This paper focuses on estimating the effects of the real FDI-weighted exchange rate on real U.S. foreign direct investment (FDI) in the global processed food industry. We use a straightforward production possibility framework as our theoretical basis to demonstrate the shift of production between countries on the basis of exchange rate fluctuations. The log-log regression model, derived from the theoretical model, gives statistically robust results to show that for the years 1983 to 2002, the exchange rate fluctuations, the level of fixed capital in the U.S. food industry, and the cost of materials in both the United States and abroad were major determinants of the stock of U.S. FDI in the global processed food industry. As the dollar appreciated, U.S. FDI increased. An overall conclusion is that countries with an undervalued exchange rate will experience increased FDI. Countries with overvalued exchange rates incur costs from lost export opportunities for domestic firms as well as discourage FDI.

The need for models that forecast land use change spans many disciplines and encompasses many approaches. Pattern-based models were the first in which projections of change at specific locations in actual landscapes could be predicted. In contrast, recent economic models have modeled the underlying behavioral process that produces land use change. This paper combines attributes from each approach into a hybrid model using a multiple discrete continuous extreme value formulation that allows for multiple conversion types, while also estimating the intensity of each type of conversion, which is an important but often overlooked dimension. We demonstrate the simulation routine, which successfully predicts a majority of growth by type, time, and location at a disaggregated scale, for a three-county region in Maryland.

Farm-to-school (F2S) local food procurement must be cost-effective to be financially sustainable without policy support. We test, among schools participating in F2S programs, whether market channel procurement strategies for local foods affect schools’ perceptions of whether meal costs decline as a result of F2S participation. Schools that buy local foods exclusively from intermediaries are 7 percentage points less likely to report lower costs from undertaking F2S initiatives. We further demonstrate that the probability that schools source local foods exclusively from intermediaries is influenced by the number of direct marketing farmers in their county.

The number of wineries in nontraditional cool climate regions of the United States has increased dramatically in the last decade. We examine factors influencing distribution channel choices by these wineries, including winery characteristics, marketing strategies, and the extent of vertical and horizontal integration. Using a survey of winery operators in Michigan, Missouri, and New York, we developed fractional logit models to test hypotheses regarding their distribution channel choices. We find that the share of wine sold through intermediated channels increases with winery size, years of operation, increased vertical and horizontal integration, and greater promotional intensity and levels of self-reported marketing challenges.

This paper outlines a method to determine the tradeoff between economies of size in water treatment and diseconomies of distribution. Cost equations are estimated for several treatment technologies and distribution extensions. Empirical results are used to identify optimal system size where average total costs are minimized. Regardless of treatment, most costs are due to distribution. As water systems expand service territories, only in the most densely populated areas would remaining economies of size in treatment outweigh the diseconomies in distribution.

The use of survey or contingent valuation methods to estimate an individual's valuation of non-marketed goods, especially environmental resources, has attracted increasing attention in recent years. Initially, research efforts in this area were viewed by a majority of the economics profession with considerable skepticism. However, with the increased need for information on individuals’ valuation of a whole range of environmental resources and limitations on the ability of indirect market-based methods for valuing all of these resources, there has been a substantial increase in the use of contingent valuation methods to provide this information. Indeed, a recent state-of-the-art assessment (see Cummings et al. [1984]) of the contingent valuation method (CVM) has been able to develop a set of reference operating conditions under which it was reasonable to expect the CVM approach would yield estimates with accuracy that was approximately comparable to the indirect methods. Clearly the definition of these conditions is a judgmental one. Nonetheless, it was based on a substantial number of comparative studies evaluating the relationship between CVM and indirect market estimates of the benefits associated with changes in specific environmental resources. Moreover, it does reflect the changing attitude toward the CVM approach. It is therefore particularly appropriate to consider new directions in the development of the contingent valuation method.

This paper develops and applies a methodology to assess the accuracy of historical loss-cost rating procedures, similar to those used by the U.S. Department of Agriculture's Risk Management Agency (RMA), versus alternative parametric premium estimation methods. It finds that the accuracy of loss-cost procedures leaves much to be desired, but can be markedly improved through the use of alternative methods and increased farm-level yield sample sizes. Evidence suggests that the high degree of inaccuracy in crop insurance premium estimations through historical loss-cost procedures identified in the paper might be a major factor behind the need for substantial government subsidies to keep the program solvent.

This paper describes a novel experiment designed to examine how rent dissipation may occur in fisheries in which the right to participate is limited and fishermen compete amongst themselves for shares of an exogenous total allowable catch. We demonstrate that rent dissipation may occur through multiple mechanisms, and that the heterogeneity of fishermen has important implications for how rent dissipation occurs and the extent to which different individuals may benefit from the implementation of rights-based management. We apply this approach to investigate the concept of voluntary rights-based management under which managers divide the total allowable catch between two separate fisheries, and fishermen may choose between fishing for a guaranteed individual harvest quota and competing for a share of the total catch in a competitive fishery.

This study explores how higher temperatures influence corn yield response to planting density. Using 1990–2010 field trial data from Wisconsin and econometric models with a variety of specifications, we find that higher temperatures reduce the yield benefits of increasing planting density. However, these adverse high-temperature effects are smaller for genetically modified corn varieties, especially those with rootworm-resistant traits. Consistent with previous studies, these results support the notion that varietal improvements through genetic modification may have paved the way for higher planting densities in US corn production. Moreover, our results imply that expected in-season temperatures are important considerations when making planting density decisions.

This paper shows how econometric identification can be improved in studies making use of crop insurance participation as either an independent or dependent variable. The paper provides the reader with a succinct overview of how crop insurance contracts are priced and how to use publicly available data to derive a novel composite crop insurance design parameter that emulates existing crop insurance rating parameters using a procedure that is based on current actuarial practices. The derived design parameter performs well at predicting historic crop insurance loss-cost ratios and satisfies the requirements for an instrumental variable for a variety of empirical applications related to crop insurance. Representative empirical examples are presented where it is shown that the proposed instrument has favorable two-staged least squares diagnostic tests and is effective at eliminating endogeneity bias.

We explore the optimal regulation of forest carbon and albedo for climate change mitigation. We develop a partial equilibrium market-level model with socially optimal carbon and albedo pricing and characterize optimal land allocation and harvests. We numerically assess the policy's market-level impacts on land allocation, harvests, and climate forcing, and evaluate how parameter choices (albedo strength, productivity of forest land, and carbon and albedo prices) affect the outcomes. Carbon pricing alone leads to an overprovision of climate benefits at the expense of food and timber production. Complementing the policy with albedo pricing reduces these welfare losses.

Agri-environmental programs, such as the Environmental Quality Incentives Program, provide payments to livestock and crop producers to generate broadly defined environmental benefits and to help them comply with federal water quality regulations, such as those that require manure nutrients generated on large animal feeding operations to be spread on cropland at no greater than agronomic rates. We couch these policy options in terms of agri-environmental “carrots” and regulatory “sticks,” respectively. The U.S. agricultural sector is likely to respond to these policies in a variety of ways. Simulation analysis suggests that meeting nutrient standards would result in decreased levels of animal production, increased prices for livestock and poultry products, increased levels of crop production, and water quality improvements. However, estimated impacts are not homogeneous across regions. In regions with relatively less cropland per ton of manure produced, the impacts of these policies are more pronounced.

We estimate a bivariate probit model using data from a survey of Maine and New Hampshire beachgoers to (i) assess the impact of exposure to and contact with beach waters on safety information-seeking behaviors, and (ii) compare information-seeking behaviors for surf conditions and water quality information. We find that individuals who engage in certain high-contact recreation activities (i.e., swimming, fishing, surfing) are more likely to seek out safety information and that some potential drivers of this behavior affect searches differently for surf conditions versus water quality information.

Using farm data from three dairy-dependent communities in Wisconsin, this study addresses the question: Do small farms spend more locally than large farms? The work develops a theoretical model of farm cost functions with transaction costs varying between local and distant input sources. This model is then tested econometrically, describing farm costs and where they were spent as a function of transaction/search costs and farm characteristics. The results suggest that scale does matter to farm spending patterns.

After a strong expansion across the United States, farmers markets’ (FMs) growth rate has declined in spite of policymakers’ interest in promoting them. In this study we model farmers’ participation in FMs and investigate what market factors affect FMs’ location using zip-code-level data for the New England states. Our results suggest that market size, education, presence of children in the household and SNAP participation lend to the establishment of FMs, more than income per se. Farming activities has a positive association with the likelihood of FMs, while proxies for establishment costs and the presence of traditional distribution channels may play a limiting role in their formation.

This study examined possible economic impacts on Northern Plains grain producers of policies that could be undertaken by the United States to comply with the Kyoto Protocol. The paper begins with a discussion of the potential effects of the Kyoto Protocol on prices of energy and inputs used in agricultural production. The next section describes the data and econometric models that were used to develop a field-scale, stochastic simulation model of the crop production system typical of the Northern Plains. This model is based on econometric production models estimated with a spatially referenced, statistically representative sample of farmers in Montana. The simulation analysis shows that the impacts of higher energy prices would tend to discourage the use of fallow, raise variable costs of production by 3 to 13%, and reduce net returns above variable cost by 6 to 18% in the case of spring wheat grown on fallow. Under the higher cost scenarios assumed in an analysis conducted by the Farm Bureau, production costs for spring wheat on fallow would increase by 15 to 27% and net returns would decline by 15 to 24%.

With weather index insurance expanding and common property resources diminishing in low-income agricultural areas, it is essential to understand the potential effects of such insurance on resources that serve as vital input bases for low-income households. Using simple analytical constructs, we illustrate how index insurance may increase or decrease use of common property resources depending on common implementation characteristics such as binding constraints and multiple sources of income in a multi-temporal decision context. This analysis of how index insurance might assist low-income families without degrading the commons can be informative for insurance administrators and policymakers.

Willingness to pay (WTP) estimation typically involves some strategy for mapping nondichotomous contingent valuation (CV) responses onto a dichotomous yes/no dependent variable. We propose a new approach to selecting which responses qualify as ‘yes.’ We apply the proposed method to polychotomous CV data for preventative land management programs in the Great Basin. We also estimate WTP using other methods of response recoding found in the literature. By contrasting the results under different approaches, we demonstrate how and why WTP point estimates vary across recoding methods and discuss the comparative advantages of our more generalized recoding approach that is based on predicted probabilities of ‘yes’ responses.

High rates of commercial fertilizer and animal manure application on cropland have been identified as an important cause of ground and surface water degradation in many areas of the country. Suggested remedies are often based on the idea that fertilization levels are economically irrational for the individual farmer. The received wisdom is that farmers could simultaneously improve their own economic well being and reduce the degradation of the ground and surface waters by fertilizing only to meet crop nutrient needs. Rather than assuming that farmers act irrationally, this study examines the fertilization problem on a mixed crop-livestock farm from the perspective of a risk-averse farmer coping with two key uncertainties: crop yield response to nitrogen applications and the nitrogen content of manure. The effects on fertilization decisions by such a farmer of various policy prescriptions for reducing surface and ground water pollution are examined. The results underscore the importance of understanding producer behavior for the design of economically sound policy.

The use of chemical pesticides frequently causes minor pests to become serious problems by disturbing the natural controls that keep them in check. As a result, it is possible to suffer heavier crop losses after pesticides are introduced than before their introduction. Efficient use of pesticides requires complete biological modeling that takes the appropriate predator-prey relationships into account. A bioeconomic model is introduced involving three key species: a primary target pest, a secondary pest, and a natural enemy of the secondary pest. Optimal decision rules are derived and contrasted with myopic decision making, which treats the predator-prey system as an externality. The issue of resistance in the secondary pest is examined briefly.