Is Meta-Analysis a Noah's Ark for Non-Market Valuation?

This paper describes meta-analytical methods as they have been appliedto non-market valuation research. These studies have been used to reviewand synthesize literature and, more recently, in benefit transfer. Thissecond use imposes a higher standard on the consistency in economicconcepts being summarized and in the resources included in ameta-analysis. To meet this need, the paper proposes and illustrates astructural framework using a generalized method of moments estimator toestimate the parameters of a preference function with the benefitsestimates usually encountered in meta-analytic summaries.     

COMBINING REVEALED AND STATED PREFERENCE DATA TO ESTIMATE THE NONMARKET VALUE OF ECOLOGICAL SERVICES: AN ASSESSMENT OF THE STATE OF THE SCIENCE

Abstract This paper reviews the marketing, transportation and environmental economics literature on the joint estimation of revealed preference (RP) and stated preference (SP) data. The RP and SP approaches are first described with a focus on the strengths and weaknesses of each. Recognizing these strengths and weaknesses, the potential gains from combining data are described. A classification system for combined data that emphasizes the type of data combination and the econometric models used is proposed. A methodological review of the literature is pursued based on this classification system. Examples from the environmental economics literature are highlighted. A discussion of the advantages and disadvantages of each type of jointly estimated model is then presented. Suggestions for future research, in particular opportunities for application of these models to environmental quality valuation, are presented.     

Farm Economics of Bird Flu

Outbreaks of infectious animal diseases represent a major threat to agriculture and can impose significant social and economic costs. The potential for devastating epidemics, such as the recent outbreaks of highly pathogenic avian influenza (HPAI) in Asia, Europe, and Africa, has prompted major global investments in animal disease prevention and control, both public and private. However, there has been little research into the effects of alternative public policies on farm‐level actions to prevent and control HPAI and the implications for disease impacts. Animal disease management involves both ex ante investments to reduce the probability of infection and ex post actions to contain the spread of disease once introduced. The public sector can play an important part in disease mitigation through provision of public disease prevention and control. Another vital role for government in mitigating the potential impacts of HPAI is in the development of well‐designed policies to induce socially optimal ex ante private investment while providing incentives for truthful disclosure of disease status. This study employs an economic epidemiology framework to examine the effects of farmer behavior on disease introduction and transmission and to analyze the effects of public policy decisions under alternative scenarios. Les éclosions de maladies animales infectieuses représentent une menace importante pour l’agriculture et peuvent entraîner des coûts socio‐économiques considérables. L’éventualité d’épidémies dévastatrices, telles que les récentes flambées d’influenza aviaire hautement pathogène (IAHP) en Asie, en Europe et en Afrique, a suscité d’importants investissements publics et privés à l’échelle mondiale pour prévenir et lutter contre ces maladies. Cependant, peu de recherches se sont penchées sur les effets des politiques publiques de rechange sur les mesures prises à la ferme pour prévenir et lutter contre l’IAHP et les répercussions des maladies. La gestion des maladies animales nécessite des investissements ex ante pour diminuer la probabilité d’infection et des mesures ex poste pour contenir la propagation d’une maladie une fois introduite. Le secteur public peut jouer un rôle important dans l’atténuation d’une maladie en instaurant des programmes publics de prévention et de lutte. Pour atténuer les conséquences potentielles de l’IAHP, le gouvernement peut élaborer des politiques efficaces pour inciter des investissements privés ex ante socialement optimaux tout en offrant des stimulants pour encourager la divulgation véridique de la situation zoosanitaire. Dans la présente étude, nous avons utilisé un cadre épidémiologique et économique pour examiner les conséquences du comportement de l’exploitant agricole sur l’introduction et la transmission des maladies et pour analyser les conséquences des décisions de politique publique selon divers scénarios.     

Valuing soil conservation benefits of agroforestry: contour hedgerows in the Eastern Visayas,Philippines

Trees can be considered as investments made by economic agents to prevent depreciation of natural assets such as stocks of top soil and water In agroforestry systems farmers use trees in this manner by deliberately combining them with agricultural crops on the same unit of land. Although advocates of agroforestry have asserted that soil conservation is one of its primary benefits, empirical estimates of these benefits have been lacking due to temporal and spatial complexity of agroforestry systems and the nonmarket aspect of soil capital assets. This study designs and applies a bio-economic framework for valuing the soil conservation benefits of agroforestry. The framework is tested with econometric analysis of data from surveys of households in Eastern Visayas. Philippines, where USAID/Government of Philippines introduced contour hedgerow agroforestry in 1983. By constructing a weighted soil quality index that also incorporates measures of soil fertility, texture and color in addition to erosion, we extend previous economic studies of soil resources. This index is regressed on a variety of farming and site specific bio-physical variables. Next, we use a Cobb-Douglas profit function to directly relate agricultural profits and soil quality. Thus, the value of soil conservation is measured as a quasi-rent differential or the share of producer surplus associated with a change in soil quality. Because this framework assumes the existence of markets, the assumption is tested by analysing the statistical significance of consumption side variables, e.g., number of household members, on production side variables, e.g., profits. Instrumental variables are used to handle the endogeneity of the soil index in the profit equation. Seemingly unrelatedregression (SUR) analysis is used to accommodate correlation of errors across the soil and profit equations. Regression results reveal the importance of agroforestry intensity, private ownership, land fragmentation, and familiarity with soil conservation as positive covariates of soil quality. Analysis of production data indicate the importance of market prices, education, farming experience, farm size, topography, and soil quality as positive covariates of household profits Investments in agroforestry to improve or maintain soil capital can increased annual agricultural profits by US$53 for the typical household, which is 6% of total income. However, there are significant up-front costs. Given that small farmers in tropical uplands are important players in the management of deteriorating soil and forest resources, policy makers may want to consider supporting farmers in the early years of agroforestry adoption.     

Spatial Complementarity of Forests and Farms: Accounting for Ecosystem Services

Our article considers the economic contributions of forest ecosystem services, using a case study from Flores, Indonesia, in which forest protection in upstream watersheds stabilize soil and hydrological flows in downstream farms. We focus on the demand for a weak complement to the ecosystem services—farm labor—and account for spatial dependence due to economic interactions, ecosystem processes, and data integration. The estimated models have theoretically expected properties across eight different specifications. We find strong evidence that forest ecosystem services provide economically substantive benefits to local people and that these services would be substantially undervalued if spatial dependence is ignored.     

Is The Foreign Exchange Market Efficiency Adaptive? The Empirical Evidence From India

ABSTRACT

Is market efficiency a time-varying condition or static? Do economic and noneconomic events explain evolving efficiency? This study tries to respond to these two important questions of efficiency in foreign exchange markets. For empirical scrutiny, as per the framework of the adaptive market hypothesis, the authors employ recent methods that are robust and that possess stronger power properties. We find that efficiency is time dependent and that major economic and noneconomic events cause a change in efficiency. The novelty of this study lies in its attempt to measure the relative degrees of efficiency for major currency pairs and to find the factors of the efficiency level.     

Leverage adjustment after mergers and acquisitions

Australian firms have leverage targets. Speeds of adjustment to a target capital structure are higher than previously published estimates when there are major disruptions to firms’ leverage ratios. Firms exploit company‐specific characteristics to achieve these targets. Profitability and cash levels are important drivers of the speeds of adjustment. Firms, which have lower profitability or higher cash levels, appear to adjust faster.     

Converting Forests to Farms: The Economic Benefits of Clearing Forests in Agricultural Settlements in the Amazon

Agricultural expansion into tropical forests is believed to bring local economic benefits at the expense of global environmental costs. The resulting tension is reflected in Brazilian government policy. The national agrarian reform program has settled farm families in the Amazon region since the 1970s, with the expectation that they will clear forests in order to farm the land. On the other hand, recent Brazilian policy initiatives seek to reduce deforestation to mitigate climate change. We contribute to the policy debate that surrounds these dual goals for the Amazon by estimating the marginal effects of new agricultural land on the full income and assets of farm settlers over a 13-year period from 1996 to 2009. Using micro panel data from agrarian settlements where forest was being rapidly cleared, and controlling for factors that would otherwise confound the relationship, we estimate the effect of converting forest to agriculture on total household income to estimate the opportunity cost of conserving forest. Our measure of income reflects any re-allocation of resources by utility maximizing households and any productivity effects due to loss of forest ecosystem services. The estimated effect of new agricultural land on income is positive, but small relative to the income per hectare of previously cleared land. However, we show that income increases investment in physical assets, which raises households’ income generating capacity and future accumulation of assets. Thus, while there is only a small immediate income gain from clearing more forest, the long-term effects on wealth are still substantial. This demonstrates that given the right conditions, conversion of forest to agricultural land can be an impetus for asset accumulation by smallholders. It also highlights the importance of considering the indirect and long-term welfare benefits of new agricultural land when assessing the opportunity costs of forest conservation.     

Modeling fertilizer externalities around Palo Verde National Park,Costa Rica

Irrigated rice farming in Costa Rica involves use of agrochemicals that pollute important wetlands ecosystems, such as the Palo Verde National Park in the northeastern province of Guanacaste. We characterize rice farming in this region, apply duality theory to estimate conditional factor demand for fertilizer, and then simulate the impacts of alternative policies on fertilizer use. Using a normalized profit function, we also estimate policy impacts on farmer profits. As expected, prices of rice seeds and fertilizer significantly affect use of fertilizer. Price incentives or taxes could encourage farming practices that reduce the threat to downstream ecosystems.