{"title":"Who carries the burden of climate change? Heterogeneous impact of droughts in sub-Saharan Africa","authors":"Edouard Pignède","doi":"10.1111/ajae.12507","DOIUrl":"https://doi.org/10.1111/ajae.12507","url":null,"abstract":"<p>Droughts can dramatically affect economic activities, especially in developing countries where more than half the labor force is in the agricultural sector. This paper highlights the causal impact of drought on income inequality using a new methodology known as the quantile treatment effect on the treated under the copula stability assumption. This method generalizes the difference-in-differences framework to the entire distribution. The methodology is applied to a geo-referenced and nationally representative household survey of two sub-Saharan African countries: Ethiopia and Malawi. The results show that droughts worsen income inequality in both countries. Lower income quantiles are subject to a higher decrease in per capita income, up to 40% for the lowest income quantile. In contrast, higher income quantiles are largely unaffected or appear to benefit from the drought. These results are robust to several specifications and offer quantitative insights into how extreme weather conditions affect inequality dynamics in developing countries. Inequality formation is driven by differences in the ability to cope with droughts. The results show that wealthier households have a higher capacity to find alternative sources of income to prevent a welfare drop. In contrast, the most vulnerable households, particularly those that are low in assets, remote, or headed by women or older individuals, are most seriously harmed. Finally, consumption-smoothing behaviors and asset depletion strategies in middle income households are also observed.</p>","PeriodicalId":55537,"journal":{"name":"American Journal of Agricultural Economics","volume":"107 3","pages":"925-957"},"PeriodicalIF":4.2,"publicationDate":"2025-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143826658","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Kjersti Nes, K. Aleks Schaefer, Matthew Gammans, Daniel Paul Scheitrum
{"title":"Extreme weather events, climate expectations, and agricultural export dynamics","authors":"Kjersti Nes, K. Aleks Schaefer, Matthew Gammans, Daniel Paul Scheitrum","doi":"10.1111/ajae.12505","DOIUrl":"https://doi.org/10.1111/ajae.12505","url":null,"abstract":"<p>Rising temperatures and shifting precipitation patterns threaten agricultural yields in many key global production regions. This paper assesses the impact of growing-season extreme weather events on agricultural export outcomes in the short run, as well as the association between agricultural exports and long-run climate expectations and variance. Our analysis matches information on bilateral trade flows with high-resolution, geospatial data on growing area, planting and harvest dates, and weather for three highly traded staple crops—maize, soybeans, and rice—which together account for almost half of global calorie consumption. We use an econometric gravity model to estimate the short-run effects of weather volatility and a nonparametric series regression to infer long-run climate-export associations. We then use our estimates to simulate the effects of various climate and weather counterfactuals on the agricultural export landscape. We find that 2-standard-deviation extreme weather events (measured using the water balance deficit) reduce maize, rice, and soybean bilateral export values by 48.2%, 53.4%, and 21.7%, respectively. Our long-run results imply that increases in the standard deviation of weather are associated with lower export values across all three crops. An increase in the frequency of extreme events has the potential to greatly shift current commodity export patterns. Understanding these shifting patterns of trade is necessary to implement trade policy that enables countries to leverage their evolving comparative advantages and ensure the effectiveness of trade as a tool mitigating the negative production effect of climate change.</p>","PeriodicalId":55537,"journal":{"name":"American Journal of Agricultural Economics","volume":"107 3","pages":"826-845"},"PeriodicalIF":4.2,"publicationDate":"2025-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ajae.12505","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143826861","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Prakashan Chellattan Veettil, Yashodha Yashodha, Joseph Vecci
{"title":"Hypothetical bias and cognitive ability: Farmers' preference for crop insurance products†","authors":"Prakashan Chellattan Veettil, Yashodha Yashodha, Joseph Vecci","doi":"10.1111/ajae.12506","DOIUrl":"https://doi.org/10.1111/ajae.12506","url":null,"abstract":"<p>The absence of an incentive-compatible mechanism to reveal consumers' true willingness to pay in stated preference elicitation methods and the consequent hypothetical bias are an important concern in discrete choice experiments. Our study extends this discourse on hypothetical bias by examining how it varies with the heterogeneity in respondents' cognitive ability and familiarity with a good. This paper also adds to our understanding of the demand for agricultural insurance in developing countries by studying the willingness to pay for one of the world's largest agricultural insurance programs using a large state representative sample. Following a between-subject design, we implemented a large scale randomized incentivized choice experiment and hypothetical choice experiment with real farmers who make decisions on the purchase of insurance. We find that demand for an insurance product is shaped by the subject's familiarity with and cognitive ability to understand the product. We show that the magnitude of the hypothetical bias is higher at a lower level of cognitive ability and that bias diminishes with an increase in cognitive ability. Finally, we examine key heterogeneity and test a number of possible mechanisms.</p>","PeriodicalId":55537,"journal":{"name":"American Journal of Agricultural Economics","volume":"107 3","pages":"888-924"},"PeriodicalIF":4.2,"publicationDate":"2024-12-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ajae.12506","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143826857","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Impacts of an increase in federal assistance for cover cropping: Evidence from the Environmental Quality Incentives Program","authors":"Andrew B. Rosenberg, Bryan Pratt, Daniel Szmurlo","doi":"10.1111/ajae.12502","DOIUrl":"https://doi.org/10.1111/ajae.12502","url":null,"abstract":"<p>Financial assistance for cover cropping through the U.S. Department of Agriculture's Environmental Quality Incentives Program (EQIP) has increased more than twentyfold in the past decade and a half. Available support for cover cropping increased further due to the Inflation Reduction Act, which provides significant funding for climate smart practices. In this study, we examine whether increases in available financial assistance lead to significant increases in producer participation in EQIP for cover cropping and whether these increases are additional on the landscape. We focus on the impacts of the National Water Quality Initiative (NWQI), which provides funding for cover crops and several other practices to producers in targeted watersheds on top of normal EQIP levels. We first estimate the impacts of NWQI on enrollment in EQIP using a watershed-level panel of acres enrolled in EQIP for cover crops. We find that NWQI more than triples EQIP cover crop acreage compared to similar control watersheds. Driving the increase in enrolled acreage is a small increase in the share of applications receiving a contract, as well as a significant increase in the total number of applications received. We then utilize field-level administrative data on cover cropping to estimate the impact of NWQI on cover crop adoption overall. We find evidence that the impacts of NWQI on cover cropping are largely additional.</p>","PeriodicalId":55537,"journal":{"name":"American Journal of Agricultural Economics","volume":"107 3","pages":"795-825"},"PeriodicalIF":4.2,"publicationDate":"2024-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143826824","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Structural transformation without industrialization? Evidence from Tanzanian consumers","authors":"Ellen B. McCullough","doi":"10.1111/ajae.12501","DOIUrl":"https://doi.org/10.1111/ajae.12501","url":null,"abstract":"<p>Export-oriented industrialization was central to many Asian countries' structural transformation processes, but many African countries are bypassing industrialization, and the prospects for competing in global manufacturing markets are poor. Alternative structural transformation pathways all rely on domestic markets, and thus understanding their trajectories requires uncovering consumer preferences. Using detailed household expenditures data from a nationally representative panel survey in Tanzania, I estimate a flexible, stylized consumer demand system. I recover estimates of expenditure elasticities of demand for goods, services, and food in the aggregate, along with price elasticities of demand, identified using within-household variation in prices and expenditures. I find that, across the expenditures distribution and in both rural and urban areas, consumer preferences are service facing. In particular, I show that (1) consumers sharply increase spending on services relative to goods and food as incomes increase; (2) demand for services in the aggregate is somewhat sensitive to changes in service prices; and (3) food, goods, and services are substitutes for each other. On one hand, a high propensity to consume the types of services that generate large local economic growth multipliers is consistent with driving growth in service sector employment. However, sustained growth in the long run may be limited because these services are low productivity and nontradable, and domestic markets are size constrained.</p>","PeriodicalId":55537,"journal":{"name":"American Journal of Agricultural Economics","volume":"107 2","pages":"411-439"},"PeriodicalIF":4.2,"publicationDate":"2024-10-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ajae.12501","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143404641","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Francesco Amodio, Leonardo Baccini, Giorgio Chiovelli, Michele Di Maio
{"title":"Weather shocks affect trade policy: Evidence from preferential trade agreements","authors":"Francesco Amodio, Leonardo Baccini, Giorgio Chiovelli, Michele Di Maio","doi":"10.1111/ajae.12500","DOIUrl":"https://doi.org/10.1111/ajae.12500","url":null,"abstract":"<p>We show that weather shocks affect government trade policy decisions. We exploit variation in rainfall during the growing season within and across countries to show that weather shocks impact agricultural output and trade. Using information on tariff cuts by commodity from preferential trade agreements signed between 1995 and 2014, we then show that weather shocks that happen during the negotiation period correlate strongly with the size of tariff cuts. When weather shocks increase (decrease) a country's capacity to produce a given crop, its government negotiates a smaller (larger) tariff cut. These results are consistent with a political economy trade model with sector-specific inputs in which the government places more weight on producers relative to consumers in its objective function. They also reveal that governments update their beliefs about domestic agricultural production capacity in response to weather shocks.</p>","PeriodicalId":55537,"journal":{"name":"American Journal of Agricultural Economics","volume":"107 2","pages":"696-717"},"PeriodicalIF":4.2,"publicationDate":"2024-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ajae.12500","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143404416","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Geographical indications and welfare: Evidence from US wine demand","authors":"Raj Chandra, GianCarlo Moschini, Gabriel E. Lade","doi":"10.1111/ajae.12499","DOIUrl":"https://doi.org/10.1111/ajae.12499","url":null,"abstract":"<p>A systematic component of wine quality is believed to depend on the geoclimatic factors of its production conditions. This belief has long motivated the development of geographical indications for wines. American viticulture areas (AVAs) represent the most common geographic identifier firms use to differentiate their products in the United States. In this paper we contribute new empirical evidence on the effectiveness and impact of GIs by studying consumers' valuation of US wine appellations within a structural model of wine demand. The model is rooted in the discrete-choice framework, under the basic premise that observable information concerning wine attributes is credible and key to consumers' choices. Specifically, we develop a two-level, nested-logit model featuring many wine products and characteristics—including wine type, brands, and varietals, in addition to geographic origin. The model is estimated using NielsenIQ Consumer Panel data over the 2007–2019 period. We find that US consumers place a relatively high value on wines' geographic origins, distinct from the value of brand and varietal information, as documented by their marginal willingness to pay estimates. Furthermore, a counterfactual experiment shows significant welfare impacts from information about the geographic origin of wines. Over the period of interest, the welfare gain attributable to US geographic origin designation is estimated at about $5.37 billion, with wine producers and retailers capturing ~78% of this surplus. Virtually all consumer welfare gains are due to product differentiation and increased product variety enabled by information about the wine's origin.</p>","PeriodicalId":55537,"journal":{"name":"American Journal of Agricultural Economics","volume":"107 2","pages":"670-695"},"PeriodicalIF":4.2,"publicationDate":"2024-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ajae.12499","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143404623","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}