing it empirically. In the essay I show how to implement the first best through higher prices for better quality commodities, deriving the optimal pricing schedule. I take into account producers' heterogeneity by modelling inefficiency and illustrating how technical efficiency interacts with producers' ability to produce output for a given level of inputs and hence affects revenues. The technology and the technical efficiency of producers are then estimated with a stochastic production function model. The estimation results are then used to simulate the pricing scheme.
Essays in Behavioral and Experimental Economics
(2006-05-18) Alevy, Jonathan Eliot; Chambers, Robert G.; List, John A .; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Behavioral economics aims to provide more realistic psychological foundations for economic models. Experimental methods can contribute to this effort by providing the ability to identify causal processes and motivations that can be confounded in field settings. The essays in this dissertation examine three critical issues in behavioral economics using lab and field experiments. The first two essays examine two core elements of economic rationality; expected utility theory and Bayesian updating. The essays consider, respectively, ambiguity, and information cascades, in environments in which limitations of the theories can be studied. The third essay examines a contracting game in which other-regarding preferences are explicitly considered. Decision making under ambiguity has been of interest to economists since the 1920's (Knight (1921), Keynes (1921)). It has received renewed attention due to the work of Ellsberg (1961). In the first essay I examine the stability of ambiguity attitudes using a within subject design across individual choice and market environments. The evidence favors stability, with attitudes elicited from individuals strongly correlated with trading decisions in asset markets. The comparative ignorance hypothesis of Fox and Tversky (1995) developed for individual choice is also supported in the market setting shedding light on the causes of ambiguity aversion. Previous empirical studies of information cascades have used either naturally occurring data or laboratory experiments. In the second essay attractive elements of each line of research are combined by observing market professionals from the Chicago Board of Trade (CBOT) in a controlled environment. Analysis of over 1500 decisions suggests that CBOT professionals behave differently than a student control group. Professionals are better able to discern the quality of public signals and their decisions are not affected by the domain of earnings. These results have important implications for market efficiency. The contracting game studies both one and two principal settings. With one principal, behavior is consistent with a reputational model in which principals are successful in structuring contracts to insure against defections by agents imitating inequity-averse behavior. The complexity of the two principal setting creates more difficulties, but there is evidence that reciprocity between principals partially mitigates the adverse payoff consequences.
Methodology and Estimation of the Welfare Impact of Energy Reforms on Households in Azerbaijan
(2006-06-07) Klytchnikova, Irina; Just, Richard; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation develops a new approach that enables policy-makers to analyze welfare gains from improvements in the quality of infrastructure services in developing countries where data are limited and supply is subject to interruptions. With the tight budgetary constraints that usually exist, it is important to be able to prioritize public sector investments on the basis of expected benefits. However, policy analysts are rarely able to measure the benefits of improving the quality of infrastructure services, even though they may yield large welfare benefits. The most frequently cited reason for failures to carry out such welfare analysis is the scarcity of data on service quality. The main contribution of this dissertation is a new model of welfare evaluation of changes in the quality of infrastructure services. This model is estimated using the existing data from household energy surveys or data from the energy sections of multi-purpose household surveys. Potential applications of this model range from ex-ante reform evaluation to ex-post monitoring of policy outcomes, which makes this approach a useful contribution to policy analysis and to the literature on welfare evaluation of quality changes in infrastructure. An application of the proposed model in the former Soviet Republic of Azerbaijan demonstrates how this approach can be used in welfare assessment of energy sector reforms. The planned reforms in Azerbaijan include a set of measures that will result in a significant improvement in supply reliability, accompanied by a significant increase in the prices of energy services so that they reach the cost recovery level. Currently, households in rural areas receive electricity and gas for only a few hours a day because of a severe deterioration of the energy infrastructure following the collapse of the Soviet Union. The reforms that have recently been initiated will have far-reaching poverty and distributional consequences for the country as they result in an improvement in supply reliability and an increase in energy prices. The new model of intermittent supply developed in this dissertation is based on the household production function approach and draws on previous research in the energy reliability literature. Since modern energy sources (network gas and electricity) in Azerbaijan are cleaner and cheaper than the traditional fuels (fuel wood, etc.), households choose modern fuels whenever they are available. During outages, they rely on traditional fuels. Theoretical welfare measures are derived from a system of fuel demands that takes into account the intermittent availability of energy sources. The model is estimated with the data from the Azerbaijan Household Energy Survey, implemented by the World Bank in December 2003/January 2004. This survey includes an innovative contingent behavior module in which the respondents were asked about their energy consumption patterns in specified reform scenarios. Estimation results strongly indicate that households in the areas with poor supply quality have a high willingness to pay for reliability improvements. However, a relatively small group of households may incur substantial welfare losses from an electricity price increase even when it is combined with a partial reliability improvement. Unlike an earlier assessment of the same reforms in Azerbaijan, analysis in this dissertation clearly shows that targeted investments in improving service reliability may be the best way to mitigate adverse welfare consequences of electricity price increases. Hence, policymakers should focus their attention on ensuring that quality improvements are a central component of power sector reforms. Survey evidence also shows that, although households may incur sizable welfare losses from indoor air pollution when they rely on traditional fuels, they do not recognize indoor air pollution as a factor contributing to the high incidence of respiratory illness among fuel wood users. Therefore, benefits may be greater if policy interventions that improve the reliability of modern energy sources are combined with an information campaign about the adverse health effects of fuel wood use.

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