Riparian Buffers and Hedonic Prices: A Quasi-Experimental Analysis of Residential Property Values in the Neuse River Basin

Riparian buffers, the strips of vegetation along banks of rivers and streams, have been proposed as a key instrument to protect water quality in the United States. Riparian buffers impose a restriction on the use of private property limiting harvest and development, but buffers can also provide for aesthetic and recreational benefits that may accrue to property owners. With data from the Neuse River Basin in North Carolina, this study attempts to provide empirical evidence on the effect of a mandatory buffer rule on the value of riparian properties. Spatial autoregressive hedonic models are estimated within a quasi-experimental framework using the imposition of the buffer rule as the treatment and nonriparian properties as a control group. Results indicate that a riparian property generally commands a high premium. We find no evidence, however, that the mandatory buffer rule has had a significant impact on riparian property values when compared with the control group.     

The Incidence of EU Per‐Hectare Payments on Farmland Rental Rates: A Spatial Econometric Analysis of German Farm‐Level Data

This article analyses determinants for 2001 farmland rental prices from 3,819 farms in Germany. Based on specification tests we estimate a general spatial model to account for both spatial relationships among rental prices of neighbouring farmers and spatially autocorrelated error terms. A €1 per hectare higher rental price in a farmer’s neighbourhood coincides with a €0.72 higher rental price paid by the farmer. The marginal incidence of EU per‐hectare payments paid for eligible arable crop land on rental rates amounts to €0.38 for each additional €1 of premium payments. Regional livestock density, which is indirectly influenced by different policies, is also a major determinant of rental prices. Results are confirmed by sensitivity analyses. Consequently, German farmland rental rates are heavily influenced by agricultural policy instruments and therefore, these policies exhibit substantial distributional effects.     

Stocks‐to‐use ratios and prices as indicators of vulnerability to spikes in global cereal markets

We identify critical stocks‐to‐use ratios (SURs) for major grains and for an index of total calories from these grains. The latter appears to be a promising indicator of vulnerability to large price spikes when the current price shows no cause for concern. More generally, our results suggest that stocks data, though no doubt unreliable, can be valuable complements to price data as indicators of vulnerability to shortages and price spikes.     

Estimation of time-varying price elasticity in 1970–1997 Japanese raw milk supply by structural time-series model

The price elasticity of raw milk supply in Japan is estimated over time by a structural time-series model in state space form, and the changes in elasticity are tested by the diagnosing test of de John and Penzer in 1998. The supply function is modeled with a local linear trend and a strictly exogenous autoregressive distributed lag price. The seasonality in the data is adjusted by a structural time-series model. In the 1970–1997 period, there were major dairy policy changes in Japan: a production adjustment, related penalties, and two-tier pricing. Hokkaido is the region that mainly provides the supply of raw milk for milk products, while Tofuken is the region that mainly produces drinking milk. The estimated price elasticity in Hokkaido became stable after imposition of the production adjustment. On the other hand, price elasticity in Tofuken became stable after the inflation of the mid-1970s. Price elasticity is estimated to be more inelastic as well as more likely to converge in inelasticity in Hokkaido than in Tofuken. We discuss the relationship between changes in dairy policy and changes in price elasticity.     

Forecasting pseudo‐periodic seasonal patterns in agricultural prices

A seasonal model is proposed to forecast agricultural prices with pseudo‐periodic seasonal patterns, in which the length of the seasonal period does not remain the same over time. The seasonal effect at a season is defined as a function of the proportion of the seasonal period length elapsed up to that season, and the seasonal pattern is modeled by means of evolving splines to capture any dynamic process of change. Such a model is a useful tool to forecast seasonal behaviors. To illustrate the relevance of this modeling framework, the methodology is applied to weekly prices of tomatoes exported to German markets.     

Estimating a Primal Model of Regional Crop Supply in the European Union

This article estimates behavioural parameters of the quadratic regional supply models in the modelling system CAPRI. Using the time‐series data in the CAPRI database, we directly estimate the optimality conditions using a Bayesian highest posterior density estimator. After discarding regions with insufficient data, parameters for up to 23 crop production activities with related inputs, outputs, prices and behavioural functions are estimated for 219 regions in EU‐27. The results are systematically compared with the outcomes of other studies. For crop aggregates (e.g. cereals, oilseeds, etc.) at the national level, the estimated own price elasticities of supply are found to be in a plausible range. On a regional level and for individual crops, the picture is much more diverse. As far as we know, there is no other study of similar regional and product coverage.     

Inter‐ and intra‐seasonal crop acreage response to international food prices and implications of volatility

Understanding how producers make decisions to allot acreage among crops and how decisions about land use are affected by changes in prices and their volatility is fundamental for predicting the supply of staple crops and, hence, assessing the global food supply situation. This study makes estimations of monthly (i.e., seasonal) versus annual global acreage response models for the world's principal staple food crops: wheat, corn, soybeans, and rice. Primary emphasis is given to the magnitude and speed of the allocation process. Estimation of intra‐annual acreage elasticity is crucial for expected food supply and for input demand, especially in the light of the recent short‐term volatility in food prices. The econometric results indicate that global crop acreage responds to crop prices and price risks, input costs as well as a time trend. Depending on respective crop, short‐run elasticities are about 0.05 to 0.40; price volatility tends to reduce acreage for some of the crops; comparison of the annual and the monthly acreage response elasticities suggests that acreage adjusts seasonally around the globe to new information and expectations. Given the seasonality of agriculture, time is of an essence for acreage response. The analysis indicates that acreage allocation is more sensitive to prices in the northern hemisphere spring than in winter and the response varies across months.     

Structural Change of European Dairy Farms – A Cross‐Regional Analysis

Previous analyses of dairy farm structural change focus on the variation over time in one or a small number of regions. We present an EU‐15 cross‐regional analysis of the development of dairy farm numbers in different size classes over the period 1995–2005. Our purpose is to measure the explanatory relevance and effect of key factors suggested in the theoretical and empirical literature on structural change. Apart from the unprecedented scope, the underlying Markov chain analysis also contributes by combining observed transitions in micro (farm level) data with macro (sector level) data on farm numbers. Results show widely significant impacts of most considered explanatory variables, but also reflect and illuminate the complexity of the underlying processes.     

Land‐use change trajectories up to 2050: insights from a global agro‐economic model comparison

Changes in agricultural land use have important implications for environmental services. Previous studies of agricultural land‐use futures have been published indicating large uncertainty due to different model assumptions and methodologies. In this article we present a first comprehensive comparison of global agro‐economic models that have harmonized drivers of population, GDP, and biophysical yields. The comparison allows us to ask two research questions: (1) How much cropland will be used under different socioeconomic and climate change scenarios? (2) How can differences in model results be explained? The comparison includes four partial and six general equilibrium models that differ in how they model land supply and amount of potentially available land. We analyze results of two different socioeconomic scenarios and three climate scenarios (one with constant climate). Most models (7 out of 10) project an increase of cropland of 10–25% by 2050 compared to 2005 (under constant climate), but one model projects a decrease. Pasture land expands in some models, which increase the treat on natural vegetation further. Across all models most of the cropland expansion takes place in South America and sub‐Saharan Africa. In general, the strongest differences in model results are related to differences in the costs of land expansion, the endogenous productivity responses, and the assumptions about potential cropland.     

Price formation in the German biodiesel supply chain: a Markov‐switching vector error‐correction modeling approach

Changing linkages between agricultural and energy markets have attracted considerable attention in research and policy discussions during recent years. As one of the largest biofuel markets worldwide, the German biodiesel market is of particular interest. It has grown rapidly since the beginning of the new millennium, with this growth being driven mainly by political interventions. Vertical price transmission channels along the biodiesel supply chain are analyzed in this study. We examine the relationship between diesel and biodiesel prices, and between rapeseed oil, soy oil, and biodiesel prices between 2002 and 2008. Due to pronounced changes in market conditions and the policy framework, a regime‐dependent Markov‐switching vector error‐correction model is used. The regimes are characterized by markedly different price adjustment behaviors. Before 2005 and from late 2007 onward, a regime characterized by the strong orientation of biodiesel prices toward diesel prices dominates. Between 2005 and 2007, biodiesel and rapeseed oil prices are mutually interdependent. Frequent switches between the regimes of the price dynamics during this period indicate a high extent of uncertainty and instability in the market.     

Out‐of‐sample testing price discovery in commodity markets: the case of soybeans

Price discovery, a central function of futures markets, has been usually tested in‐sample by studying the common stochastic trend between spot and futures prices. Instead, to evaluate futures as anticipatory prices, we develop a forecast approach to out‐of‐sample test price discovery in a multivariate framework. We apply it to the soybeans market. Results indicate futures prices as the best available “predictors” of future spot prices, although this finding holds only on average and for certain periods, other models show forecasting gains.     

The Impact of Electronic Clock Auction Systems on Shellfish Prices: Econometric Evidence from a Structural Change Model

Economic theory suggests that different auction systems may lead to different price equilibria under specific conditions. By changing the trading rules, the introduction of electronic clock auction systems (ECAS) on primary fish markets is likely to modify the price formation process. A relationship between the prices of live prawns (Nephrops norvegicus) in two French ports where different ECAS have been successively introduced is estimated through two univariate models and a vector autoregressive model applied to stationary weekly data series. Using a recent multiple break searching procedure (Econometrica, Vol. 66, 1998, 47; Journal of Applied Econometrics, Vol. 18, 2003, 1; Econometrics Journal, Vol. 6, 2003, 72), a single structural change matching the date of implementation is discovered in the two ports and shows a different impact partly explained by the type of auction system in force. The introduction of the Euro in January 2002 also appeared to play an influential role in the adoption of electronic clock auction markets.     

Consumers’ Appreciation of Regional Certification Labels: A Pan‐European Study

Successful regional products, such as Florida oranges, Idaho potatoes and Parma ham, often have to compete against products passing themselves off as the authentic product using the exact same name. This unfair competition misleads consumers, discourages small‐ and medium‐sized enterprises (SMEs) from marketing products based on their region of origin, and may end up hurting rural economies. To protect consumers, and support SMEs and rural economies, many countries around the world have introduced regulations enabling SMEs to legally protect the names of their regional products. The success of these regulations largely depends on consumers’ appreciation of regional certification labels that inform consumers that the name of the regional product is protected and that it denotes the authentic product. To gain an understanding about consumers’ appreciation of regional certification labels, this paper investigates consumers’ image of these labels and proposes a model that relates this image to consumers’ willingness to buy and pay for protected regional products. The model is tested based on Regulation No. 2081/92 that was introduced by the EEC allowing European SMEs to protect their regional products and market their products with a protected‐designation‐of‐origin (PDO) label. Structural equation modelling results suggest that consumers’ image of regional certification labels consists of a quality warranty dimension and an economic support dimension, which positively relate to consumers’ willingness to buy and pay for the protected regional product. Protecting regional products and marketing them with regional certification labels may be beneficial for SMEs producing and marketing regional products. Policy and managerial implications are discussed.     

A roller coaster ride: an empirical investigation of the main drivers of the international wheat price

Over the last decade, commodity prices have registered substantial booms and busts marked by extreme volatility. Wheat in particular, one of the main nonoil commodities, has registered a roller coaster in price levels which seems to be inconsistent with supply and demand fundamentals. To acutely investigate the drivers of wheat prices and quantify their impact, a vector error correction model (VECM) has been used. The exogenous variables have been distinguished into four groups: market‐specific factors, broad macroeconomic determinants, speculative components, and weather variables. The quadriangulation of the determinants will enable us to better understand the movements in wheat price and identify the specific role of each component. The results show that a mix of factors are contributing to wheat price movements, including speculation, global demand, and real effective exchange rate.     

Road connectivity,population, and crop production in Sub‐Saharan Africa

This study adopts a cross‐sectional spatial approach to examine the relationship between transport infrastructure, population location, and agricultural production in Sub‐Saharan Africa using new data obtained from geographic information systems (GIS). We find that both population and agricultural production are spatially concentrated near large cities, with 41.4% of population and 23.6% of agricultural production (in value terms) within 2.5 hours travel time to large cities. Taking into account agroecological and other factors, we find a statistically significant association between travel time and agricultural production. Using coefficients estimated for Mozambique, we simulate the effects of hypothetical increases in road investments on travel times and agricultural production, suggesting that improvements in road infrastructure could facilitate a substantial increase in agricultural production.     

El Niño,La Niña,and world coffee price dynamics

Coffee is produced in equatorial and subequatorial regions of the world, which are also most affected by El Niño Southern Oscillation (ENSO). ENSO events have a tendency to amplify weather conditions such as droughts or excess precipitation in the affected regions, resulting in production shortage or excess supply, subsequently impacting agricultural commodity prices. In this research we assess effects of ENSO events on world coffee price dynamics using the monthly data between March 1989 and December 2010. We employ smooth transition autoregression framework to examine nonlinear dynamics of ENSO and coffee prices, and illustrate the results of this research using generalized impulse‐response functions. We find that ENSO events indeed have short‐term impacts on coffee prices. The research findings are of interest to coffee producers and intermediaries in the coffee markets as well as researchers in the fields of environmental and development economics.     

Spatial determinants of productivity growth on agri‐food Spanish firms: a comparison between cooperatives and investor‐owned firms

This study analyses the effect of the spatial factor, location, and interaction effects among peer companies, on the productivity growth of agri‐food companies in Spain. With this aim, we build a productivity growth index and apply a multiequational Seemingly Unrelated Regression on a sample of 344 Spanish cooperatives and investor‐owned firms for the period 2010–2012. Our findings show that agri‐food firms are influenced by spatial factors finding interesting differences between cooperatives and investor‐owned firms. With regard to the geographical location, cooperatives in the western of Spain show higher productivity growth rates, whereas investor‐owned firms in the northeast of Spain present better results. The interaction effect among closer peer companies is also a relevant factor to determine the productivity growth in agri‐food companies. This factor is more relevant for cooperatives than for investor‐owned firms.     

Spatial Spillovers on Input‐specific Inefficiency of Dutch Arable Farms

Traditional benchmarking implicitly assumes that decision making units operate in isolation from their peers. For arable production systems in particular, this assumption is unlikely to hold in reality. This paper quantifies spatial spillovers on input‐specific inefficiency using data envelopment analysis and a second‐stage bootstrap truncated regression model. The bootstrap algorithm is extended to allow for the estimation of the parameter of the spatial weight matrix, which captures the proximity between producers. The empirical application concerns Dutch arable farms for which latitudes and longitudes are available. The average inefficiency across years was 3.87% for productive inputs and 2.98% for damage abatement inputs under variable returns to scale. For productive inputs technical inefficiency, statistically significant spillover effects from neighbours’ age and their degree of specialisation depended on the type of the spatial weight matrix used (inverse distance or k‐nearest neighbours). Statistically significant spillover effects of subsidy payments were adverse while statistically significant spillover effects from insurance payments were beneficial. For damage abatement inputs technical inefficiency, statistically significant adverse effects were found for neighbours’ age and subsidy payments and beneficial effects from neighbours’ insurance payments and their degree of specialisation.     

Farm Type Effects of an EU‐wide Direct Payment Harmonisation

In this study, we analyse how three scenarios involving different levels of harmonisation of common agricultural policy (CAP) decoupled payments in the EU affect the distribution of farm income across regions and farm types. We use the farm type extension of the common agricultural policy impact (CAPRI) model, which captures farm heterogeneity across the EU. The first scenario (NUTS1) assumes uniform per‐hectare payments at the NUTS1 level. The second scenario (MS‐CONV) equalises the per‐hectare rates inside each Member State (MS) and partially harmonises the single payment scheme (SPS) across MS in line with the 2011 Commission proposal. The third scenario simulates a uniform per‐hectare payment at the EU level. Depending on the implementation of the SPS, the NUTS1 flat rate induces a substantial redistribution of payments across farm types and NUTS2 regions, particularly in regions that apply the historical SPS. The MS‐CONV and EU flat‐rate schemes have more significant impacts at the EU‐wide level. In the EU‐15, almost all farms lose payments from MS‐CONV and EU‐wide flat rates, whereas in the EU‐10, almost all farm types gain from these scenarios. Our conservative estimates indicate that the flat‐rate payments could redistribute up to €8.5 billion. Lower land rental costs partially offset the losses of farm income in the EU‐15 from payment redistribution. Land rents drop for all flat‐rate scenarios across most sectors and farm sizes in the EU‐15. In the less productive new MS, the landowners’ rental income is largely unaffected by the introduction of the flat rate.     

Effects of machinery‐sharing arrangements on farm efficiency: evidence from Sweden

The effects of partnerships, in the form of machinery‐sharing arrangements, on farm efficiency are analyzed using data for Swedish crop and livestock farms. Efficiency scores are obtained using Data Envelopment Analysis and the findings suggest that efficiency is, on average, higher among partnership farms compared to nonpartnership farms. Moreover, partnership farms that are characterized by the most extensive form of collaboration, that is, that share all machinery with one or several other farms, display the highest average efficiency. In a two‐stage procedure in which efficiency determinants are analyzed in the second stage, the bootstrap procedures suggested by Simar and Wilson (2007) are applied in addition to the conventionally used Tobit regression. Participation in partnership arrangements is found to have a positive and statistically significant impact on farm efficiency.