Targeting Monitoring Resources to Enhance the Effectiveness of the CAP

From its inception the operation of the CAP has required the compliance monitoring of farming activities and anticipated increases in the complexity of the monitoring tasks with the introduction of the SFP will stretch monitoring resources even further. We outline the scope for using targeting to enhance effectiveness of monitoring resources in dealing with non-compliant behaviour. Targeting resources can increase information on particular groups making identification of inappropriate behaviour easier. However, in reallocating monitoring resources towards the targeted sub-group, there is likely to be an associated reduction in resources allocated to monitoring non-targeted agents and therefore an increase in their incentive to cheat. To reduce this problem we suggest balancing the targeting-induced reduction in the probability of being caught cheating for non-targeted agents with an appropriate increase in the penalty for those agents if they are caught cheating. This increase in penalty results in an increased divergence between the outcomes from being caught or not caught cheating for non-targeted agents, which increases the overall perceived risk of the cheating option. And for risk-averse agents, this increase is a disincentive to cheating. On this basis we argue for greater use of target-based compliance monitoring as part of the revised and evolving CAP.     

Using R to teach econometrics

R, an open‐source programming environment for data analysis and graphics, has in only a decade grown to become a de‐facto standard for statistical analysis against which many popular commercial programs may be measured. The use of R for the teaching of econometric methods is appealing. It provides cutting‐edge statistical methods which are, by R's open‐source nature, available immediately. The software is stable, available at no cost, and exists for a number of platforms, including various flavours of Unix and Linux, Windows (9x/NT/2000), and the MacOS. Manuals are also available for download at no cost, and there is extensive on‐line information for the novice user. This review focuses on using R for teaching econometrics. Since R is an extremely powerful environment, this review should also be of interest to researchers. Copyright © 2002 John Wiley & Sons, Ltd.     

A METHOD FOR EVALUATING SUPPLY RESPONSE TO PRICE UNDERWRITING

In this paper a method for evaluating the supply response of individual producers to a price underwriting scheme is presented. The method includes precise formulae to take account of the impact of price underwriting on the producer's uncertain conditions. The Australian Wheat Board's guaranteed minimum price scheme is taken as a specific example of price underwriting in practice. Results show the scheme to lead to only relatively small supply responses. The impact on producer behaviour of an increase in price uncertainty in the presence of an underwriting scheme is also demonstrated in the paper.     

The multiple effects of carbon values on optimal rotation

Non-consumptive benefits which increase with crop age, like keeping carbon sequestered, lengthen optimal rotation compared with rotation for timber alone. High proposed carbon prices may extend rotation indefinitely. Carbon storage in wood products reduces this tendency. Biomass as an energy source displacing fossil fuels favours rotations near those of maximum biomass productivity. Use of sawn timber to displace structural materials with high embodied carbon favours somewhat longer rotations. Effects of rotation on soil carbon, and fossil carbon volatilised in harvesting operations, are further complications. Including all carbon effects results in optimal rotations somewhat longer than those based only on timber value, but shorter than those based on timber plus forest carbon. To include all factors intuitively is not possible: balanced appraisal needs economic calculations.     

Decision making for business model development: a process study of effectuation and causation in new technology-based ventures

This study investigates the decision-making logics used by new ventures to develop their business models. In particular, they focussed on the logics of effectuation and causation and how their dynamics shape the development of business models over time. They found that the effectual decision-making logic was used dominantly to generate a viable value proposition for a specific customer segment. Causal logic is then used dominantly to define the other business model components in relation to the value proposition and customer segment. When a shortage of resources emerges, causal logic is replaced by an increase in effectual decision-making again. They concluded that before investing significant resources in a business model it was crucial for firms to reduce, as far as possible, technological and market uncertainty through effectual strategies to avoid high re-configuration costs later.     

Social capital and soil conservation: evidence from the Philippines*

The formation of social capital is hypothesised to enhance collective efforts for soil conservation. The Landcare Program in the southern Philippines promotes simple conservation practices in upland environments by supporting community landcare groups and municipal landcare associations, thus augmenting social capital. A study was conducted in 2002–2003 to evaluate the Landcare Program, using a mix of quantitative and qualitative techniques. In the present paper, the relationship between social capital formation and adoption of soil conservation in the Municipality of Lantapan is investigated. It is concluded that the Landcare Program as a whole created a valuable stock of bridging social capital, rapidly accelerating the adoption of contour farming measures, but that on‐going support is needed to maintain this capital stock.     

Moral Hazard and Risk Management in Agri‐environmental Policy

This paper develops the key finding of Ozanne, Hogan and Colman (2001) that risk aversion among farmers ameliorates the moral hazard problem in relation to agrienvironmental policy compliance. It is shown that risk averse farmers who face uncertainty in their production income are more likely to comply with such a policy as a means of risk management. In addition, it is shown that a principal who has control over both the level of monitoring and the size of penalty, if detected, can reduce non‐compliance by adjustments to these instruments which increase the variance of farmers' income but leave the expected penalty unchanged. It is concluded that risk management by both principals and agents has the potential to diminish the moral hazard problem, especially given proposed developments in agri‐environmental policy in the European Union.     

Saddlepoint approximations to the mean and variance of the extended hypergeometric distribution

Conditional inference on 2 x 2 tables with fixed margins and unequal probabilities is based on the extended hypergeometric distribution. If the support of the distribution is large, exact calculation of the conditional mean and variance of the table entry may be computationally demanding. This paper proposes a single‐saddlepoint approximation to the mean and variance. While the approximation achieves acceptable accuracy for ordinary practical purposes, an alternative saddlepoint approximation is provided that gives much closer to exact results. It improves the accuracy of current approximations to up to more than four powers of ten.