Agricultural & Resource Economics Theses and Dissertations

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AGRICULTURAL POLICY AND PRODUCTION IN THE PRESENCE OF RISK AND INCOMPLETE FINANCIAL MARKETS
(2017) Voica, Daniel Constantin; Chambers, Robert G; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Economic interventions are rarely free of debate, hence it should come as no surprise that governmental agricultural policies are usually surrounded in controversy. A topic of debate in the World Trade Organization (WTO) is how to maintain the fragile balance between two opposite objectives: the need of governments to protect their farmers and the need for a subsidy system which does not distort farmers’ production decisions. Lump-sum transfers to farmers are commonly believed to affect the production choices of farmers in the presence of risk and uncertainty. Chapter 1 shows that if farmers have off-farm investment and employment opportunities, production decisions are decoupled from lump-sum subsidies in the presence of risk and uncertainty. The results are reconciled with existing results by showing that previously identified production adjustments are portfolio adjustments. Chapter 2 contributes to the debate surrounding agricultural policy support for farmers and the potential distortionary effects of area payments. Area payments can affect production decisions via land allocation. I show theoretically how the timing of these payments can weaken the link between area payments and production. The theoretical predictions are supported by the empirical findings. Chapter 3 explores the trade-off between health and food consumption, and the effectiveness of health interventions such as taxing unhealthy foods. Rational agents maximize utility over health and consumption of healthy and unhealthy foods, while health is a function of discretionary and non discretionary calories and nutrients. Calories are not available for purchase in the market, thus their pricing is derived via a ``household'' production technology used to convert healthy and unhealthy foods into health outcomes. Additionally, consumers face a physiological constraint, a minimum calorie intake, which has further implications in terms of reducing potential health benefits associated with governmental interventions, such as taxing high-calorie foods. The future budget available to consumers depends on the consumption of discretionary calories. The theoretical model is calibrated using financial and consumption data reflecting farmworkers's food consumption in the US.
Agriculture, Environmental Incentive Payments, and Water Quality in the Chesapeake Bay
(2016) Fleming, Patrick; Lichtenberg, Erik; Newburn, David; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Nonpoint sources (NPS) pollution from agriculture is the leading source of water quality impairment in U.S. rivers and streams, and a major contributor to lakes, wetlands, estuaries and coastal waters (U.S. EPA 2016). Using data from a survey of farmers in Maryland, this dissertation examines the effects of a cost sharing policy designed to encourage adoption of conservation practices that reduce NPS pollution in the Chesapeake Bay watershed. This watershed is the site of the largest Total Maximum Daily Load (TMDL) implemented to date, making it an important setting in the U.S. for water quality policy. I study two main questions related to the reduction of NPS pollution from agriculture. First, I examine the issue of additionality of cost sharing payments by estimating the direct effect of cover crop cost sharing on the acres of cover crops, and the indirect effect of cover crop cost sharing on the acres of two other practices: conservation tillage and contour/strip cropping. A two-stage simultaneous equation approach is used to correct for voluntary self-selection into cost sharing programs and account for substitution effects among conservation practices. Quasi-random Halton sequences are employed to solve the system of equations for conservation practice acreage and to minimize the computational burden involved. By considering patterns of agronomic complementarity or substitution among conservation practices (Blum et al., 1997; USDA SARE, 2012), this analysis estimates water quality impacts of the crowding-in or crowding-out of private investment in conservation due to public incentive payments. Second, I connect the econometric behavioral results with model parameters from the EPA’s Chesapeake Bay Program to conduct a policy simulation on water quality effects. I expand the econometric model to also consider the potential loss of vegetative cover due to cropland incentive payments, or slippage (Lichtenberg and Smith-Ramirez, 2011). Econometric results are linked with the Chesapeake Bay Program watershed model to estimate the change in abatement levels and costs for nitrogen, phosphorus and sediment under various behavioral scenarios. Finally, I use inverse sampling weights to derive statewide abatement quantities and costs for each of these pollutants, comparing these with TMDL targets for agriculture in Maryland.
An analysis of regulatory decisions on food-use pesticides under the Food Quality and Protection Act
(2012) Newcomb, Elisabeth Jo; Cropper, Maureen L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
To ensure the safety of older pesticides used in the United States, the EPA required the reregistration of pesticide uses which were first introduced before 1984. Using a dataset of reregistration outcomes for 2722 pesticide uses applied to food crops, I analyze the extent to which these decisions were determined by chronic health risks, pesticide expenditures, and other factors. I find that the dietary health risks associated with pesticides are had greater influence on actions to reduce dietary and occupational exposures than on pesticide cancellations. High population dietary risks are associated with higher rates of pesticide cancellations, though these results are insignificant. There is evidence that the EPA was more responsive to child and infant dietary risks: values above the EPA's threshold of concern were more than 10% more likely to be cancelled than those that were not (significant at the 10% level). The effects of cancer risks on EPA actions are more ambiguous, though this may be due to data limitations. The less safe pesticides are for handlers, the more often they are cancelled, but pesticide safety has a more significant correlation with reentry intervals. A one percent decrease in the safety of a pesticide to handlers predicts a reduction in reentry interval of 1.6 days (significant at the 5% level). Expenditures on individual pesticides have a strong relationship with pesticide reregistration, with an additional half million dollars in expenditures predicting a 2% increase in the probability of reregistration (significant at the 1% level). Expenditures are not so correlated with reentry intervals or changes in pesticide tolerances. After accounting for dietary risk and pesticide expenditures, Monsanto and Dow were most likely to have uses reregistered. Though there was some concern that small crops with low pesticide expenditures would suffer extra cancellations, small crop uses were no more likely to be cancelled than large crop uses. Mentions of individual pesticides in the media had no apparent relationship with the outcome of reregistration decisions.
An Analysis of Sector Allocations in Commercial Fisheries
(2010) Holzer Bilbao, Jorge Gabriel; Olson, Lars; McConnell, Kenneth; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
The formation of harvest cooperatives has recently generated considerable interest among fishermen and regulators as an alternative to other rights-based systems such as individual transferable quotas. Many consider the promotion of self-governance to be essential to more sustainable, equitable and efficient management of commercial fisheries. This dissertation examines the incentives created by the allocation of collective fishing rights as a mechanism for inducing the creation of cooperatives (or sectors). A theoretical model of the fishery characterizes necessary and sufficient conditions for the formation of sectors when harvesters have incomplete information on how to organize collective fishing but instead must learn by doing. The equilibria of the dynamic sector-formation game played by the heterogeneous fishermen shows that sectors may fail to form if permit holders are unfamiliar with cooperative harvesting. Conversely, when sectors do organize, the least skilled fishermen join first and the scope of their cooperation, as given by the number of tasks they choose to coordinate, increases progressively over time until the uncertainty is fully resolved. Profitability, in turn, benefits from enhanced cooperation. I test the predictions of the model using a panel data set from the hook gear segment in the New England Multispecies Fishery to estimate a stochastic output distance function and a technical inefficiency model. The simultaneous estimation of both equations allows the full characterization of the underlying multi-output technology and the assessment of key determinants of technical efficiency such as vessel characteristics, congestion conditions and cooperation. The results show that the least efficient vessels were the first to join the Georges Bank Cod Hook sector in 2004, and present evidence of earlier cooperation among these vessels (i.e. previous to the institutionalization of the group as a sector), hence suggesting familiarity with collective harvesting when joining the sector. Additionally, the resulst demonstrate that technical efficiency was higher for sector vessels than common pool boats during the sector years and increased during this period.
ANALYZING MILLET PRICE REGIMES AND MARKET PERFORMANCE IN NIGER WITH REMOTE SENSING DATA
(2013) Essam, Timothy Michael; Leonard, Kenneth L.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation concerns the analysis of staple food prices and market performance in Niger using remotely sensed vegetation indices in the form of normalized differenced vegetation index (NDVI). By exploiting the link between weather-related vegetation production conditions, which serve as a proxy for spatially explicit millet yields and thus millet availability, this study analyzes the potential causal links between NDVI outcomes and millet market performance and presents an empirical approach for predicting changes in market performance based on NDVI outcomes. Overall, the thesis finds that inter-market price spreads and levels of market integration can be reasonably explained by deviations in vegetation index outcomes from the growing season. Negative (positive) NDVI shocks are associated with better (worse) than expected market performance as measured by converging inter-market price spreads. As the number of markets affected by negatively abnormal vegetation production conditions in the same month of the growing season increases, inter-market price dispersion declines. Positive NDVI shocks, however, do not mirror this pattern in terms of the magnitude of inter-market price divergence. Market integration is also found to be linked to vegetation index outcomes as below (above) average NDVI outcomes result in more integrated (segmented) markets. Climate change and food security policies and interventions should be guided by these findings and account for dynamic relationships among market structures and vegetation production outcomes.
Antidumping Effects in the Presence of Collusion in an Upstream Market: the case of U.S. frozen shrimp imports from Thailand
(2009) Suchato, Ravissa; McAusland, Carol; Horowitz, John K.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Many studies have shown a relationship between antidumping duty and collusion. These studies, however, only focus on collusion in output (downstream) market, i.e. collusion between import competing firms and exporters, or among import competing firms. This dissertation explores how the antidumping duty on downstream goods can affect collusive behavior in an upstream market of exporters whom are sub jected to the duty. Bertrand duopoly model with infinite periods is developed to examine the effect of the antidumping duty on collusive behavior. Under a set of discount rate, whether is influenced by a tariff or the antidumping duty, the exporters will fully cooperate. The unaffected rate might be due to the linearity in input supply and output demand assumptions. Although the discount rate is not suffciently high enough to support the full cooperation, the collusive behavior is still feasible through self-enforcing agreement. With future period self-enforcing agreement, under the antidumping duty, the full cooperation in the initial period that is feasible under a set of the discount rate is called "the restricted full cooperation". The set under free trade that supports the full cooperation is smaller than the one supporting the restricted full cooperation. Therefore, the antidumping duty on downstream goods is pro-collusive in the upstream market. The theoretical result is tested by using Thai shrimp industry data during 1996-2009; the industry has been sub jected to the U.S. antidumping duty since 2005. 2SLS is employed to estimate a system of Thai fresh shrimp supply, the U.S. demand for Thai frozen shrimp, and the mark up equations. Using comparative static in supply approach, with an interaction between fresh shrimp price and rainfall as a supply rotator, the empirical results confirm that the antidumping duty increases the degree of collusion among the exporters in Thai shrimp market at 1 % significant level.
Assessing the Efficacy of NPDES Regulation: Permit Writers' Decisions, Plants' Responses, and Impact of Pollutants on Water Quality
(2008-11-17) Chakraborti, Lopamudra; McConnell, Kenneth E; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This study provides indirect evidence that the Clean Water Act (CWA), implemented through the National Pollution Discharge Elimination System (NPDES) regulation, has been effective in terms of inducing certain 'best practice' responses from the different 'agents' involved in water pollution and its regulation. Given that cost benefit analyses of the CWA have yielded favorable conclusions, the chapters in this dissertation collect empirical evidence on whether NPDES permit writers pay attention to downstream water quality, if plants are sensitive to ambient pollution, and finally if pollutant discharges have an impact on downstream quality. Previous empirical studies incorporating ambient water quality in effluent limit or abatement choice, or pollutant inputs as a determinant of downstream water quality could not be found. These intermediate relationships are studied with Biochemical Oxygen Demand (BOD) as the primary pollutant and hence Dissolved Oxygen (DO) as the main indicator of water quality. Monthly panel data comprising a sample of 100 plants from Maryland, Virginia and Pennsylvania and 79 pairs of (downstream and upstream) water quality monitoring stations over a period of about 14 years, from 1990 to February 2004, was used. Positive evidence on efficacy of the NPDES regulation is found in all the three aspects investigated. On how regulation is implemented: if average water quality prevailing during past permit cycle is increased by one percent, then limits on BOD concentration (quantity) in the 'new' cycle would be made less stringent by 0.617 (0.322) percent. On how polluters respond to downstream water quality: if average DO prevailing during past three years is reduced by one percent, then concentration (quantity) discharges relative to effluent limits is reduced by 1.301 (1.558) percent. Finally, on how pollutant discharges from point sources have an impact on ambient water quality: if sum of BOD concentration is increased by one mg/L, then downstream net of upstream DO is reduced by 0.005 mg/L.
Asymmetric Information and Alternate Premium Rating Methods in U.S. Crop Insurance: A Comparison of High and Low Risk Regions
(2008-04-01) Claassen, Roger L; Just, Richard E.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Federally subsidized crop insurance has a long history of underwriting losses. These losses may be due to premium rating procedures that do not account, as fully as possible, for differences in yield loss risk across farms. If farmers understand their own yield loss risk in more detail than is reflected in crop insurance premium rates, an information asymmetry may be leading to adverse selection or moral hazard. Regional differences in underwriting losses suggest that the effect of asymmetric information is relatively large where inter-farm yield variability is also relatively large. An econometric model is used to identify asymmetric information in crop insurance premium rating. A simulation model is used to compare existing crop insurance premium rates to alternative rates calculated using yield loss risk measures based on existing, farm-specific yield history data. Both models are applied to crop/region combinations where inter-farm yield variability is relatively low (non-irrigated corn in the Corn Belt region) and where inter-farm yield variability is relatively high (non-irrigated, continuously cropped wheat in the Northern Plains). Region-wide asymmetric information effects are identified for both regions, but the asymmetric information effect is found to be larger in the high variability region. This difference explains at least part of the inter-regional difference in underwriting losses. The simulation analysis suggests that, on average, across an entire region, premium rates derived from a farm-specific measure of yield variability are closer to actuarially fair rates than RMA premium rates. At a county- and farm-level, however, it is much more difficult to say, with a high level of statistical confidence, whether these alternate premium rates are closer than RMA rates to the actuarially fair rates. To provide a foundation for the crop insurance models, an econometric model of crop yields is estimated and used to separate total yield variation into systematic and random components. Random yield variation is tested against several common distributions, including normal, gamma, and beta. The effect of aggregation on the representation of both systematic and random yield variation is also investigated.
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.
A balancing act? An empirical examination of whether the dynamic balance policy has helped China reduce cultivated land loss amid rapid urban land expansion
(2011) Feng, Juan; Lichtenberg, Erik; Ding, Chengri; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
For decades, the Chinese government has been concerned about its ability to meet the grain self-sufficiency goal due to the depletion of cultivated land caused by urbanization and industrialization. The Dynamic Balance Policy (DBP) was initiated in 1998 to balance China's need to protect cultivated land with the need to provide land for urban and industrial development. The DBP is a "no net loss" policy which requires local government to keep their good-quality cultivated land at the current level. If cultivated land is converted to other uses, an equal amount of other land, adjusted for the quality, must be converted to cultivation to compensate for the loss. Empirical evidence suggests that the DBP has had no effects of reducing cultivated land loss in China. Economic incentives, such as the values of urban and cultivated land, emerge as the most influential factors for China's land use changes. Moreover, these economic incentives may have overridden the effects of the DBP, if any. Polices can be made more effective to address the windfall profits in land acquisition and conveyance, and offer economic incentives for not converting cultivated land to urban uses. This dissertation conducts a systematic examination of the effects of the DBP of curbing the rate of cultivated land conversion. In particular, it develops a theoretical model of land conversion that combines the institutional structure of land use in China and the incentive structure of Chinese local officials whose goal is to promote local economies and budgetary balances. This model serves as the theoretical foundation for the empirical examination. The empirical implementation of the land conversion model uses the official land use data provided by the Ministry of Land and Resources of China and economic data published in various issues of provincial statistical yearbooks. This is a unique set of data which combines China's official land use data and economic data at the prefecture level and covers a period of rapid economic growth and prominent changes in land uses from 1996 to 2004.
Behavioral Response to Environmental Taxation: Evidence from the Transportation Sector
(2016) Cerruti, Davide; Alberini, Anna; Williams III, Roberton; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation analyzes how individuals respond to the introduction of taxation aimed to reduce vehicle pollution, greenhouse gases and traffic. The first chapter analyzes a vehicle registration tax based on emissions of carbon dioxide (CO2), a major greenhouse gas, adopted in the UK in 2001 and subject to major changes in the following years. I identify the impact of the policy on new vehicle registrations and carbon emissions, compared to alternative measures. Results show that consumers respond to the tax by purchasing cleaner cars, but a carbon tax generating the same revenue would further reduce carbon emissions. The second chapter looks at a pollution charge (polluting vehicles pay to enter the city) and a congestion charge (all vehicles pay) adopted in 2008 and 2011 in Milan, Italy, and how they affected the concentration of nitrogen dioxides (NOx). I use data from pollution monitoring stations to measure the change between areas adopting the tax and other areas. Results show that in the first quarter of their introduction, both policies decreased NOx concentration in a range of -8% and -5%, but the effect declines over time, especially in the case of the pollution charge. The third chapter examines a trial conducted in 2005 in the Seattle, WA, area, in which vehicle trips by 276 volunteer households were recorded with a GPS device installed in their vehicles. Households received a monetary endowment which they used to pay a toll for each mile traveled: the toll varied with the time of the day, the day of the week and the type of road used. Using information on driving behavior, I show that in the first week a $0.10 toll per mile reduces the number of miles driven by around 7%, but the effect lasts only few weeks at most. The effect is mainly driven by a reduction in highway miles during trips from work to home, and it is strongly influenced by past driving behavior, income, the size of the initial endowment and the number of children in the household.
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.
CASH, TRAINING OR COMMITMENT? EVIDENCE ON BEHAVIORAL AND FINANCIAL INTERVENTIONS FROM DEVELOPING COUNTRIES
(2019) Bin Bakhtiar, Mohammed Mehrab; Leonard, Kenneth; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation analyzes how poor households in Africa and South Asia respond to large-scale policy experiments involving conditional and unconditional cash transfers as well as interventions that have training and behavioral components. The first chapter, titled “Do Cash Transfers Improve Women’s Agency? Evidence from Lab and Field Experiments", details results from lab-in-the-field experiments that I have designed and implemented for my PhD job market paper. This chapter investigates whether receiving a cash transfer - in a very low-empowerment context - improves women’s agency in household decision-making, particularly, in the longer term. I try to answer this question by combining data from a female-targeted unconditional cash transfer (UCT) program with lab- in-the-field experiments. The UCT was designed as a Randomized Controlled Trial and was disbursed to adult women from ultra-poor households in rural Nigeria over a period of 15 months. The lab-in-the-field experiments were carried out on 503 married couples one year after the UCT program ended and can measure women’s (as well as men’s) agency in household decision-making. The main experimental measure of agency is the propensity to not defer decision-making to one’s spouse. By randomly varying whether subjects’ decisions can be observed by their spouses, a latent desire for agency (in the absence of spousal observation) versus an actual manifestation of one’s agency (when decisions are observed by one’s spouse) can be separately measured. I find that UCT-receiving women, one year after the completion of the program, defer 13 percentage point fewer decisions to their spouses; however, they do so only when their decisions cannot be observed by their spouses. In the second chapter, titled “Social and Financial Incentives for Overcoming a Collective Action Problem: Sanitation Underinvestment in Rural Bangladesh", we study the effects of social and financial incentives on communities’ ability to overcome collective action problems. Our specific context is a sample of 107 villages (approximately 19,000 households) in rural Bangladesh, and the collective action problem we study is investment in hygienic latrines and their subsequent maintenance and use. We randomized (1) whether and what type of incentive was provided - a financial reward (which was, essentially, a conditional cash transfer) or a non-financial "social recognition" reward, and (2) whether and what type of verbal commitment the households were encouraged to make - a private pledge vs. a public pledge. We measure short-term (3 months) and medium-term (15 months) effects and investigate the mechanisms behind the effects. Preliminary reduced form estimates suggest that a small financial reward has the strongest impact in the short term, inducing an approximately 12 percentage point increase in hygienic latrine ownership relative to ‘control’ villages, which received basic health messages. The public commitment treatment, in which members would publicly commit to have a hygienic latrine at the end of a group meeting, induced an approximately 5 percentage point increase in hygienic latrine ownership in the short term. In the medium term the effect of the financial reward dissipates; however, the smaller effect of the public commitment treatment in the short term continues to persist after 15 months. The results suggest that low-cost interventions which take advantage of social network dynamics have the potential to improve the effectiveness of group-meeting based rural health interventions common in developing countries. The third chapter, titled “Training Mentors? Experimental Evidence from Female-Owned Microenterprises in Ethiopia" reports findings from a randomized evaluation of a business training and mentoring intervention targeted at female- owned microenterprises in Ethiopia shows that formal business training produces an immediate impact on the adoption of beneficial business practices (that were highlighted in the training); however, no impact on business profit is observed in the short term. Three and four years after the training, we observe delayed impacts on business profits. Shortly after the training, the trained cohort is randomly assigned to provide mentoring to less-experienced women who own smaller businesses. These mentees were nominated by mentors at baseline from their own social networks. The overall impact of mentoring on mentees is more muted. There are early impacts on the adoption of beneficial business practices, and some measures of profits. However, the impacts on profits do not persist in the longer term.
Computational and Experimental Market Design
(2010) Higgins, Nathaniel Alan; McConnell, Kenneth E; Cramton, Peter; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
This dissertation contributes to the literature on the market design of auctions. I use computational and experimental techniques to make two types of contributions to the literature. First, I provide a program that implements a state-of-the-art algorithm for solving multi-unit auctions with asymmetric bidders. This methodological contribution can be used by other economists to solve a variety of auction problems not considered in this dissertation. Second, I undertake the study of one auction environment in particular, utilizing my program to generate hypotheses when bidders participate in a particular sealed-bid, asymmetric multi-unit auction. These hypotheses are then tested in an experimental setting.
Costly Renewable Resource Management and International Trade
(2007-12-20) Bergeron, Nancy; Olson, Lars J.; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Renewable resource management is necessary to avoid the dissipation of inter-temporal rents due to open access exploitation. In reality management is costly, which implies that the first best solution is not appropriate. Management costs must be considered explicitly in optimization problems, to find the appropriate second best solutions. This is the focus of this dissertation, which contains applied theoretical analyses of dynamic bio-economic models, where moving away from open access exploitation of a renewable resource is costly. Partial equilibrium problems of harvesting a scarce renewable resource are analyzed, where economic incentives of poachers, who are punished if caught, are included. Harvest, enforcement and resource price are endogenously determined. The punishment increases poachers' expected marginal costs and the resource market price, which forces at least some poachers out of the market. Different relative harvest cost structures are considered between social planner and poachers, which drives the manner in which the market supply is optimally shared between them. Corrective policies are given for a pseudo-monopolist seeking to maximize his discounted profit instead of total economic surplus. Further policy adjustments are characterized, in case the resource entails nonmarket values. A two-good, two-variable-factor bio-economic trade model is also developed for a small country. Open access, first and second best resource management models are analyzed, assuming that instantaneous gains are independent of the resource stock and that resource management incurs a flow of instantaneous fixed cost. The most empirically realistic model allows for resource management regime switches, which is influenced by the trade regime and the world price of the resource good. Different cases are characterized in relation to changes in welfare and conservation, following a move from autarky to free trade. Free trade is unambiguously beneficial in some cases, but not always. Specifically, if open access is the second best management regime in autarky, then a small comparative advantage in the resource good could be detrimental to the home country. There exists a greater comparative advantage in the resource good, above which free trade would be beneficial. Understanding what drives the empirically relevant detrimental consequences of free trade can be helpful for policy-making.
DEMAND FOR SAFER FOOD IN DEVELOPING COUNTRIES
(2016) Ordonez, Romina Valeria; Hoffmann, Vivian E; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
According to the WHO, in less developed countries approximately 2.2 million people—most of whom are children—die annually of food and waterborne diseases. In these economies, information on the safety attributes of food is usually not available and enforcement of food safety regulations is often weak, particularly within markets for locally consumed food. Still, food safety in the developing world has long been considered a secondary concern relative to food availability. The goal of this dissertation is to contribute to a deeper understanding of some of the constraints that surround demand for safer food along food supply chains in developing countries. Consumers’ demand for safe food can be thought of as an investment in preventive health, which has been shown to be extremely low in developing countries. Hence, this dissertation contributes to the economics literature that explores the impact of health-related information on preventive health behaviors in poor countries. This dissertation focuses on the role of food safety information in affecting people’s purchase behavior in a developing country setting. Because food safety is mostly a credence attribute that cannot be ascertained—or is too costly to ascertain—even after consumption, the provision of information has an important role to play in the reduction of information asymmetries inside the food chains. Among the several actors that are involved in food value chains, this dissertation focuses on small-scale informal intermediaries and consumers. The effect of information on these actors’ demand for safer food is assessed through the estimation of willingness to pay for food labeled as having safer characteristics, and through the analysis of the effect of different types of health-related information on the decision of whether or not to purchase food advertised as safer to eat. To achieve this, two field experiments using revealed preference methods were conducted in Kenya, where maize, the staple food, is frequently contaminated with aflatoxin, a naturally-occurring fungal toxin that is harmful to human health. A brief introductory chapter is followed by a comparison of the advancement of food safety policy and research in developed countries with the corresponding evolution in developing countries (Chapter 2). The framed field experiment described in Chapter 3 tests whether maize traders in informal markets are willing to pay more for higher quality and safer maize. 369 traders from different markets across Kenya participated in a second-price sealed-bid auction in which information on moisture content and aflatoxin contamination of maize auctioned was varied experimentally using labels. The results show that information on moisture content significantly affects traders’ willingness to pay and suggest the observability of moisture content is limited. Also, the effect of information does not appear to be driven by the possibility of selling drier maize to the formal sector, nor by the intention to keep the dryer maize for own family consumption. Further, the impact of providing traders with information on aflatoxin contamination is over twice as large as the effect of moisture content information. These results show that there is potential for strengthening the price-quality relationship within this context by increasing the availability of information on maize quality and safety. Chapter 4 presents the results of a field experiment conducted among customers of small retail shops in Nairobi and smaller urban centers in eastern Kenya. Packages of maize flour were tested for aflatoxin, labeled as safe to eat when they complied with the aflatoxin regulation, and offered for sale at a 20% premium above the price of untested maize. Information messages about the health consequences of aflatoxin exposure and about local contamination prevalence were randomly varied across customers as they entered the shops. The results show that the impact of health messaging on purchase of tested maize varies significantly depending both on the specific content of the message, and on the characteristics and prior beliefs of consumers. Information on the local prevalence of aflatoxin contamination, which exceeded the vast majority of customers’ contamination priors, had the strongest impact on demand. This study demonstrates that combining information on the prevalence of a risk with its health consequences is an effective approach for encouraging preventive health behavior.
Determinants of Childhood Morbidity and the Role of Malnutrition: Evidence from Indonesia
(2009) Wilson, Shannon Leigh; Cropper, Maureen L; Alberini, Anna; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Studies that have attempted to examine the impact of early childhood malnutrition on acute illness have failed to adequately establish the causal link from malnutrition to acute illness. The empirical challenge arises because household behavioral decisions that influence investment in a child's nutrition and growth are very likely correlated with other household decisions that affect a child's incidence of illness. These include decisions to invest in hygiene and sanitation or a mother's knowledge and use of appropriate feeding practices. There may also be unobserved risk factors, such as genetic endowments, which introduce correlation between one of the regressors - nutritional status - and the error term in a disease production equation. In this dissertation, I test two basic hypotheses: (1) chronic undernutrition in early childhood, as measured by stunting in children under five, increases the probability of contemporaneous acute illness; and (2) there is a significant effect of early childhood malnutrition on the probability of developing acute illness later in childhood. I estimate a model that predicts the incidence of febrile, diarrheal and respiratory disease, diseases which combined account for the greatest total burden of morbidity and mortality in children in developing countries. I focus my research on contemporaneous and longer-term acute illness outcomes in children under five for three reasons. First, substantial research has shown that children are at greatest risk of malnutrition in the early years of life, particularly before age two (Victora et al. 2008; Ruel et al 2008). In this period, children are no longer exclusively breastfeed and they have high nutritional requirements because they are growing quickly. Second, the burden of infectious disease is disproportionately borne by children under five due to their relatively immature immune systems and their dependence on caregivers to use appropriate feeding and hygiene practices to avoid infection (Martorell 1999; Martorell and Habicht 1986). Third, since most of the literature on the long-term consequences for human capital formation focuses on conditions in early childhood, by placing this research question in the same context, it can be more clearly seen as contributing to the broader literature on human capital formation. I employ instrumental variables to allow identification of the impact of early childhood malnutrition on acute illness. I use a panel dataset from three waves of the Indonesian Family Life Survey (IFLS) to address the measurement challenges that arise due to the unobservable household factors that influence both the likelihood of early childhood malnutrition and acute illness, and the synergistic nature of malnutrition and infection. My results show a strong and statistically significant contemporaneous effect of malnutrition on the likelihood of acute illness. I find that children under five who are stunted are 16 percent more likely than children who are not stunted to report symptoms of acute illness. I find that the impact of malnutrition on the likelihood of acute illness remains positive and significant four years into the future. Children who were stunted in 1993 are still 5 percent more likely than non-stunted children to experience acute illness in 1997. While I find this impact of early childhood stunting on future illness outcomes dissipates seven years later, I present suggestive evidence that this may reflect the fact that many of the children in my sample who were stunted in 1993 are in fact no longer stunted by 2000. Overall, these results suggest that efforts at reducing early childhood malnutrition can lead not only to immediate health benefits in terms of lower rates of infectious disease, but also lead to better health outcomes in the future. Many international organizations and bilateral donors are prioritizing improvements in early childhood nutrition with the goal of improving long-term human capital outcomes (World Bank 2002; USAID 2008). The most important implication of my results is that improvements in early childhood nutrition and reducing the burden of disease are complementary objectives; improved early childhood nutrition will facilitate meeting the Millennium Development Goal of reducing the burden of disease. Further, to the extent improvements in pre-school nutritional status reduce either the incidence of acute illness, the severity of acute illness episodes, or both, such improvements may have indirect benefits. These include reducing school absenteeism which likely will enhance the acquisition of knowledge at school and lead to higher school completion rates among children in developing countries
Development, Technology Adoption, and Social Networks
(2011) Vasilaky, Kathryn Nadine; Vasilaky, Kathryn Nadine; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Agriculture remains a key component of economic development, but the methodology for how development policies are determined has changed for developing countries. In the last decade, the focus of economic growth in developing countries has shifted from country-wide prescriptions to testable micro-development programs at the local level. As international development focuses in on local programs, social networks have been identified as a key component for their effective deployment. This dissertation analyzes the effects of a social network-based intervention. It contributes to the economics literature on identifying social network effects by implementing a randomized encouragement design to develop social capital, while simultaneously introducing a new method of development training. The program implemented here is comprised of two parts, and was conducted with female-headed households in rural Uganda, that were growing a relatively new cash crop, cotton. The first part conducted social network-based information games in 20 sample villages, in which each participant was trained in one aspect of cultivating cotton, and encouraged to attain a full set of knowledge on growing cotton through her assigned learning networks. They were presented with two different incentives schemes for accumulating information: competitive and team incentives. The second portion of the program paired the surveyed individuals at random with other game participants. These pairs were encouraged to develop team goals across the growing season and a time schedule for networking as well as update and share their learned information from the games on a regular basis. The estimated effects of the SNI, which comprise this dissertation, include both the effects from the information games and the effects of the mentored pairing; that is, the impact of acquiring one information point and one new link. I compare the effects of this program to a standard agricultural training program that was concurrently conducted during this research, in which extension agents taught the same information that was presented in the information games but with a traditional classroom-based teaching method. My games analysis shows that females learn more when presented with competitive incentives. The total number of learning points learned during competitive incentives first order stochastically dominates the total number of learning points learned during team incentives. However, for the dissemination of one specific information point, team incentives are better at ensuring that a unique information point reaches the entire group. Difference in difference estimates, controlling for the training program, show that the overall SNI program had significant effects on the average farmer, with diminishing returns for higher yielding farmers. I find that these average effects are comparable to the effects of the conventional training program, but at a fifth of the implementation cost. A closer examination shows that the SNI program has its most significant effect for farmers growing around the average output when the program was started in 2009 (100-200 kgs/acre), while the Training program has its greatest and most significant impact for those yielding above the average output in 2009. Therefore, the two programs are not necessarily substitutes in how they effect change. My research shows that a competitive incentive structure coupled with social network-based learning serves as an effective paradigm for improving outcomes for the poorest producers.
Dynamics of Capital Investment and Pollution Externalities in Wholesale Electricity Markets
(2022) Holt, Christopher; Linn, Joshua; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
The field of environmental economics was built on the notion of internalizing into markets the social harm caused by pollution. This dissertation examines the implications of putting that idea into practice in the electric power generation sector, with a particular focus on market structure and short- and long-run industry dynamics. Environmental policy to mitigate climate change seeks to transform the capital composition of industries for the purpose of reducing carbon dioxide emissions. In deregulated wholesale electricity markets, firms may exercise long-run market power through investment and retirement decisions which affect future wholesale price settlement. In Chapter 1, I develop a dynamic structural model of the Texas electricity market spanning 2003-2019 to analyze how long-run market power exercise and environmental policy for reducing carbon emissions affect the capital composition of the industry over time. I find that market power exercise led to significant early fossil fuel plant retirements over this period, with an attendant decrease in consumer surplus on the order of $1.6 billion annually. Further counterfactual analysis suggests that federal production tax credits for wind power expanded the deployment of wind by approximately 73 percent, but the associated reductions in emissions were more than twice as costly as would have been achieved under a $20-per-ton carbon tax. In Chapter 2 I delve further into the issue of market structure and long-run dynamics. Economic theory suggests that setting the wholesale price of electricity at the marginal social cost of unmet demand during periods of scarcity results in optimal capacity investment in the presence of perfect competition. I examine the implications of applying this principle in a setting where competition is imperfect, and where the market was structured prior to the introduction of competition (deregulation) and therefore not established through firms’ profit maximizing behavior. I build a stylized model that approximates the effects of a scarcity price mechanism under the hourly demand distribution observed in the Texas wholesale electricity market in 2017. I use this model to demonstrate that the scarcity price mechanism may encourage incumbent firms with large portfolios to retire plants, and that firms with a threshold amount of existing infra-marginal generation capacity will be unwilling to invest in new capacity. I then use a dynamic structural model to demonstrate that the scarcity price mechanism introduced in Texas in 2014 accelerated turnover over the period 2014-2019 by driving greater retirement of capacity in addition to greater investment, relative to a counterfactual scenario in which the scarcity price design was not implemented. In Chapter 3 I shift my focus from long-run industry dynamics and environmental policy concerning a global pollutant (carbon dioxide) to short-run dynamics and harm from a local pollutant (ground-level ozone). NOx emissions are a precursor to ground-level ozone, a pernicious pollutant that is harmful to human health and ecosystems. Despite decades of regulations including NOx emissions pricing, and a corresponding precipitous decline in NOx emissions, episodic high-ozone events prevent many areas from achieving air quality standards. Theoretically, spatially or temporally differentiated emissions prices could be more cost-effective at reducing such events than a uniform price. To test this prediction, using data from the EPA and NOAA spanning 2001-2019, we use novel empirical strategies to estimate (1) the link between hourly emissions and high-ozone events and (2) hourly marginal abatement costs. The estimates form the basis for simulations that compare uniform and differentiated emissions pricing. Consistent with economic theory, differentiated emissions pricing is substantially more cost effective at reducing high-ozone events, but this advantage depends on the accuracy of the estimated NOx-ozone relationship.
Early Childhood Nutritional Responses to Targeted Food Aid and Social Network Disruptions in Ugandan Internally Displaced Person's Camps
(2009) Adelman, Sarah Wallace; Leonard, Kenneth L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
Early childhood malnutrition, which is a series of symptoms including slow linear growth, decreased resistance to infection, and poor motor and cognitive functioning, has received increased attention in recent years as a key to economic development. While malnutrition can affect people at any age, the effects of malnutrition are most damaging in utero and during the first two years of life. Deficits during this period have long-term effects on health, educational attainment and productivity in adulthood. Thus, investing in efforts to provide children with minimal required nutrition can substantially improve future household welfare and promote economic development. In Northern Uganda, parents had limited control over their children's nutritional outcomes as nearly all rural households were living in internally displaced persons (IDP) camps due to a civil conflict. Food in these camps was scarce, sanitation conditions were poor, and health care was underprovided. Additionally, the displacement severely disrupted the strong social structures in place in the village that households relied on day to day for many activities, including care for children. This dissertation looks at early childhood health outcomes in these IDP camps and how these outcomes are affected by a food aid program and by social network influences. Chapter 3 examines the spillover effects of two types of food for education (FFE) programs on the nutritional outcomes of eligibles' younger siblings. FFE programs are criticized on the grounds that household redistribution responses mitigate nutritional benefits from the programs. However, this study shows that in some cases households redistribute program benefits to younger children who can benefit more from marginal improvements in nutritional status, which could increase returns to FFE. In Chapter 4, I look at the effects of local social networks, the friends and family that households interact with on a daily basis, on preschoolers' nutritional outcomes. Social networks can affect demand for human capital investments by relaxing household time or budget constraints or by defining and reinforcing human capital preferences. However, empirically identifying the effect of social networks on human capital investment is usually problematic because households self-select their networks in ways that may be correlated with their abilities to make these investments. In Northern Ugandan Internally Displaced Persons Camps, networks were not entirely self-selected. Rebel activity, which forced households into camps in 2002, disrupted pre-existing social networks in ways that were exogenous to household human capital preferences. This paper uses the exogenous variation in network disruption to identify the impact of networks on child health outcomes. Using household survey data from the Uganda School-Based Feeding Evaluation, household data that I collected, and administrative data from the World Food Programme and local governments, I show that an increase in the average household's network size by one household (or roughly 25 percent of the network) improves height-for-age z-scores by .25 standard deviations for children born in the camp. This improvement is equivalent to moving from the 8th percentile to the 13th percentile in height for the average child in this sample. The result stands up to numerous falsification tests. Additionally, I find no evidence that in-camp network strength impacts nutritional outcomes determined before displacement, supporting the exogeneity of the disruption to household health preferences.