Effect of public subsidies on farm technical efficiency: a meta-analysis of empirical results

Investigating the impact of public subsidies on farm technical efficiency is becoming a critical issue in applied agricultural policy analysis. This article presents a meta-analysis of empirical results on this issue, based on data gathered from a systematic literature review. We find that, in the empirical literature, subsidies are commonly negatively associated with farm technical efficiency. Meta-regression estimation results show that the direction (significantly negative, significantly positive or non-significant) of the observed effects is sensitive to the way subsidies are modelled in the empirical studies.     

Is Talk Cheap?

For the steel import quota bill of 1999, each word in the Congressional Record costs $39 in campaign contributions from the steel industry. Consequently, our answer is "Yes, talk is cheap!"     

FARM PROFITABILITY AND BUREC WATER SUBSIDIES: AN LP LOOK AT A REGION

Most studies of irrigation water subsidies focus on farmers' "ability-to-pay" for irrigation-related construction costs without questioning the methods used to subsidize these costs. This article shows how BUREC water subsidies could be eliminated by increasing federal water and power rates on long-term irrigation contracts. The welfare effects of this "desubsidization" are examined for California's San Joaquin Valley, which uses federal power for groundwater pumping and the conveyance of surface water. A linear programming model provides estimates of the change in farm profitability from imposing full-cost federal water and power rates. The desubsidization has a disproportionate impact on growers of water intensive crops while benefiting non-agricultural power users and the U.S. Treasury. This points to the conclusion that charging full-cost rates would redistribute $4.58 million of profit-income per year without significant regional impacts on growers.     

Spillovers from regulating corporate campaign contributions

Populist clamor and recent Supreme Court decisions have renewed calls for increased regulation of corporate money in politics. Few empirical estimates exist, however, on the implications of existing rules on firms’ political spending. Exploiting within firm-cycle cross-candidate variation and across firm-cycle variation, we demonstrate that the regulation of PAC campaign contributions generates large spillovers into other corporate political expenditures such as lobbying. Using both high dimensional fixed effects and regression discontinuity designs, we demonstrate that firms constrained by campaign contribution limits spend between $549,000 and $1.6M more on lobbying per election cycle, an amount that is more than 100 times the campaign contribution limit. These results demonstrate that, similar to regulations in other domains of the economy, constraining specific corporate political activities often yields unintended effects.     

U.S. farm dynamics and the distribution of U.S. agricultural subsidies

The persistent instability of the agricultural sector is the fundamental premise of most agricultural policy. Yet no research has ever quantified the aggregate dynamics of individual farms in the US. This article is the first to combine the US Census of Agriculture with the Agricultural Resource Management Survey to observe the dynamics of nearly 1.5 million farms. The data reveal substantial variation in farm size expansion and contraction. Most of this variation is unobservable in the sector totals reported by the US Department of Agriculture each year. The distribution of agricultural subsidies suggests that subsidies become more important as farms get smaller and may play a role in slowing farm size contraction.     

A dynamic multi-commodity model of the agricultural sector: A regional application in Brazil

This paper develops a dynamic model to analyze the development process in the agricultural sector. Formulated as a recursive linear programming model, it contains several commodities as outputs, farm and regional resource constraints on owned and purchased inputs-including working capital-and several farm sizes. The objective function is assumed to be separable for each farm size and additive for the region and measures for each year the net expected revenues from crop and livestock production less an investment charge. Prices are exogenous. The model is applied to a rapidly developing agricultural region in Southern Brazil and tested for its ability to trace regional farm sector development over a decade. It is then used to analyze the impact of alternative agricultural policies including price and credit subsidies.     

Subsidizing charitable contributions: a natural field experiment comparing matching and rebate subsidies

We report the results of a field experiment conducted in conjunction with a mailed fundraising campaign of a nonprofit organization. The experiment is designed to compare the response of donors to subsidies in the form of matching amounts or rebated amounts. Matching subsidies are used by many corporations as an employee benefit; the US federal tax system encourages giving using a rebate subsidy by making donations tax deductible. The design includes a control group and two levels of subsidy of each type. Our main result is that matching subsidies result in larger total donations to charities than rebate subsidies, a result that is qualitatively similar to the lab findings. The estimated price elasticities for the matching subsidy are very similar to (and insignificantly different from) the lab experiments, while rebate subsidies lead to lower contributions in the field than in the lab. Since rebates in the field involve substantial lags and additional complications as compared with the “instant rebates” of the lab, this latter difference is not unexpected. The matching results are an important step in validating lab estimates of responsiveness to subsidies of charitable giving.

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Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users.      

Annual Index

The author of this article expands the background theory of voting to incorporate the undergraduate majors of members of Congress. Examining nine votes on trade across the 109th and 110th Congresses reveals that economics majors are the only category of college major to vote in favor of free trade in a predictable way. Controls for a variety of factors including ideology, race, campaign contributions, and the inclusion of votes specifically on Cuba fail to diminish the effect. While economics majors are more likely to take a free trade position, not every vote that presupposes a free trade outcome is supported by economics majors. On the issue of sugar subsidies, being an economics major does not influence the direction of a congressional member's vote.     

Using GIS-based ecological–economic modeling to evaluate policies affecting agricultural watersheds

This paper has three purposes. The first is to conceptualize agricultural watersheds as complex adaptive human ecosystems that co-produce agricultural goods and ecosystem services. The second is to demonstrate a generalizable framework for the spatial modeling of ecosystem service production in watersheds based on this conceptualization. The third is to examine the policy implications of the analysis conducted using this spatial decision support system (SDSS).Analyses using the SDSS show that restrictions on soil loss to the “tolerance level” (T) cause average farm income to decline by only 4%, a reduction that is nearly eliminated if the Conservation Reserve Program (CRP) is available to farmers as an income-generating alternative. The spatially variable response of farmers to soil loss restrictions and the CRP creates a complex pattern of winners and losers and a markedly different land use pattern and crop mix than occurs without these programs. The land use pattern associated with T restrictions and the CRP yields about 64% lower erosion rates and 43% lower sediment yields than the pattern without T restrictions or CRP. These and other results from the SDSS analysis point out that ecosystem service-based subsidies, such as CRP, improve the joint production of farm income, soil conservation and water quality in agricultural watersheds. These subsidies could perhaps receive greater funding by shifting agricultural subsidies from income supports tied to yield and price as well as other crop-based programs. In this way, public expenditures on agriculture would produce a valuable public benefit in the form of load reductions in a TMDL context, and an augmentation of ecosystem services now in decline in many agricultural watersheds. Further methodological developments now underway using evolutionary algorithms can find near-optimal solutions for farms over time and for landscape patterns over whole watersheds.     

Contributions to the exchequer funds by state level public sector enterprises: does political alignment matter?

Regular payments or contributions to states’ exchequer funds are mandated for state level public sector enterprises (SLPEs) in most states in India. However, in the absence of a regular mechanism to ensure timely payments, the contributions are abysmally poor. In most SLPEs, the situation is driven by the presence of soft budget constraints and strong financial support from the state governments. The current study analyses the effect of political factors on the contribution that SLPEs make to the state governments’ exchequer funds. Using different econometric methods, the study finds that SLPEs located in assembly constituencies that are politically aligned with the state government, make frequent and larger contributions to the exchequer funds. Surprisingly, the subsidies provided to the SLPEs by state governments are not driven by political alignment between the state government and the constituency where the enterprise is located. In fact, subsidies compensate for the contributions to the extent that there is no effect of political alignment on net contributions (contributions–subsidies) by SLPEs to state governments. Finally, political alignment has a strong influence on the relative share of contributions made by SLPEs to state governments vis-à-vis the centre. These results are robust across different model specifications.     

The economic consequences of substituting carbon payments for crop subsidies in U.S. agriculture

There is a growing body of literature on the costs of sequestering carbon. However, no studies have examined the interplay between farm commodity programs and carbon sequestration programs. This study investigates two dimensions of the interaction between farm commodity programs and afforestation programs, using a price-endogenous sector model of agriculture in the United States. First, this study compares the fiscal and welfare costs of achieving specific carbon targets through afforestation, with and without current farm programs. Second, it examines the welfare, fiscal, and carbon consequences of replacing existing farm subsidies, wholly or in part, with payments for carbon. Two approaches, Hicksian and Marshallian, are investigated. In the first, the sector model is used to quantify the carbon consequences and fiscal costs associated with various combinations of farm commodity and carbon sequestration programs that leave consumers and producers in the U.S. agricultural sector no worse off than under existing farm programs. The second approach focuses on the carbon and welfare consequences of various farm commodity and carbon sequestration programs that hold total program fiscal costs constant at current levels. Althouth the methodology and data are applied to the United States, the issues addressed are common in a number of developed nations, particularly within the European Union (EU). Adapting existing sector models in these nations to perform similar analyses would provide policy makers with more precise information about the nature of the trade-offs involved with second-best policies for replacing farm commodity subsidies with tree planting subsidies.The research reported in this paper was partially funded by the United States Environmental Protection Agency under contract number 68W90077. It does not reflect the official position of that agency. Mention of trade names does not constitute endorsement.     

Economic Impacts of Multiple Agro-Environmental Policies on New Zealand Land Use

This paper investigates the implications of policy on farm income, land use, and the environment when New Zealand landowners face multiple environmental constraints. It also looks at the interaction between climate and nutrient reduction policy and the extent to which one policy can be used to meet the other’s objectives. We use a non-linear, partial equilibrium mathematical programming model of New Zealand land use to assess the economic impacts of climate and water policies at the New Zealand territorial authority level. The spatially explicit agro-environmental economic model estimates changes in land use, agricultural output, land management, and environmental impacts. The policies investigated include a range of carbon prices on land-based emissions ($0–30/tCO\(_{2\mathrm{e}}\)) as well a range of prices on nitrogen leaching from diffuse sources ($0–30/kgN). We estimate that implementing stand-alone greenhouse gas and nutrient emissions reduction policies for the agricultural and forestry sectors will create environmental benefits outside the scope of the policy. However, not all environmental outputs improve, and net farm revenue declines by between 0 and 11%. Simultaneously implementing the two policies results in the desired goals of reductions in nitrogen and greenhouse gas emissions with a marginal economic burden on landowners (i.e. 1–2% additional loss in farm profit relative to a stand-alone policy).     

农民权利配置与收入增长关系研究

农民权利配置在促进农民收入增长的同时,也存在着制约农民收入增长的情况。本文力图明晰农民收入增长中权利配置的主要问题及产生原因,找到解决对策。本文首先对农民权利配置与农民收入关系做了理论及描述性分析,进一步实证分析了1994-2011年农民权利配置与农民收入增长的关系。结果表明：长期以来,国家配置为主的配置方式,与国家支农支出、农地流转比例、农用机械总动力有关的权利配置和其对农民收入增长影响系数的匹配不当,收益权配置为主的配置偏好共同导致农民权利配置效率偏低,影响到农民收入增速长期低于GDP增速。本文建议控制直接补贴规模,加大农业科技投入,适度控制农地流转的比例及速度,引导农民开设家庭农场,扶持专业化农业生产,从而提高农民权利配置效率,有效促进农民收入增长。     

Bioenergy Crop Production in the United States: Potential Quantities, Land Use Changes, and Economic Impacts on the Agricultural Sector

The U.S. Departments of Agriculture and Energyjointly analyzed the economic potential for,and impacts of, large-scale bioenergy cropproduction in the United States. Anagricultural sector model (POLYSYS) wasmodified to include three potential bioenergycrops (switchgrass, hybrid poplar, and willow). At farmgate prices of US $2.44/GJ, anestimated 17 million hectares of bioenergycrops, annually yielding 171 million dry Mg ofbiomass, could potentially be produced at aprofit greater than existing agricultural usesfor the land. The estimate assumes highproductivity management practices are permittedon Conservation Reserve Program lands. Traditional crops prices are estimated toincrease 9 to 14 percent above baseline pricesand farm income increases annually by US $6.0billion above baseline.At farmgate prices of US $1.83/GJ, anestimated 7.9 million hectares of bioenergycrops, annually yielding 55 million dry Mg ofbiomass, could potentially be produced at aprofit greater than existing agricultural usesfor the land. The estimate assumes managementpractices intended to achieve highenvironmental benefits on Conservation ReserveProgram lands. Traditional crops prices areestimated to increase 4 to 9 percent abovebaseline prices and farm income increasesannually by US $2.8 billion above baseline.     

Agri-Environmental Program Compliance in a Heterogeneous Landscape

Heterogeneity of agricultural landscapes may necessitate the use of spatially targeted instruments. But costly enforcement may be needed to ensure compliance with these policies. This paper examines the design of agri-environmental policies designed to achieve reductions in fertilizer application rates and installation of riparian buffers through the use of incentive-based instruments. We derive monitoring strategies capable of ensuring perfect compliance from risk neutral farmers given realistic limits on penalties for non-compliance. We then apply that framework empirically using a parametric model reflecting Finnish agricultural and environmental conditions. The results of our simulations indicate that subsidies for installing and maintaining buffer strips, used alone, are the most cost effective means of reducing nitrogen runoff from crop production. This policy is also the most attractive politically, in that it reduces farm income less than the alternatives considered.     

ROLE OF VOLUNTARY PROGRAMS IN AGRICULTURAL NONPOINT POLLUTION POLICY

Voluntary programs' effectiveness in reducing agricultural pollution is under debate in the professional literature, within government regulatory agencies, and among legislators. In general, non-farm business owners bear little or none of the costs of environmental degradation that their business activities cause. However, farmers who reside on the farm may bear some of the costs associated with using chemicals. As a result, voluntary programs encouraging adoption of management practices that simultaneously improve on farm and off-farm environmental quality may not require subsidizing farmers for their full loss in profits. However, farmers likely will not adopt regulatory agencies' recommended management practices that do not positively affect on farm environmental quality unless subsidies exceed full adoption costs .     

CAFTA,CAMPAIGN CONTRIBUTIONS,AND THE ROLE OF SPECIAL INTERESTS

This paper analyzes the passage of the Central American Free Trade Agreement (CAFTA) in 2005, paying particular attention to the role of campaign contributions. The CAFTA vote is significant in that the context in which it occurred was one in which campaign contributions were more likely to influence votes. By more carefully identifying the special interest groups actively involved in the CAFTA debate, I provide a more accurate assessment of the impact of the contributions made by these groups. I use instrumental variables to control for the potential endogeneity of campaign contributions and find that these contributions played at best a secondary role in determining the outcome of the CAFTA vote in the U.S. House of Representatives.     

Costs and benefits of on-farm nature conservation

The costs of on-farm nature conservation is an important issue in Dutch agriculture. As nature is a public good, nature conservation cannot do without subsidies from the government. The question of how much farmers should receive in subsidies in order to keep farms engaged in conservation activities is highly topical. In this article, the questions of how much farmers should receive in subsidies and what other factors motivate or demotivate farmers to participate in on-farm nature conservation are addressed. The study was carried out for a particular region in the northern Netherlands and was initiated by the concerns that farmers organisations had about the level of subsidies for landscape conservation as a major form of nature conservation on dairy farms in this region.In this study, both a normative model and a survey were employed. A normative economic dairy farm model was first used to determine differences in income between a typical farm involved in landscape conservation and a typical farm not involved in landscape conservation. Results from the model show that the farm involved in conservation earned a lower income than the farm not involved in conservation. This was due to the first farmer's smaller scale, lower intensity and lower productivity. The lower income, however, was compensated for by conservation subsidies. Next, a survey concerning on-farm nature conservation in general was carried out among the farmers in this area. From the survey results, it appeared that the majority of the respondents were satisfied, at least to some extent, with the level of subsidies for on-farm nature conservation. Moreover, the survey also revealed that the farmers' commitment to their natural environment strongly motivates farmers to get involved in on-farm nature conservation schemes, whereas the uncertainty about regulations and the feeling of being controlled too much demotivate them.The results show the complementarity of the two methods. The findings of the survey confirm the main findings of the normative model calculations, and, moreover, the survey reveals that in addition to monetary compensation, other factors play a role for farmers in the decision to get involved in on-farm nature conservation.     

Analyzing the effect of advanced agriculture development policy

This paper broadens the scope of current theoretical studies, divides rural agriculture into two sectors—advanced and traditional, and takes into consideration the land factor and the urban informal sector. Under the assumption that wages in the advanced agricultural sector are higher than in the traditional agricultural sector, this paper analyzes the effect of policies to promote advanced agricultural development with the comparative static method. The main conclusions of this paper are: wage subsidization of the advanced agricultural sector, in addition to having the same economic impact as interest subsidies on the advanced agricultural sector, could also increase the land employment in the advanced agricultural sector and reduce that in the traditional agricultural sector. Therefore, the effect of wage subsidizing policies is stronger than that of interest subsidies, while land rent subsidies for the advanced agricultural sector have the same economic effect as wage subsidies.     

Political connection,corporate philanthropy and efficiency: Evidence from China’s anti-corruption campaign

We find that the 2013 Chinese anti-corruption campaign remarkably reduced charitable donations from listed companies with strong political connections, and lessened government subsidies to these companies, implying a reciprocal relationship between companies and the government prior to the campaign. The campaign also improved the productivity of companies with strong connections. The results are consistent with a model in which favor exchanges between firms and the government divert resources away from production in a corrupt environment. These findings highlight a self-serving, and sometimes corrupt, motive of corporate donation, and imply that the campaign is effective in curbing corrupt collusion between companies and government officials. Moreover, they give empirical support to the negative efficiency implications of corruption.