What’s next for the Renewable Energy Target – resolving Australia’s integration of energy and climate change policy?*

Australian climate change policy and its integration with Australia’s electricity markets have been fraught for at least two decades. The only enduring policy has been the Commonwealth Renewable Energy Target (RET). Despite the relative success of the RET in driving investment and reducing emissions, state governments have now pivoted towards contracts-for-difference (Cfds). In this article, we outline the issues associated with policy discontinuity and the large-scale RET and review its effectiveness as an emissions reduction tool and driver of electricity sector abatement. We find that the RET has been relatively successful across the key criteria of cost and emissions reductions and is a better policy instrument than contracts-for-difference, which are increasingly being adopted by state governments. Building on the work of Nelson et al. (2020), we propose a new approach, which would allow for continued use of Cfds but utilising the RET’s policy architecture.     

The End of a Romance? A Note on the Quantitative Impacts of a ‘Brexit’ from the EU

This study suggests UK equivalent variation (EV) gains of €8.9 billion on withdrawal from the EU budget. Factoring in associated trade facilitation costs from the loss of UK access to the single market, annual UK EV losses could be as high as €14.0 billion, with the EU‐28 facing a corresponding loss of €40.4 billion. Interestingly, the extrapolated UK gain arising from withdrawal from the ‘CAP’ component of the EU budget exceeds estimated lower and upper bound trade facilitation costs exclusively on EU agrofood trade. Accordingly, the UK should realistically remain as an EU member, although continue to lobby for reductions in the CAP budget.     

Location determinants of food manufacturers in the United States, 2000–2004: are nonmetropolitan counties competitive?

Infrastructure, agglomeration, product and input markets, fiscal attributes, and labor markets of local communities influenced food manufacturing location decisions in the lower 48 United States, 2000–2004. Negative binomial regression and spatial clustering methods forecast food processor location patterns at the county level. Noncore counties are at a comparative disadvantage with respect to attracting most food processors, but nonmetropolitan counties adjacent to urban areas may be attractive investment sites for footloose, supply, and demand-oriented food manufacturers.     

Does participation in the conservation reserve program impact the economic well‐being of farm households?

This study uses U.S. farm household survey data to examine how participation in the Conservation Reserve Program (CRP) affects farm household economic well-being. Further, the study also examines the effects of CRP participation on farm household consumption, income, and imputed savings. In contrast to previous studies that assume the relationships are homogenous across the population, quantile regression is used to investigate the association between CRP participation across the entire distribution of farm household consumption and income. Empirical findings suggest that the effect of CRP participation on household economic well-being differs across the income and consumption distribution. For households in the lower percentiles of the distribution, the CRP participation is associated with an increase in household consumption, but a decrease in farm household income and savings. In contrast, farm households at the median and higher income and consumption quantiles, participation in CRP is associated with lower levels of household consumption and income, but with higher levels of savings.     

Can satellite‐based weather index insurance improve the hedging of yield risk of perennial non‐irrigated olive trees in Spain?*

Olive oil yields fluctuate strongly due to their dependence on sufficient precipitation. An interesting option to hedge the yield risk in olive cultivation could be satellite‐based weather index insurance. Therefore, we implement index insurance as a hedging alternative for non‐irrigated olive groves using MODerate‐resolution Imaging Spectroradiometer (MODIS) satellite data. For this purpose, we focus on the Spanish region of Andalusia, given its importance in olive production at the international level. We calculate three satellite indices: the Vegetation Condition Index (VCI), the Temperature Condition Index (TCI) and the Vegetation Health Index (VHI). Meteorological indices related to temperature and precipitation are used as benchmarks. Firstly, we estimate the periods that have the greatest influence on the critical vegetative phase of olives, which extends from March to September. Based on the indices, insurance contracts are designed using a copula approach, which is then employed to evaluate their hedging effectiveness. On average, the hedging effectiveness of VCI‐, VHI‐ and TCI‐based weather index insurance contracts amounts to 38 per cent, 38 per cent and 29 per cent, respectively. Moreover, VCI‐ and VHI‐based weather index insurance contracts outperform traditional weather index insurance contracts based on precipitation (by 29 per cent) and temperature (by 16 per cent) indices.     

Measuring the risk attitude of decision‐makers: are there differences between groups of methods and persons?

Many studies quantifying individual risk preferences of test persons show that results of different measuring methods may vary. Additional reservations about the reliability of the results regarding the risk attitude measurement arise from the fact that most studies are based on convenience groups, such as students or businessmen in developing countries. With this in mind, we systematically compare different measuring methods to answer the question how the choice of method affects the results. Moreover, we compare the risk preferences of German farmers with those of students and Kazakhstani farmers to investigate whether farmers’ risk preferences can be approximated through those of convenience groups. The methods applied comprise an incentive‐compatible Holt‐and‐Laury‐lottery as well as two psychometric methods. Results show that students respond consistently across all three elicitation methods whereas German and Kazakhstani farmers are more inconsistent. Significant differences exist in the responses of German students and German farmers. The comparison of risk preferences between German and Kazakhstani farmers, however, reveals significant similarities with respect to the psychometric methods.     

Incentivising teachers? Evaluating the incentive effect of China’s teacher performance‐based compensation reform in rural China

In this paper, we evaluate the incentive role of a teacher performance‐based compensation reform in rural China. Using the value‐added model widely adopted in the education literature, we first estimated the teacher effects on student academic scores with panel data of a large number of students and teachers from rural and urban schools in one county in a south‐western province of China. The estimated teachers’ value‐add was then allowed us to examine the effectiveness of the 2009 teachers’ compensation reform. We find that despite the strong intent of the performance‐based compensation reform to improve student’s academic performance, teachers’ compensations are not closely tied to teachers’ value‐add to student academic achievement. This suggests that the performance‐based compensation reform is not able to provide strong incentives for teachers to raise students’ test scores and points towards the possible problems with the design and/or implementation of the reform.     

Derivatives for Development? Small‐Farmer Vulnerability and the Financialization of Climate Risk Management

While agricultural production has always been a risky endeavour, it has become even more so in the current context of climatic change and increasing market uncertainty. Meanwhile, the rollback of state protections has rendered small‐scale farmers, especially marginalized peasant producers in the Global South, particularly vulnerable to these contemporary stressors. This essay critically evaluates the contemporary roll‐out of financial derivatives that purportedly aim to mitigate smallholder vulnerability. It gives particular attention to a novel type of derivative known as index‐based agricultural insurance (IBAI) that plays an increasingly prominent role in initiatives to ‘climate proof’ agriculture. The creation of IBAI markets has required significant work, including (1) technical interventions to debundle environmental risk from agricultural production and rebundle it in novel ways that support private financial capital and agricultural input suppliers, (2) extensive state support in the creation of risk markets, and (3) the construction of an accommodating ‘insurance culture’ among small‐scale producers. In addition to mitigating weather‐based risk, a primary objective of IBAI is to spur agricultural modernization. In promoting this agenda, IBAI initiatives may have the paradoxical effect of exposing smallholders to new risks while expanding their overall vulnerability to environmental and economic stressors.     

Farm‐level impacts of prolonged drought: is a multiyear event more than the sum of its parts?

A multiyear discrete stochastic programming model with uncertain water supplies and inter-year crop dynamics is developed to determine: (i) whether a multiyear drought's impact can be more than the sum of its parts, and (ii) whether optimal response to 1 year of drought can increase a producer's vulnerability in subsequent years of drought. A farm system that has inter-year crop dynamics, but lacks inter-annual water storage capabilities, is used as a case study to demonstrate that dynamics unrelated to large reservoirs or groundwater can necessitate a multiyear model to estimate drought's impact. Results demonstrate the importance of analysing individual years of drought in the context of previous and future years of drought.     

Does Choice Context Affect the Results from Incentive‐Compatible Experiments? The Case of Non‐GM and Country‐of‐Origin Premia in Canola Oil

We seek to design and implement a WTP elicitation instrument closely resembling an actual grocery shopping experience. An incentive-compatible choice experiment is used to elicit values for a non-GM attribute and a country-of-origin attribute of Canola oil. The choice context is varied to assess whether revealed-preference choice experiments are affected by choice variety. A median premium for non-GM Canola oil is found to approximate C$0.45 or C$0.62/liter according to the choice variety context; different country-of-origin effects are also found as choice context varies. Hypotheses as to why these significant effects of choice contexts occur are suggested.
Nous cherchons à concevoir et à mettre en application un instrument de révélation de la VDP qui ressemble étroitement aux choix que fait un consommateur lorsqu'il effectue son marché. Nous avons utilisé une méthode expérimentale compatible avec les incitations des participants afin de découvrir la valeur accordée à deux caractéristiques de l'huile de canola: non génétiquement modifiée et étiquetée selon le pays d'origine. La liste des choix est variée afin d'évaluer si les préférences révélées sont influencées par la gamme de choix. La prime médiane de l'huile de canola non génétiquement modifiée est d'environ 0,45 $CAN ou 0,62 $CAN le litre selon les choix proposés. Différents pays d'origine figurent aussi dans cette liste de choix. Nous avons formulé des hypothèses quant aux raisons pour lesquelles la gamme de choix a des effets importants.     

Would African Countries Benefit from the Termination of Kenya’s Economic Partnership Agreement (EPA) with the EU? An Analysis of EU Demand for Imported Roses

This paper assesses the impact of Kenya’s preferential status on EU demand for imported roses by country. Import demand equations were estimated using a production version of the Rotterdam model in an Armington framework. With the expiration of the Lomé Convention, tariffs (up to 24%) on Kenyan roses were likely if an Economic Partnership Agreement (EPA) was not signed by January 2008. Roses from African countries not subject to tariffs were expected to displace Kenya’s exports in the future. However, results of this study showed that roses from African countries were complements in the EU market and those exports from Zimbabwe and Other African countries would have been negatively impacted if a Kenya–EU EPA was unsuccessful. Given the maximum import duty on Kenyan roses, EU imports from Kenya would decrease by 9.1% and imports from Zimbabwe and Other African countries would decrease by 6% and 4%, respectively.     

Finding default? Understanding the drivers of default on contracts with farmers’ organizations under the World Food Programme Purchase for progress pilot

During the past two decades, food assistance policy has shifted toward local or regional food purchases and away from purchases from donor countries. Although most local and regional procurement occurs through hard tendering processes open to large‐scale firms and farms, there is growing interest in identifying how and whether to procure from smallholder farmer organizations (FOs). To date, little is known about the drivers of successful contracting with FOs. We utilize data from the United Nations World Food Programme Purchase for Progress pilot in three East African countries to predict defaults on contracts. We examine four possible explanations: country contexts, FO characteristics, prior experience with contracts, and contract modalities and their relationship to local spot market prices. The single most important predictor of default is the increase in market prices between contract approval and delivery. Yet, although increases in market prices are linked to increases in default, this relationship is decreasing in contract size, indicating search costs associated with breaking contracts. Our findings yield both generalizable and context‐specific insights about whether—and when—procuring from smallholder farmers can be successfully integrated into the food assistance toolkit.     

Estimating Price Elasticities of Food Trade Functions: How Relevant is the CES‐based Gravity Approach?

The main objective of this article is to examine econometric estimates of price elasticities of food trade functions. We investigate the relevance of the prominent gravity approach. This approach is based on the assumptions of symmetric, monotone, homothetic, Constant Elasticity of Substitution (CES) preferences. We test all these assumptions using intra‐European trade in cheese. In general, the assumptions made on preferences by the gravity approach are not supported by our dataset. The bias induced in the estimated price elasticities is ambiguous.     

“Effectively organic”: Environmental gains on conventional farms through the market?

Qualitative field research in England identified a cohort of farmers practicing what they self-defined as ‘effectively organic’ or ‘semi-organic’ farming. Utilising Ajzen's theory of planned behaviour as a framework for analysis, reducing inputs was found to be primarily a response to financial pressures, also reflected in changing substantive norms towards balancing risks and potential returns against investment, rather than optimising production. However, despite the apparent ease of converting to organic farming from low input practice, formal conversion to organic farming was not found to be the automatic outcome of this trajectory: instead, organic farming was identified as only one of a number of options for increasing the financial viability of the farming operation, which included other niche markets, pluriactivity and contracting land to and from other farmers. The affiliation of low input farmers with organic production denotes positive attitudes towards both organic farming and environmental practices, but a lack of understanding about organic farming techniques. The author argues that due to declining returns/input ratios, future conversion to organic farming may reflect the value placed on other aspects of organic production, such as increased labour, risk reduction and environmental ideals, and highlights the environmental implications of the ongoing ‘cost price squeeze’ on farming households.     

One Man's Meat … 2050? Ruminations on Future Meat Demand in the Context of Global Warming

This Address considers a range of issues relating to the contribution of meat consumption and livestock production to global warming, given the need highlighted by the Committee on Climate Change (CCC) to reduce global GHG emissions by over 50% by 2050. The IPCC Climate Change 2014 report recognised that demand oriented measures may also contribute to GHG mitigation. The paper reviews a number of studies which examine demand‐led mitigation potentials, and concludes that such estimates ignore the market effects of changes in meat consumption habits or demand oriented policies. A simple partial equilibrium model of beef, poultry, pig and ovine meats is developed for the major regions of the world to explore the impact of a range of scenarios which might reduce meat consumption and GHG emissions. These include emissions taxation, long‐term trends in reduction of red meat consumption in developed economy regions, and supply side improvements in livestock emissions intensities. The paper discusses problems associated with many published demand elasticities suitable for incorporation into a market model, problems of selection from widely varying published estimates and their appropriateness for longer‐run projections. The dearth of published supply elasticity estimates is also highlighted. The modelling concludes that economic and population growth to 2050 without any mitigation measures will lead to a 21% increase in per capita meat consumption and a 63% increase in total consumption and GHG emissions by 2050. However, the mitigation projections from the scenarios explored only generate a 14% reduction in cumulative emissions from the baseline 2050 projections, insufficient to meet the CCC target.     

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.     

Impact of farm management diversity on the environmental and economic performance of the wheat–maize cropping system in the North China Plain

To assess the attainable greenhouse gas (GHG) mitigation potential from crop production in China's most important grain production region, the North China Plain (NCP), single farm environmental and economic performances of 65 winter wheat–summer maize (WW–SM) producing households were determined. The results revealed a huge heterogeneity among farms, with up to five times higher environmental impact of worst compared to best performing farms. Astonishingly no trade-off between productivity and sustainability could be identified in the region, with high-yield farms emitting no different amounts of GHGs per hectare compared to low-yield farms. Building on cluster analysis, with farms grouped according to their economic and environmental performance into ‘poor’, ‘fair' and ‘good’ producers, the regional GHG mitigation potential was estimated. Under the scenario assumption that all grain in the NCP is produced under ‘good’ production conditions, 21% and 7% of GHG could be mitigated in wheat and maize production, respectively. The study shows that in the NCP, exemplary for China's rapidly developing agricultural sector, the crop management skills of a substantial share of farmers could obviously not keep pace with the massive input intensification. Among others, farmer–farmer trainings are recommended to close the gap in crop production performance among producers.     

Does ‘Protection for Sale’ Apply to the US Food Industries?

This paper tests the Protection for Sale model in terms of the structure of protection and how realistic the estimated domestic welfare weight is relative to campaign contributions. Using data from US food manufacturing, empirical results support the key predictions for the structure of protection when either all food manufacturing industries or most of the general population is assumed to be politically organised. The domestic welfare weight is estimated as low as 0.837, the lowest econometric estimate to date, underlining that protection is for sale and that, with a qualified ‘yes’, the model fits the data for these industries.