International Agricultural Trade under Regulatory Asymmetry: An Economic Analysis of SME Export Behavior

Over the last three decades, international agricultural trade has grown significantly. Technological advances in transportation logistics and storage have created opportunities to ship anything almost anywhere. Bilateral and multilateral trade agreements have also opened new pathways to an increasingly global market place. Yet, international agricultural trade is often constrained by differences in regulatory regimes. The impact of “regulatory asymmetry” is particularly acute for small and medium sized enterprises (SMEs) that lack resources and expertise to successfully operate in markets that have substantially different regulatory structures. As governments seek to encourage the development of SMEs, policy makers often confront the critical question of what ultimately motivates SME export behavior. Specifically, there is considerable interest in understanding how SMEs confront the challenges of regulatory asymmetry. Neoclassical models of the firm generally emphasize expected profit maximization under uncertainty, however these approaches do not adequately explain the entrepreneurial decision under regulatory asymmetry. Behavioral theories of the firm offer a far richer understanding of decision making by taking into account aspirations and adaptive performance in risky environments. This paper develops an analytical framework for decision making of a single agent. Considering risk, uncertainty and opportunity cost, the analysis focuses on the export behavior response of an SME in a situation of regulatory asymmetry. Drawing on the experience of fruit processor in Muzaffarpur, India, who must consider different regulatory environments when shipping fruit treated with sulfur dioxide, the study dissects the firm-level decision using @Risk, a Monte Carlo computational tool.

Modelling the effects of nitrogen deposition and carbon dioxide enrichment on forest carbon balance

Atmospheric CO2 concentration ([CO2]) has increased over the last 250 years, mainly due to human activities. Of total anthropogenic emissions, almost 31% has been sequestered by the terrestrial biosphere. A considerable contribution to this sink comes from temperate and boreal forest ecosystems of the northern hemisphere, which contain a large amount of carbon (C) stored as biomass and soil organic matter. Several potential drivers for this forest C sequestration have been proposed, including increasing atmospheric [CO2], temperature, nitrogen (N) deposition and changes in management practices. However, it is not known which of these drivers are most important. The overall aim of this thesis project was to develop a simple ecosystem model which explicitly incorporates our best understanding of the mechanisms by which these drivers affect forest C storage, and to use this model to investigate the sensitivity of the forest ecosystem to these drivers. I firstly developed a version of the Generic Decomposition and Yield (G’DAY) model to explicitly investigate the mechanisms leading to forest C sequestration following N deposition. Specifically, I modified the G’DAY model to include advances in understanding of C allocation, canopy N uptake, and leaf trait relationships. I also incorporated a simple forest management practice subroutine. Secondly, I investigated the effect of CO2 fertilization on forest productivity with relation to the soil N availability feedback. I modified the model to allow it to simulate short-term responses of deciduous forests to environmental drivers, and applied it to data from a large-scale forest Free-Air CO2 Enrichment (FACE) experiment. Finally, I used the model to investigate the combined effects of recent observed changes in atmospheric [CO2], N deposition, and climate on a European forest stand. The model developed in my thesis project was an effective tool for analysis of effects of environmental drivers on forest ecosystem C storage. Key results from model simulations include: (i) N availability has a major role in forest ecosystem C sequestration; (ii) atmospheric N deposition is an important driver of N availability on short and long time-scales; (iii) rising temperature increases C storage by enhancing soil N availability and (iv) increasing [CO2] significantly affects forest growth and C storage only when N availability is not limiting.