Cheating? The Case of Producers’ Under‐Reporting Behavior in Hog Insurance in China

Information asymmetry exists in virtually every insurance setting. The institutional arrangement of hog insurance in China offers a unique opportunity to investigate the farmer's behavior of under‐reporting the actual number of finished hogs on one hand, and the insurer's efficiency in determining the actual numbers on the other. Using data on 444 hog operators synchronized from farm production survey and insurance records, results showed that farmers report on average 11.5% fewer hogs to the insurance company. The level of under‐reporting is positively associated with the size of operation. Farmers with longer farming experience and more conservative risk attitude report more accurately. The under‐report behavior is also partially attributed to a farmer's limited capacity of accurate estimation. Due to information barrier, the insurance company is only able to recover 18.6% of the under‐report at the indemnity payment stage. Results are robust after controlling for potential sample selection problems. It is suggested that technical supports, public programs and premium incentive designs in repeated insurance should be considered to promote more accurate reports.     

Did the 2008–2009 Food and Financial Crises Affect Child Mortality? The Case of Sub-Saharan Africa

We estimate an aggregate model of child mortality on a panel of 40 African countries over the period 1995–2007. This model is then used to assess the impact of the 2008–2009 food and financial crises on child mortality, by comparing the number of child deaths computed under a “business-as-usual scenario” with those computed under the actual 2008–2009 “crisis scenario”. According to the simulation results, the 2008–2009 food price rise and recession caused a statistically non-significant additional 27,000 child deaths. However, if the 2008–2009 changes in other determinants of child mortality are factored in, the number of child deaths declined by 15,000. This unexpected result is explained by the fact that the effects of the rise in domestic food prices and the recession were offset in most of the region by the protective effect on the under-five mortality rate of a surge in food production, and by a rise in public expenditure on and foreign aid to the health sector.     

Does Agricultural Productivity Actually Matter for Food Security in a Landlocked Sub‐Saharan African Country? The Case of Burkina Faso

This paper makes use of a Computable General Equilibrium model to analyze the impact of two agricultural productivity trends on poor households’ food security in Burkina Faso: a negative trend that could arise from many different factors, including land degradation, climate change, and harmful agricultural practices; and a positive trend which may result from enhanced public investment in agriculture, notably in research and development, extension, irrigation, rural roads, rural electrification, and rural education. The results point to a high sensitivity of the poor's consumption to agricultural productivity as well as to stronger impacts on the urban poor than on the rural poor. The current situation is already characterized by severe food insecurity, such that a decline in agricultural productivity is likely to further plunge the urban poor into a deep food crisis. By contrast, positive agricultural productivity trends may help alleviate poverty and food insecurity. Agricultural productivity may indeed affect the poor's food consumption mainly through large changes in agricultural prices and real incomes. Cet article utilise un modèle d’Équilibre Général Calculable pour analyser l'impact des différentes tendances de la productivité agricole sur la sécurité alimentaire des ménages pauvres au Burkina Faso. D'une part, les tendances négatives peuvent résulter de plusieurs facteurs, y compris la dégradation des terres, le changement climatique, et les pratiques agricoles nuisibles. D'autre part, la tendance positive peut résulter de l'investissement public accru dans l'agriculture, notamment dans la recherche et développement, la vulgarisation, l'irrigation, les routes rurales, l′électrification rurale et l′éducation rurale. Les résultats montrent une sensibilité élevée de la consommation des pauvres à la productivité agricole, ainsi que des impacts plus forts sur les populations urbaines pauvres. La situation actuelle est déjà caractérisée par une insécurité alimentaire grave de sorte qu'une baisse de la productivité agricole est susceptible de plonger davantage les pauvres en milieu urbain dans une crise alimentaire profonde. En revanche, la tendance positive sur la productivité agricole peut contribuer à atténuer la pauvreté et l'insécurité alimentaire. La productivité agricole peut en effet affecter la consommation alimentaire des pauvres principalement par le biais de grandes variations des prix agricoles et des revenus réels.     

Is Input Mix Inefficiency Neglected in Agriculture? A Case Study of Pig‐based Farming Systems in England and Wales

The principal concern of this article is the relative importance of input mix as a source of inefficiency. Emphasis in efficiency analysis studies in agricultural production has historically focused on technical inefficiency as a single concept until methodological advances enabled it to be decomposed into pure technical inefficiency and scale inefficiency. But, this advance was insufficient to identify what we consider to be the major source of inefficiency in agricultural production, namely mix inefficiency. We consider that farm enterprises may be particularly susceptible to input mix inefficiency because of restrictions on movement around the frontier isoquant; delays in the adoption of improved technologies embodied in new vintages of production processes; risk as a source of friction in input allocation decisions; and the potential for inconsistency in simultaneously attempting to reach points of allocative efficiency and mix efficiency in input use. We use non‐parametric methods to calculate a Hicks–Moorsteen productivity index using panel data for a sample of specialised pig producers in England and Wales. This index is then decomposed into measures of technology, technical efficiency, scale efficiency and mix efficiency for an input orientation. Results of the analysis show that the estimated mean mix inefficiency (0.736) was substantially larger than mean technical inefficiency (0.975) and mean scale inefficiency (0.957) over the study period.     

The Formation of GM‐free and GM Coasean Clubs: Will They Form and If So How Much Can They Achieve?

The unintended presence of traces of genetically modified (GM) crops in the harvests of non‐GM crops plays a prominent role in the debate over the coexistence of GM and non‐GM crops. One way to address the issue is the formation of GM‐free or GM‐only clubs. We model the decisions of individual farmers to cultivate either GM or non‐GM crops and combine this with a game theoretic model of club formation to investigate the feasibility of such clubs. We consider two liability regimes: GM farmers are liable or they are not. We consider two benchmarks: Nash equilibrium without negotiations and the efficient allocation and compare those with partial co‐operation through a Coasean club. We find that in both regimes a relatively large club can form but they are not always necessary to reach the efficient allocation. In fact, if farmers can freely decide under profit maximisation what to cultivate, they reach 95% of an efficient allocation. This holds independent of the property rights system and provides strong support for coexistence policies based on ex‐post liability such as in the US and Spain.     

Resisting Environmental Dispossession in Ecuador: Whom Does the Political Category of ‘Ancestral Peoples of the Mangrove Ecosystem’ Include and Aim to Empower?

The development of shrimp aquaculture in Ecuador caused massive ecological damage, particularly in the mangrove areas. Consequently, the livelihood of the population linked to this ecosystem was disrupted. Faced with environmental dispossession, the population engaged in the defence of mangroves by articulating a national grassroots movement. In 2007, this movement implemented a novel identity politics strategy that linked mangrove ecosystem to indigeneity, and positioned itself as the ‘Ancestral Peoples of the Mangrove Ecosystem’ (PAEM). This paper focuses on the political economy of the shrimp‐farming industry in Ecuador, showing the interrelation between environmental dispossession, collective action and identity formation, and analysing how this novel political identity is understood by different members of this social movement. The work argues that PAEM refers to a category that is closely linked to the processes of mangrove defence, in direct opposition to the shrimp farmer's identity, rather than to an essentialized conception of identity based on ‘nativeness’.     

A thing of the past? Household surveys in a rapidly evolving (agricultural) data landscape: Insights from the LSMS‐ISA

Household surveys, a pivotal component of every country's national statistical system, continue to be criticized and praised in equal manner. While recognizing their limitations, it is clear that certain types of data must continue to be collected through household surveys, preferably in an integrated manner with other data sources. This is particularly true in the agricultural space for which household and farm surveys will be critical both to collect primary data as well as to validate alternative data sources. Recent methodological gains and technological innovations offer a unique opportunity to address many of the shortcomings of agricultural data. In this article, we briefly describe select examples of such methodological and technological changes, drawing from the Living Standards Measurement Study‐Integrated Surveys on Agriculture, a survey program aimed at improving the availability, quality, and relevance of agricultural data in multitopic, multipurpose household surveys.     

A Case Study of Technological Switching and Technological Lock‐In in the French Fisheries Sector: Why is Sustainable Change so Difficult?

Many sectors such as the fishery show classic examples of technological lock‐in and path dependence, even though some economists might predict smooth switching toward technologies that are more cost effective and sustainable. We use ideas from the evolutionary economics and public choice literatures to explain why trajectories of technological change, especially in fisheries, may not be smooth at all, but rather punctuated. The interest of technological change and switching behavior for fisheries economists and managers stems from the fact that control of effective effort, often necessary for sustainable management of the resource, remains a central management problem for that sector worldwide, even in developed countries. However, various policies put in place by governments to support the fishing sector, and often put in place to “correct” for certain market failures, may inadvertently produce other “nonmarket” failures, which result in technological lock‐ins which are unsustainable. For example, the trawling technique was widely promoted in France in the 1970s and 1980s. Path dependency developed in such a way that the preferred choice of new entrants into the fishery was this technology. Technological lock‐in occurred on the trawling technique as the trawling sector also became more politically active, making it ultimately the most widely used technique in the French fisheries sector in the Atlantic. Switching away from this technology has not taken place even with poorer economic performance of that technology. This paper also discusses the influence of state subsidies on the adoption of trawling. Even if trawling was a major innovation in fisheries in the past, its potential for technological adaptations or minor innovations is limited now. These limitations are more obvious during periods of increasing energy prices, especially in the absence of state aid. However, due to collective choice phenomena, switches to more sustainable technologies will occur more slowly. Plusieurs secteurs, tel que celui des pêcheries, offrent des exemples de verrouillage technologique et de dépendances au sentier, alors même que les économistes s’attendent à un changement régulier vers une technologie plus efficace en termes de coûts et plus soutenable. Nous nous appuyons sur la littérature évolutionniste et des choix publics afin d’expliquer pourquoi les trajectoires du changement technologique, en particulier dans les pêcheries, peuvent ne pas être régulières, mais au contraire discontinues. L’intérêt des économistes et des gestionnaires pour le changement technologique et le comportement face au retour des techniques est lié au contrôle de l’effort réel, souvent nécessaire pour une gestion durable de la ressource. Le contrôle de l’effort reste le problème essentiel de la gestion des pêches à l’échelle mondiale, y compris dans les pays développés. Toutefois, de nombreuses mesures publiques mises en place par les gouvernements pour soutenir le secteur des pêcheries, afin de «contrecarrer» certaines défaillances du marché, peuvent déboucher involontairement sur d’autres défaillances «non marchandes», se traduisant par des verrouillages technologiques non‐soutenables. Par exemple, la technique du chalutage fut largement diffusé en France dans les années soixante‐dix et quatre‐vingt. Un sentier de dépendance s’est développé tel que les nouveaux entrants dans la pêcherie optaient pour cette technologie. Un verrouillage technologique s’est produit sur la technique du chalutage rendant ce secteur politiquement important, et finalement la technique la plus répandue parmi les pêcheries françaises de l’Atlantique. Un changement de technologie n’a donc pu survenir, même en présence de faibles performances économiques. L’article traite de l’influence des subventions étatiques liées à l’adoption du chalutage. Même si cette technologie fut une innovation majeure dans les pêcheries par le passé, les adaptations techniques potentielles ou les innovations mineures sont désormais limitées. Ces limites apparaissent clairement dans les périodes de coûts énergétiques croissants, notamment en l’absence d’aides étatiques. Toutefois, en raison du phénomène de comportements collectifs, les changements vers des technologies plus soutenables se déroulent avec lenteur.     

Protester or non‐protester: a binary state? On the use (and non‐use) of latent class models to analyse protesting in economic valuation*

In the analysis of stated preferences studies, it is often assumed that protesting is a discretely measured item only occurring among those who are not willing to pay. However, various studies have recently shown that protest beliefs are as well held by respondents who state a positive willingness to pay (WTP). Using latent class (LC) models, we investigate the extent of heterogeneity with respect to protest beliefs among all respondents of two contingent valuation studies. The advantage of LC models is that classes of individuals are endogenously identified and no selection bias is introduced by ad hoc definitions of protesters. Further we investigate whether it is possible to identify a class of non‐protesters. Finding a group of pure non‐protesters could indicate how strongly stated WTP in the whole sample is affected by protest beliefs. For both samples, we find a class with strong protest beliefs but no pure non‐protest class. Overall, our results suggest that LC models might not be the first choice to determine unbiased WTP measures, but they provide valuable insights into the degree of protesting expressed by different groups and corresponding determinants of group membership.     

The Effects of Kenya's ‘Smarter’ Input Subsidy Programme on Smallholder Behaviour and Incomes: Do Different Quasi‐experimental Approaches Lead to the Same Conclusions?

Kenya joined the ranks of sub‐Saharan African (SSA) countries implementing targeted input subsidy programmes (ISPs) for inorganic fertiliser and improved seed in 2007 with the establishment of the National Accelerated Agricultural Inputs Access Programme (NAAIAP). Although several features of NAAIAP were ‘smarter’ than other ISPs in the region, some aspects were less ‘smart’. However, the efficacy of the programme, and the relationship between its design and effectiveness, have been little studied. This article uses nationwide survey data to estimate the effects of NAAIAP participation on Kenyan smallholders’ cropping patterns, incomes, and poverty status. Unlike most previous studies of ISPs, a range of panel data‐ and propensity score‐based methods are used to estimate the effects of NAAIAP. The article then compares these estimated effects across estimators and to the effects of other ISPs in SSA, and discusses the likely links between differences in programme designs and impacts. The results are robust to the choice of estimator and suggest that, despite substantial crowding out of commercial fertiliser demand, NAAIAP had sizeable impacts on maize production and poverty severity. NAAIAP's success in targeting resource‐poor farmers and implementation through vouchers redeemable at private agro‐dealer shops likely contributed to its more favorable impacts than those of ISPs in Malawi and Zambia.     

Short and long‐run returns to agricultural R&D in South Africa,or will the real rate of return please stand up?

This paper briefly presents the results of a total factor productivity (TFP) study of South African commercial agriculture, for 1947‐1997, and illustrates some potential pitfalls in rate of return to research (ROR) calculations. The lag between R&D and TFP is analyzed and found to be only 9 years, with a pronounced negative skew, reflecting the adaptive focus of the South African system. The two‐stage approach gives a massive ROR of 170%. The predetermined lag parameters are then used in modeling the knowledge stock, to refine the estimates of the ROR from short‐ and long‐run dual profit functions. In the short run, with the capital inputs treated as fixed, the ROR is a more reasonable 44%. In the long run, with adjustment of the capital stocks, it rises to 113%, which would reflect the fact that new technology is embodied in the capital items. However, the long‐run model raises a new problem since capital stock adjustment takes 11 years, 2 years longer than the lag between R&D and TFP. If this is assumed to be the correct lag, the ROR falls to 58%, a best estimate. The paper draws attention to the possible sensitivity of rate of return calculations to assumed lag structure, particularly when the lag between changes in R&D and TFP is skewed.