PROBLEMS OF AGRICULTURAL EXTERNALITIES: A CONCEPTUAL MODEL WITH IMPLICATIONS FOR RESEARCH

Using a bargaining model the interaction between agriculture and the environment is explored. Application of the model to nitrogen pollution and management agreements directs attention to the research needs for achieving more rational environmental management     

AGRICULTURAL RESEARCH EXPENDITURES AND AGRICULTURAL PRODUCTIVITY CHANGE

This note comments on the econometric analysis of the dynamic relationship between agricultural research expenditures and agricultural productivity change. The validity of the Almon restrictions, particularly endpoint restrictions, commonly imposed on the distributed lag is questioned. It is suggested that models incorporating such restrictions may lead to biased estimates of the effects of research spending. More fundamentally, doubts are raised as to whether any meaningful relationship between research spending and productivity change can be established from the available data.     

THE COMMON AGRICULTURAL POLICY: THE IMPLICATIONS FOR ITALIAN AGRICULTURE

The relative importance of Italian agriculture in the EC, both in terms of net value added and of employment, has never been matched by a comparable impact on the CAP policymaking process. Mediterranean agricultural products in particular have been less favoured by the overwhelming common policy instrument of product price support, which has also a negative impact on the economy as a whole. The most relevant effects of the CAP are reviewed: the impact on resource allocation, including international income transfers, and the effects on the environment, as well as the effects on interpersonal income distribution. An evaluation of CAP is then made from different points of view: the likely perspective of present Italian farmers, a national perspective and an overall perspective, including the interests of non EC countries and future generations. Lower and more balanced price support, together with higher concern for structural and environmental policies especially in less favoured areas, are advocated.     

PRIVATISING THE PRODUCTION OF KNOWLEDGE: PROMISE AND PITFALLS FOR AGRICULTURAL RESEARCH AND EXTENSION

In the absence of some form of government intervention, knowledge is a classic public good which will be under-produced because of lack of price excludability. Government intervention may take the form of establishing intellectual property rights, or other means of shielding knowledge-based innovations from imitation or copying. Such intervention offers the prospect of 'privatising' the production of knowledge in the sense that a certain level of private knowledge production may become profitable if producers can appropriate at least part of the benefits of R&D. However, publicly funded R&D or extension still can 'crowd out' private knowledge production by charging lower prices. The principal finding of this study is that such 'crowding out' behaviour may be efficient in the sense of being potentially Pareto superior even if it is at the expense of public funding for so called 'orphan' areas of knowledge production which are privately unprofitable. The reason why conventional conclusions about privatisation and 'crowding out' of private goods need not apply to rural research and extension is that private goods are both rival in consumption and price excludable, while knowledge is intrinsically non rival in consumption even if it can be made price excludable.     

PERSPECTIVES ON AGRICULTURAL BIOTECHNOLOGY RESEARCH FOR SMALL COUNTRIES

The Rockefeller Foundation currently provides about 7.0 million annually for a comprehensive programme of rice biotechnology research designed to meet the needs of the developing world. Early in the programme deliberate decisions were made by the Foundation to support all the components of research required to make new varieties ready for testing, from determining what plant traits should receive priority to strategic technique development through the incorporation of traits into varieties. Agricultural biotechnology research is risky, high-cost relative to other agricultural research, has a long time lag to payoff, and requires efficiently functioning ‘conventional’ research to be effective. Most small developing countries do not have the conditions necessary to make productive investments in agricultural biotechnology, except possibly for sharply defined tissue-culture activities. A wise use of funds would be to concentrate on producing enough indigenous talent to give knowledgeable advice to policy makers on the costs, time lags and possible benefits of agricultural biotechnology.     

TOWARD A FRAMEWORK FOR EVALUATING AGRICULTURAL ECONOMICS RESEARCH*

Agricultural economists need to evaluate their own research priorities. The main difficulty in doing so is to value the types of information generated by economic research. Bayesian decision theory provides a framework for valuing information, and the results of selected studies using this methodology are collated. Most of the other determinants of research priorities can be encapsulated in a target return ratio measure. How such a framework might be used is illustrated by three 'hypotheticals'.     

BELIEFS AND VALUES IN AGRICULTURAL ECONOMICS RESEARCH*

Attention is drawn to the values that are often kept hidden but condition what research agricultural economists do. It is pointed out that the economic theory, which guides most research, is not value free and that therefore the lack of debate about theory amongst Australian agricultural economists may be unhealthy. In a world with uncertainty, the research process is likened to learning, leading to a suggestion that Bayesian procedures provide a more satisfactory conceptual framework for the process of enquiry than does the conventional hypothesistesting approach. While difficulties in the practical applicability of Bayesian methods are understood, they do provide insights which permit some of the more inappropriate uses of hypothesis testing to be recognised. The view of research enquiry as learning also leads to an appreciation of the desirability of a more honest acceptance of the inherent subjectivity of the process. Finally, attention is drawn to the need for vigilance over professional standards in research.     

THE ELASTICITY OF AGGREGATE AUSTRALIAN AGRICULTURAL SUPPLY: ESTIMATES AND POLICY IMPLICATIONS

Annual time series data for the period 1950-51 through 1975-76 are used to estimate the price elasticity of aggregate Australian agricultural supply using two methods. The short-run elasticity is estimated to be highly inelastic but it has been increasing through time. The preferred estimate of the long-run elasticity is in the relatively inelastic range and it has also been increasing through time. Some implications of these results for intersectoral resource flows and compensatory assistance, the cost-price squeeze, the effects of the mineral boom and monetary policy are discussed.     

THE SHIFT OF COST CURVES AND AGRICULTURAL RESEARCH BENEFITS

In the estimation of agricultural research benefits, so far the only procedure taking into account the conditions under which new technology is introduced has been the semi-empirical Lindner-Jarrett construction. The present paper describes quantitatively the effect of various factors on the benefit estimate: original cost curve, technical parameters (yield increase and implementation cost), willingness to adopt new technology, and the market mechanism. Numerical results are given from which it is concluded that empirical constructions are unsatisfactory and that some overestimation of research benefits in previous analyses may well have occurred.