The shadow value of agricultural land rent of rural households and alternative uses of land for sustainable development: the case of Mexico

Market failures are frequent in the rural sector of less developed countries, so, rural economic agents that face high transaction costs take their decisions based on implicit or shadow prices. Failing to consider this feature may generate, amongst others, misleading results for policy evaluation and recommendations. In this paper we develop a theoretical agricultural household model that considers market failures in a subsistence crop market and in agricultural land and labor markets. We apply the model to estimate econometrically the shadow price of agricultural land of rural households in Mexico using economic and socio-demographic data from a representative national survey of these economic agents. We find that the estimated average shadow price of their land rent is relatively high and also that it has sharp variation in rural Mexico. Based on these results we suggest that policies aimed to promote changes in the use of rural land (e.g. from agriculture to forestry) have to consider the value attached to agricultural land by rural households and its variability according to the diversity of agro-ecological conditions in countries like Mexico. Acknowledgement : We thank the financial support of Mexico Nacional Council for de Evaluation of Social Policy (CONEVAL, Spanish acronym), granted to the authors through El Colegio de Mexico

TRANSITION POLICY AND THE STRUCTURE OF THE AGRICULTURE OF MEXICO

This paper has three main objectives. The first is to review major changes in Mexico's agricultural policies in the context of trade liberalization. The second is to explore econometrically the impact of these policy changes on key variables of interest, including prices, trade, production and rural out-migration. The third is to illustrate the use of disaggregated policy modeling techniques to explore the sometimes paradoxical impacts of recent policy changes on Mexico's rural economies. After reviewing trends in the evolution of the rural economy of Mexico, including employment, land property rights and poverty, we suggest hypotheses to explain why some of the expected effects of NAFTA and agricultural reforms have not occurred. The paper ends with a reflection on the current political-economic situation in Mexico

Applying cointegration and error correction to measure trade linkages: maize prices in the United States and Mexico

The impact of U.S.-grown maize on Mexican markets is a subject of heated debate, and is complicated by limited substitution between white and yellow maize as well as regional price differences within Mexico. This article improves on previous analyses using a detailed data set of white maize prices reported weekly in 11 states across Mexico from 1998 through 2005. Using cointegration analysis and the error-correction model, we find that prices between the United States and Mexico do not share a common long-run relationship. Within Mexico, prices in Michoacán and Oaxaca are only weakly related with prices in neighboring states, whereas prices in Sinaloa and Jalisco exert considerable influence on prices elsewhere in Mexico. We conclude that, despite North American Free Trade Agreement (NAFTA), white maize prices in Mexico are determined by local conditions including particularly the degree of integration to other regions within Mexico. Copyright (c) 2008 International Association of Agricultural Economists.