A model of optimal import phytosanitary inspection under capacity constraint

Growth and liberalization of world trade have increased the risks of introduction of quarantine plant pests into importing countries. Import inspection of incoming commodities is a major tool for prevention of pest introductions related to world trade, but inspection capacities are limited. This article develops a theoretical and an empirical model for the optimal allocation of inspection effort for phytosanitary inspection of imported commodities when the inspecting agency has a limited capacity. It is shown that the optimal allocation of inspection effort equalizes marginal costs of pest introduction across risky commodity pathways. The numerical illustration finds the optimal allocation of inspection effort of chrysanthemum cuttings imported in the Netherlands. The numerical results suggest that ceteris paribus , greater inspection effort should be allocated to pathways whose inspection yields a greater reduction in the expected costs of pest introduction. The numerical results also suggest that import inspection has a high marginal benefit. In particular, we found that each additional euro of the inspection capacity decreases the expected costs of pest introduction from 18 to 49 euros, depending on the initial inspection capacity.     

Forest Conservation in Costa Rica when Nonuse Benefits are Uncertain but Rising

Stochastic dynamic programming is used to investigate optimal holding of primary tropical forest in humid Costa Rica when future nonuse benefits of forest conservation are uncertain and increasing. The quasi-option value of maintaining primary forests is included as a component of investment in natural capital. Although the impact of uncertainty on conservation incentives is substantial, our results indicate that a rising trend in future benefits and compensation by the international community for beneficial spillovers are more important factors in determining optimal holdings of forest stocks. Without compensatory payments, however, further deforestation may be warranted.     

Where Are Saskatchewan Farmland Prices Headed?

An adaptive expectation model is employed to estimate Saskatchewan farmland values based on land rent. The estimated model is then used to forecast future agricultural land values, given a number of commodity price scenarios. The model illustrates the importance of expectations in the farmland purchase decision. Furthermore, it explains why swings in land prices tend to lag behind what current financial conditions would suggest. Nous avons utilisé un modèle adaptable de détermination des attentes pour déterminer la valeur des terres agricoles de la Saskatchewan à partir du prix de location. Le modèle estimatif est ensuite utilisé pour prévoir la valeur future des terres agricoles, compte tenu ?un certain nombre de scénarios ?évolution des prix des produits. Le modèle montre ?importance des attentes des gens dans les décisions ?achat de terres agricoles. Il explique en outre pourquoi les variations observérs dans les prix des terres ont tendance à marquer un certain retard par rapport à ce que les conditions financières existantes devraient laisser prévoir.     

Economic Dynamics of Tree Planting for Carbon Uptake on Marginal Agricultural Lands

As a result of the 1997 Kyoto Protocol, afforestation of agricultural lands can be expected to take on an important role in the CO₂ emissions reduction policy arsenal of some countries. To date, identification of suitable (marginal) agricultural lands has been left mainly to foresters, but their criteria fail to take into account economic nuances. In this study, an optimal control model is used to determine the optimal level of afforestation in the western Canada. The results indicate that, while planting fast-growing trees for carbon uptake on marginal agricultural land may be important, the path dynamics matter in determining whether Canada can rely on afforestation to meet its obligations under Kyoto.
Sous l'impulsion duprotocole de Kyoto (1997), on peuts'attendre à voirle reboisement des terres agricoles prendre une place importante dans l'arsenal de mesures de réduction des émissions de CO₂ de certains pays. Jusqu'à présent, le choix des terres agricoles utilisables (c.-à-d. marginales pour l'agriculture) a été laissé principalement aux forestiers, mais les critères sur lesquels ces derniers se basent ne tiennent pas compte des aspects économiques. Nous utilisons ici un modèle de contrôle optimal pour déterminer le niveau optimal de reboisement qui conviendrait pour l'ouest du Canada. Il se dégage des résultats que, sans remettre en question l'importance de la plantation d'arbres à croissance rapide pour la capture du C dans les terres agricoles marginales, les décideurs devront tenir compte de la dynamique des sentiers avant que le reboisement puisse ètre la solution adoptée par le Canada pour honorer les engagements pris dans le cadre du Protocole.     

Expert opinion versus actual transaction evidence in the valuation of non-market amenities

Actual property values are overwhelmingly employed as a dependent variable in hedonic pricing models. Yet, assessed property values are generally more readily available than actual sales values and have, in some studies, been used in lieu of market prices. In this study, we compare estimates of different non-market amenity values based on actual transactions and assessed values. We estimate a Seemingly Unrelated Regression (SUR) model with two hedonic price equations, one with actual market values as the dependent variable and the other with assessed property values, and compare the resulting estimates of shadow prices for open space amenities. We also take into account spatial autocorrelation and combine Method of Moment estimates of the spatial parameters in both equations to create our test statistic. The results indicate that we cannot accept the hypothesis that the impacts of open space on property values are the same for actual sales and assessed values. Moreover, we do observe some differences between the distributions of assessed versus sales values, although the difference between the sizes of open space effects measured within the two equations is rather limited. Thus, while this one study is insufficient to enable one to draw definitive conclusions, there remains the possibility that policy makers cannot reliably base decisions on amenity values obtained from a hedonic model using assessed values.