Converting to organic farming in France: Is there a selection problem?

Using a sample of French crop farms during the 1999-2006 period, we test whether less technically efficient farmers are more likely to engage in organic farming in order to benefit from conversion subsidies. Despite some limitations in our data, we find no evidence of such selection effect. On the contrary, our estimation results indicate that more technically efficient farmers are more likely to convert to organic farming. This finding is found to be robust to the method of calculation of efficiency scores, either parametric or non-parametric. This study also confirms that farm’s characteristics (education, farm size and legal status) and farmers’ practices under conventional farming do impact the probability of conversion to OF.Organic farming, technical efficiency, subsidies, selection, France, Agricultural and Food Policy, Crop Production/Industries, Farm Management, Land Economics/Use,

On Production Function Estimation with Selectivity and Risk Considerations

In the estimation of production functions, ignoring risk considerations can cause inefficient estimates, while biased parameter estimates arise in the presence of sample selection. In the presence of uncertainty and selection bias, the latter introduced by the endogeneity of qualitative characteristics of inputs in crop choice, we show that correcting for risk considerations (a la Just and Pope, 1978, 1979) but not selection bias, can produce incorrect inferences in terms of risk behavior. The arguments raised in this study have estimation and policy implications for stochastic production analysis applied to all goods whose qualitative characteristics can affect sample selection.crop choice, production risk, sample selection, Production Economics,

Uncertainty and technical efficiency in Finnish agriculture: a state-contingent approach

In this article, we present one of the first real-world empirical applications of state-contingent production theory. Our state-contingent behavioral model allows us to analyze production under both inefficiency and uncertainty without regard to the nature of producer risk preferences. Using farm data for Finland, we estimate a flexible production model that permits substitutability between state-contingent outputs. We test empirically, and reject, an assumption that has been implicit in almost all efficiency studies conducted in the last three decades, namely that the production technology is output-cubical, i.e., that outputs are not substitutable between states of nature.state-contingent; production; uncertainty

Water markets, demand, and cost recovery for piped water supply services : evidence from Southwest Sri Lanka

In many countries water supply is a service that is seriously underpriced, especially for residential consumers. This has led to a call for setting cost recovery policies to ensure that the tariffs charged for water supply cover the full cost of providing for the service. Yet, the question arises on how consumers will react to such price increases. The authors illustrate the impact of price increases on consumption of piped water through a study of the demand for water of piped and non-piped households using cross-sectional data from 1,800 households in Southwest Sri Lanka. The (marginal) price elasticity is estimated at -0.74 for households exclusively relying on piped water, and at -0.69 for households using piped water but supplementing their supply with other water sources, with no significant differences between income groups. Those households that depend on non-piped water sources have a time cost elasticity (as a proxy for price elasticity) of only -0.06. The authors discuss the implications of these results in terms of pricing policy.Town Water Supply and Sanitation,Water and Industry,Water Supply and Sanitation Governance and Institutions,Water Conservation,Water Use

How"natural"are natural monopolies in the water supply and sewerage sector ? Case studies from developing and transition economies

Using data from the International Benchmarking NETwork database, the authors estimate measures of density and scale economies in the water industry in four countries (Brazil, Colombia, Moldova, and Vietnam) that differ substantially in economic development, piped water and sewerage coverage, and characteristics of the utilities operating in the different countries. They find evidence of economies of scale in Colombia, Moldova, and Vietnam, implying the existence of a natural monopoly. In Brazil the authors cannot reject the null hypothesis of constant returns to scale. They also find evidence of economies of customer density in Moldova and Vietnam. The results of this study show that the cost structure of the water and wastewater sector varies significantly between countries and within countries, and over time, which has implications for how to regulate the sector.Town Water Supply and Sanitation,Urban Water Supply and Sanitation,Economic Theory&Research,Water and Industry,Water Supply and Sanitation Governance and Institutions

Endogenous Technology Adoption Under Production Risk: Theory and Application to Irrigation Technology

The main objective of this paper is to present a theoretical framework that conceptualizes technology adoption as a decision process involving information acquisition by farmers who face yield uncertainty and vary in their risk preferences. This is done by integrating the microeconomic foundations used to analyze production uncertainty at the farm level with the traditional technological adoption models. First we follow the approach of Antle (1987) based on higher-order moments of profit, which enables flexible estimation of the stochastic technology without ad hoc specification of risk preferences. Then individual risk preferences are derived, which are then used to explain farmer’s decision to adopt modern water saving technologies. The proposed model is applied to a randomly selected sample of 265 farms located in Crete, Greece. Results show that risk preferences affect the probability of adoption and provide evidence that farmers invest in new technologies as a means of hedging against input related production risk.risk attitudes, technology adoption, stochastic agricultural production, momentsbased estimation

Identifying the Effect of Unobserved Quality and Expert Reviews in the Pricing of Experience Goods: Empirical Application on Bordeaux Wine

We propose a structural empirical approach à la Levinsohn and Petrin (2003) to disentangle the effect of experts’ grades from the effect of unobserved quality on the pricing of experience goods. Using a panel data set of 108 châteaux selling wine on the Bordeaux ‘en primeur’ market, we provide some empirical validation for the theoretical result that the price set by wine producers is used as a signal for wine quality. We confirm that experts’ grades affect producers’ choice of ‘en primeur’ price above the effect of unobserved wine quality. Our empirical results also show that failing to control for endogeneity caused by the omission of unobserved leads to over-estimate the influence of experts’ grades on the ‘en primeur’ price.quality signaling, wine price, wine market, expert ratings, Demand and Price Analysis, Industrial Organization,

On production function estimation with selectivity and risk considerations

In the estimation of production functions, ignoring risk considerations can cause inefficient estimates, while biased parameter estimates arise in the presence of sample selection. In the presence of uncertainty and selection bias, the latter introduced by the endogeneity of qualitative characteristics of inputs in crop choice, we show that correcting for risk considerations (a la Just and Pope, 1978, 1979) but not selection bias, can produce incorrect inferences in terms of risk behavior. The arguments raised in this study have estimation and policy implications for stochastic production analysis applied to all goods whose qualitative characteristics can affect sample selection

Technical Change vs Efficiency Change: Performance of Food Industries over Time

This paper proposes an iterative procedure for testing periods of technical progress and periods of technical regress. We apply this methodology to the French food industry.productivity, efficiency, technical change, food industry, Productivity Analysis,