Agricultural & Resource Economics Theses and Dissertations
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Item Factors That Influence The Regional Agricultural Production Structure In China(2010) Shen, Dongquan; McConnell, Kenneth; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)An analysis of the regional specialization trend in China since the beginning of its economic reform in 1979, and the determinants of this trend. The indices of regional specialization are calculated for years 1985 to 2006. Important policy changes during this period, mainly agricultural policy changes, are discussed. After applying the fixed effect regression on a modified Heckscher-Ohlin model, it is found that: (a) among scale, natural resource and human investment variables, only human investment are significant; (b) WTO membership has had a positive total effect on regional specialization of China's agricultural production; (c) Regions that produce a larger portion of exportable products have become more specialized since entering WTO; (d) Center region of China is the one with the least specialization.Item Institutional Structure in Corporate Agriculture(2010) Bhutani, Niti; Chambers, Robert G; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, a state-contingent, principal-agent model is developed to examine the institution of input provision by a corporate firm that contracts with agents for the production of a given commodity. "Input provision" entails not only the provision and delivery of key inputs by the principal but also their purchases (or in-house production), as well as contract design to ensure their optimal use. The provision of key inputs is modeled in the context of production contracts for poultry and pork, such as those offered by Perdue Farms, Smithfield Foods, and Tyson Foods in the United States. The decision in question is the levels of inputs (e.g. feed, medication) that the contracting company provides to the farmer. This decision is endogenous to the model, and facilitates comparison of production contracts (input provision) with marketing contracts (no input provision, with all inputs purchased and/or provided by the farmer himself). The theoretical model formalizes Coase's idea that an institutional arrangement emerges if the benefits associated with it exceed the costs. In particular, I characterize the case of no input provision as a corner solution for the optimal choice of inputs provided. The extent of input provision, in turn, reflects "limits to firm size". I also examine conditions under which incentives relating to one of two output dimensions (produced by the agent) tend to zero, when both dimensions are observable and verifiable. The state-contingent approach is used as it allows for a general production technology, and the inclusion of transaction costs in a general theoretical model. The possibility of reservation utility being endogenous in dyadic relationships is also examined. This is explored formally by incorporating pre-contract interactions in a contractual framework with the principal and the agent competing as independent producers prior to contracting. Investment decisions of the principal in this framework favorably impact his variable costs both as an independent producer and as the principal party to a contract. I show that the higher these benefits, the stronger is the incentive for the principal to decide in favor of higher initial investment levels and realize a more competitive position vis-à-vis the smaller producer.Item 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 countriesItem PROTECTIONISM VERSUS RISK IN SCREENING FOR INVASIVE SPECIES(2009) Lawley, Chad Damon; Lichtenberg, Erik; Olson, Lars; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The perception that biosecurity import restrictions are used as disguised barriers to trade is widespread. Despite this perception, there has been little empirical analysis distinguishing genuine attempts to protect against introductions of foreign pests and diseases from attempts to distort trade. In this dissertation, I examine the extent to which enforcement of a biosecurity import standard - US agricultural border inspections for non-indigenous species (NIS) - is used as a disguised barrier to trade. I develop a theoretical model of border inspections that incorporates incentives to protect domestic agricultural producers from import competition as well as incentives to protect against NIS damage associated with agricultural imports. The theoretical model is used to specify an econometric model of border inspection that identifies a parameter representing the implied weight the inspection agency places on domestic producer welfare relative to consumer welfare. The structural model further identifies a parameter representing expected NIS damage as implied by the inspection agency's choice of inspection intensity. I estimate the parameters of the model using a dataset that documents the outcome of US agricultural border inspections. I find evidence suggesting that the inspection agency places greater weight on domestic producer welfare relative to consumer welfare, independent of expected NIS damage. Estimates of the implicit weight on domestic producer surplus range from 1 to 1.63. These results suggest that inspection protocols are implemented in a trade distorting manner to the benefit of domestic producers and at the expense of domestic consumers. I also find evidence that border inspections are influenced by terms of trade motives. The evidence that inspections are not implemented in a least trade distorting manner is independent of expected NIS damage. A second outcome of the econometric analysis is an estimate of expected NIS damage: I find that the inspection agency behaves as if expected NIS damage ranges from $0 to more than $0.25 per dollar of inspected imports.Item HOUSEHOLD ENERGY USE, INDOOR AIR POLLUTION, AND HEALTH IMPACTS IN INIDA [i.e. India]: A WELFARE ANALYSIS(2009) Zhang, Yabei; Just, Richard; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation develops a unified analytical framework to understand the relationships among household energy use, indoor air pollution (IAP), and health impacts and enables policy-makers to analyze welfare effects of various interventions. This unified analytical framework includes four interlinked modules. Module 1 studies the determinants of IAP and constructs an IAP index to predict typical IAP exposure. Module 2 analyzes the impacts of IAP exposure on health, including both self-reported respiratory symptoms and physician-measured spirometry indicators. Module 3 uses a novel approach to model household behavior regarding energy technology choices based on utility maximizing behavior. Households are assumed to choose a cooking energy technology based on its attributes: cooking cost, convenience, and cleanliness. Household valuation of these attributes depends on household characteristics. Then based on the household utility function estimated from Module 3, Module 4 evaluates welfare change from various policy interventions. Empirical estimation relies primarily on two surveys recently conducted in India: a social science and environmental health survey entitled Health, Environment, and Economic Development and a multi-topic national representative sample survey called the India Human Development Survey. The two surveys were fielded between late 2004 and early 2005 and contain uniquely rich information on household energy use, indoor air pollution levels, and health indicators. This dissertation provides quantitative evidence that IAP has significant health impacts comparable to smoking. Based on analysis of IAP impacts on spirometry indicators, the evidence suggests that IAP has major impacts on restrictive lung disease rather than obstructive lung disease. These results explain why certain diseases are more highly associated with IAP exposure. Considering that traditional biomass will likely continue to be the most popular cooking fuel in rural areas of India in the near future, and that households can achieve considerable welfare gains from improvement in stoves and kitchen ventilation, the analysis suggests that the Indian government should consider reviving the improved stove program with a new advanced stove strategy coupled with conducting advocacy campaigns on how to improve kitchen ventilation. The analysis suggests small overall welfare effects of the pending phasing out of LPG subsidies.Item Essays on Split Estate in Energy Development(2008) Fitzgerald, Timothy; McConnell, Kenneth; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Taking advantage of randomly-assigned federal mineral rights, the first essay establishes the discount that mineral developers place on oil and gas leases with divided ownership. This discount is interpreted as an expectation of reduced profits as a result of transaction costs incurred in obtaining surface access. Results of 53 bimonthy federal oil and gas lease auctions in Wyoming between February 1998 and October 2006 are examined. Bidders discount split estate by 11 to 14 percent on average, but by as much as 24 percent for more expensive leases. Impacts of multiple ownerships and additional leasing stipulations are also explored. The second essay examines how conflict between surface and subsurface owners affects production from coalbed methane wells in Wyoming. Using well-level production data from 1987-2006, wells on federal minerals with private surface are compared to those on federal minerals with federal surface. A kernel matching estimator is used to control for selection of well sites on the basis of observable information. Delays in entry on split estate are found, but are not associated with reduced production after entry. Some support is found for strategic incentives firms face regarding property rights. One way coalbed methane production differs from traditional oil and gas extraction is in the large quantities of produced water. Surface discharge has proven to be a low-cost alternative but raises the possibility of externalities. In the third essay a unique dataset linking coalbed methane wells in Wyoming to water disposal permit violations is used to explore differences in environmental performance across severed and unified minerals. A propensity score matching model is used to control for the endogeneity of tenure. The results suggest that split estate wells using surface discharge have a higher number of violations, but the severity of those violations is not significantly different from those on unified estates.Item The Relationship between Child Labor and Microfinance: Evidence from Rural Bangladesh(2009) Khadka, Manbar Singh; Leonard, Kenneth L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This paper analyzes the relationship between availability of microfinance and child labor in rural Bangladesh. Using household-level fixed effect in panel data, this paper shows that the stock of women's recent loans negatively impacts child labor. A 10 percent increase in the stock of recent borrowing by women reduces child labor supply by 2.58 percent. By contrast, the paper does not find any significant effect of male credit on child labor.Item 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.Item Pricing Carbon: Allowance Price Determination in the EU ETS(2008) Hintermann, Beat; Lange, Andreas; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The allowance price in Phase I of the European Union Emissions Trading Scheme (EU ETS) followed a peculiar path, increasing from €7 in 2005 to over €30 in 2006, before crashing, recovering and ultimately finishing at zero by the end of 2007. I examine if the price can be explained by marginal abatement costs as predicted by economic theory, or if there were other price determinants. This has important policy implications, since the least-cost solution depends on the equality of permit price and marginal abatement costs and is the main argument in favor of permit markets. I start with a model that incorporates the most commonly cited market fundamentals and find that the latter only explain a small part of the allowance price variation, raising the question of a bubble. I carry out two different bubbles tests, the results of both of which are consistent with the presence of an allowance price bubble. I then address whether market manipulation by dominant power generators could have lead to the initial allowance price increase. I extend economic theory to include the interaction between output and permit markets. I derive a threshold of free allocation beyond which firms find it profitable to manipulate the permit price upwards, even if they are net allowance buyers. Market data indicates that this threshold was exceeded for EU power generators. Finally, I investigate the possibility that due to the speed at which the market was set up, firms may have been unable to engage in effective abatement before the end of Phase I. I develop a model under the assumption of no abatement, where firms aim to reach compliance exclusively by purchasing allowances on the market. Thus, the allowance payoff becomes that of a binary option, for which I derive a pricing formula. The model fits daily data from the years 2006-7 well. I conclude that the allowance price in Phase I was not driven by marginal abatement costs, but by a combination of price manipulation, self-fulfilling expectations and/or the penalty for noncompliance weighted by the probability of a binding cap.Item Land preservation, voluntary programs, and regulatory instruments(2008-07-11) LIU, Xiangping; Lange, Andreas; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In the US, urban sprawl and the resulting loss of farmland and habitats to residential and commercial uses have drawn increasing concerns and led to the establishment of both voluntary programs and regulatory instruments. These programs restrict a landowner's right to develop land with or without compensation. My dissertation is a study of the effectiveness and impact of those voluntary programs and regulatory instruments. In the first essay, I develop and present an empirical test of the impact of Purchase of Development Rights programs in reducing farmland loss. I use a county-level data on the 269 counties in the six Mid-Atlantic States (Virginia, Maryland, Pennsylvania, Delaware, New Jersey, and New York) over a 50-year time period. Using a propensity score matching approach, I find strong evidence that these programs have reduced the rate of farmland loss and the acres lost. My second essay evaluates the effect of Maryland Rural Legacy (RL) program on farmland preservation by taking into account a predisposition effect, a time effect, and a crowing effect. I use data on agricultural and forest parcels in three Maryland counties (Calvert, Charles, and St. Mary's) and match parcels based on the estimated propensity that the parcels are included in a RL area. I find that 1), the RL program crowds in the preservation effort of other programs and 2), more parcels and more acres are preserved in RL areas than in non-RL areas due to preservation effort from RL program. My third essay is a theoretical study on land development restriction from the Endangered Species Act and landowners' timing to develop land. I use a two-period framework and assume uncertainty of future land value and irreversibility of land development decisions. I examine the conditions under which it is optimal for regulators to compromise and the optimal strategies that allow them to balance the welfare gain and loss from compromise. Regulators should compromise only if social welfare loss from preemption is sufficiently large. Regulator can improve social welfare and reveal landowners' types through differentiated ex ante fees for differentiated regulation levels.