Spatial econometric issues for bio-economic and land-use modelling

We survey the literature on spatial bio-economic and land-use modelling and assess its thematic development. Unobserved site-specific heterogeneity is a feature of almost all the surveyed works, and this feature, it seems, has stimulated significant methodological innovation. In an attempt to improve the suitability with which the prototype incorporates heterogeneity, we consider modelling alternatives and extensions. We discuss solutions and conjecture others.

How big is your neighbourhood? Spatial implications of market participation among Filipino smallholders

We present a procedure for estimating two quantities defining the spatial externality in discrete-choice commonly referred to as 'the neighbourhood effect'. One quantity, the propensity for neighbours to make the same decision, reflects traditional preoccupations; the other quantity, the magnitude of the neighbourhood itself, is novel. Because both quantities have fundamental bearing on the magnitude of the spatial externality, it is desirable to have a robust algorithm for their estimation. Using recent advances in Bayesian estimation and model comparison, we devise such an algorithm and illustrate its application to a sample of northern-Filipino smallholders. We determine that a significant, positive, neighbourhood effect exists; that, among the 12 geographical units comprising the sample, the neighbourhood spans a three-unit radius; and that policy prescriptions are significantly altered when calculations account for the spatial externality.

A revised Tobit procedure for mitigating bias in the presence of non-zero censoring with an application to milk-market participation in the Ethiopian highlands

Fixed transactions costs that prohibit exchange engender bias in supply analysis due to censoring of the sample observations. The associated bias in conventional regression procedures applied to censored data and the construction of robust methods for mitigating bias have been preoccupations of applied economists since Tobin [Econometrica 26 (1958) 24]. This literature assumes that the true point of censoring in the data is zero and, when this is not the case, imparts a bias to parameter estimates of the censored regression model. We conjecture that this bias can be significant; affirm this from experiments; and suggest techniques for mitigating this bias using Bayesian procedures. The bias-mitigating procedures are based on modifications of the key step that facilitates Bayesian estimation of the censored regression model; are easy to implement; work well in both small and large samples; and lead to significantly improved inference in the censored regression model. These findings are important in light of the widespread use of the zero-censored Tobit regression and we investigate their consequences using data on milk-market participation in the Ethiopian highlands. (C) 2004 Elsevier B.V. All rights reserved.

Production efficiency in the von Liebig model

The objective of this paper is to revisit the von Liebig hypothesis by reexamining five samples of experimental data and by applying to it recent advances in Bayesian techniques. The samples were published by Hexem and Heady as described in a further section. Prior to outlining the estimation strategy, we discuss the intuition underlying our approach and, briefly, the literature on which it is based. We present an algorithm for the basic von Liebig formulation and demonstrate its application using simulated data (table 1). We then discuss the modifications needed to the basic model that facilitate estimation of a von Liebig frontier and we demonstrate the extended algorithm using simulated data (table 2). We then explore, empirically, the relationships between limiting water and nitrogen in the Hexem and Heady corn samples and compare the results between the two formulations (table 3). Finally, some conclusions and suggestions for further research are offered.

Bayesian ranking and selection of fishing boat efficiencies

The steadily accumulating literature on technical efficiency in fisheries attests to the importance of efficiency as an indicator of fleet condition and as an object of management concern. In this paper, we extend previous work by presenting a Bayesian hierarchical approach that yields both efficiency estimates and, as a byproduct of the estimation algorithm, probabilistic rankings of the relative technical efficiencies of fishing boats. The estimation algorithm is based on recent advances in Markov Chain Monte Carlo (MCMC) methods—Gibbs sampling, in particular—which have not been widely used in fisheries economics. We apply the method to a sample of 10,865 boat trips in the US Pacific hake (or whiting) fishery during 1987–2003. We uncover systematic differences between efficiency rankings based on sample mean efficiency estimates and those that exploit the full posterior distributions of boat efficiencies to estimate the probability that a given boat has the highest true mean efficiency.

Dual technological development in Botswana agriculture: A Stochastic input distance function approach

To improve the welfare of the rural poor and keep them in the countryside, the government of Botswana has been spending 40% of the value of agricultural GDP on agricultural support services. But can investment make smallholder agriculture prosperous in such adverse conditions? This paper derives an answer by applying a two-output six-input stochastic translog distance function, with inefficiency effects and biased technical change to panel data for the 18 districts and the commercial agricultural sector, from 1979 to 1996 This model demonstrates that herds are the most important input, followed by draft power. land and seeds. Multilateral indices for technical change, technical efficiency and total factor productivity (TFP) show that the technology level of the commercial agricultural sector is more than six times that of traditional agriculture and that the gap has been increasing, due to technological regression in traditional agriculture and modest progress in commercial agriculture. Since the levels of efficiency are similar, the same patient is repeated by the TFP indices. This result highlights the policy dilemma of the trade-off between efficiency and equity objectives.

Effect of Information about benefits of biotechnology on consumer acceptance of genetically modified food; evidence from experimental auctions in the United States, England, and France

This study investigates the effect of information about potential benefits of biotechnology on consumer acceptance of genetically modified (GM) foods. Consumer willingness to accept compensation to consume a GM food was elicited using an incentive compatible auction mechanism in three US states (California, Florida, and Texas) and in two European countries (England and France). Results indicate that information on environmental benefits, health benefits and benefits to the third world significantly decreased the amount of money consumers demanded to consume GM food; however, the effect of information varied by type of information and location. Consistent with prior research, we find that initial attitudes toward biotechnology have a significant effect on how individuals responded to new information.

Comparative advantage in demand: Experimental evidence of preferences for genetically modified food in the United States and European Union

The United States (US) exports more than US$6 billion in agricultural commodities to the European Union (EU) each year, but one issue carries the potential to diminish this trade: use of biotechnology in food production. The EU has adopted more stringent policies towards biotechnology than the US. Understanding differences in European and American policies towards genetically modified (GM) foods requires a greater understanding of consumers' attitudes and preferences. This paper reports results from the first large-scale, cross-Atlantic study to analyse consumer demand for genetically modified food in a non-hypothetical market environment. We strongly reject the frequent if convenient assumption in trade theory that consumer preferences are identical across countries: the median level of compensation demanded by English and French consumers to consume a GM food is found to be more than twice that in any of the US locations. Results have important implications for trade theory, which typically focusses on differences in specialization, comparative advantage and factor endowments across countries, and for on-going trade disputes at the World Trade Organization.

Time-varying coefficients in the almost ideal demand system: An empirical appraisal

This paper provides a generalisation of the structural time series version of the Almost Ideal Demand System (AIDS) that allows for time-varying coefficients (TVC/AIDS) in the presence of cross-equation constraints. An empirical appraisal of the TVC/AIDS is made using a dynamic AIDS with trending intercept as the baseline model with a data set from the Italian Household Budget Survey (1986-2001). The assessment is based on four criteria: adherence to theoretical constraints, statistical diagnostics on residuals, forecasting performance and economic meaningfulness. No clear evidence is found for superior performance of the TVC/AIDS, apart from improved short-term forecasts.

Food scares and trust: A European study

The complex interactions between the determinants of food purchase under risk are explored using the SPARTA model, based on the theory of planned behaviour, and estimated through a combination of multivariate statistical techniques. The application investigates chicken consumption choices in two scenarios: ( a) a 'standard' purchasing situation; and (b) following a hypothetical Salmonella scare. The data are from a nationally representative survey of 2,725 respondents from five European countries: France, Germany, Italy, the Netherlands and the United Kingdom. Results show that the effects and interactions of behavioural determinants vary significantly within Europe. Only in the case of a food scare do risk perceptions and trust come into play. The policy priority should be on building and maintaining trust in food and health authorities and research institutions, while food chain actors could mitigate the consequences of a food scare through public trust. No relationship is found between socio-demographic variables and consumer trust in food safety information.

Consumer welfare and the loss induced by withholding information: The case of BSE in Italy

The paper develops a measure of consumer welfare losses associated with withholding it formation about a possible link between BSE and vCJD. The Cost of Ignorance (COI) is measured by comparing the utility of the informed choice with the utility of the uninformed choice, under conditions of improved information. Unlike previous work that is largely based on a single equation demand model, the measure is obtained retrieving a cost,function from a dynamic Almost Ideal Demand System. The estimated perceived loss for Italian consumers due to delayed information ranges from 12 percent to 54 percent of total meat expenditure, depending on the month assumed to embody correct beliefs about the safety level of beef.

Tropospheric ozone and winter wheat production in England and Wales: A note

Tropospheric ozone is an air pollutant thought to reduce crop yields across Europe. Much experimental scientific work has been completed or is currently underway to quantify yield effects at ambient ozone levels. In this research, we seek to directly evaluate whether such effects are observed at the farm level. This is done by intersecting a farm level panel dataset for winter wheat farms in England & Wales with information on ambient ozone, and estimating a production function with ozone as a fixed input. Panel data methods, Generalised Method of Moments (GMM) techniques and nested exogeneity tests are employed in the estimation. The results confirm a small, but nevertheless statistically significant negative effect of ambient ozone levels on wheat yields.

Energy substitutability in transition agriculture: estimates and implications for Hungary

Subsidised energy prices in pre-transition Hungary had led to excessive energy intensity in the agricultural sector. Transition has resulted in steep input price increases. In this study, Allen and Morishima elasticities of substitution are estimated to study the effects of these price changes on energy use, chemical input use, capital formation and employment. Panel data methods, Generalised Method of Moments (GMM) and instrument exogeneity tests are used to specify and estimate technology and substitution elasticities. Results indicate that indirect price policy may be effective in controlling energy consumption. The sustained increases in energy and chemical input prices have worked together to restrict energy and chemical input use, and the substitutability between energy, capital and labour has prevented the capital shrinkage and agricultural unemployment situations from being worse. The Hungarian push towards lower energy intensity may be best pursued through sustained energy price increases rather than capital subsidies. (C) 2003 Elsevier B.V. All rights reserved.