Applied Welfare Economics, Trade, and Agricultural Policy Analysis

By G. Cornelis van Kooten

© 2021

This textbook integrates three related fields in economics, namely agricultural/forestry economics, environmental economics, and international trade, by foregrounding cost-benefit analysis as a significant policy tool.

Exploring how welfare measures can be used in the analysis of agricultural, trade and other economic policies, Applied Welfare Economics, Trade, and Agricultural Policy Analysis fills a gap in the literature on agricultural policy analysis by explaining the economic efficiency improvements and income transfers of various agricultural policy reforms in the United States, Canada, the European Union.

G. Cornelis van Kooten addresses methods of identifying and measuring economic surpluses (costs and benefits), the precautionary principle, identification of an appropriate discount rate, the importance of non-market values, and the role of agriculture in trade negotiations and climate change. Applied Welfare Economics, Trade, and Agricultural Policy Analysis draws on new research, brings attention to the existing literature, and includes review questions that challenge programming skills. The techniques developed in this text can be applied to the development and reform of agricultural policies in various regions in response to trade negotiations and many other situations involving government policy.

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  • World Rights
  • Page Count: 424 pages
  • Illustrations: 70
  • Dimensions: 6.0in x 0.0in x 9.0in
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Quick Overview

Providing a broad-based background for analysing economic policies, this textbook brings economic rationality to political decision making.

Applied Welfare Economics, Trade, and Agricultural Policy Analysis

By G. Cornelis van Kooten

© 2021

This textbook integrates three related fields in economics, namely agricultural/forestry economics, environmental economics, and international trade, by foregrounding cost-benefit analysis as a significant policy tool.

Exploring how welfare measures can be used in the analysis of agricultural, trade and other economic policies, Applied Welfare Economics, Trade, and Agricultural Policy Analysis fills a gap in the literature on agricultural policy analysis by explaining the economic efficiency improvements and income transfers of various agricultural policy reforms in the United States, Canada, the European Union.

G. Cornelis van Kooten addresses methods of identifying and measuring economic surpluses (costs and benefits), the precautionary principle, identification of an appropriate discount rate, the importance of non-market values, and the role of agriculture in trade negotiations and climate change. Applied Welfare Economics, Trade, and Agricultural Policy Analysis draws on new research, brings attention to the existing literature, and includes review questions that challenge programming skills. The techniques developed in this text can be applied to the development and reform of agricultural policies in various regions in response to trade negotiations and many other situations involving government policy.

Continue Reading Read Less

Product Details

  • World Rights
  • Page Count: 424 pages
  • Illustrations: 70
  • Dimensions: 6.0in x 0.0in x 9.0in
  • Author Information

    G. Cornelis Van Kooten is a professor of Economics and Canada Research Chair in Environmental Studies and Climate at the University of Victoria.
  • Table of contents

    List of Tables
    List of Figures
    List of Acronyms

    Chapter 1. Introduction 
    1.1 Setting the Agricultural Stage 
    1.1.1 Top Agricultural Commodity Producers 
    1.1.2 Food Security: Green Revolution and Crop Yields 
    1.2 Structure of the Book 
    Guide to Literature 

    Chapter 2. Project Evaluation Criteria 
    2.1 Private Financial Analysis 
    2.1.1 Financial Ranking Criteria 
    2.1.2 Conclusion 
    2.2 Society’s Perspective: Social Cost-Benefit Analysis 
    2.2.1 Benefits and Costs as Rent and Surplus 
    2.2.2 The Fundamental Equation of Applied Welfare Economics 
    2.2.3 Total Economic Value 
    2.2.4 Total (Average) Value Versus Marginal Value 
    2.2.5 Conclusion 
    2.3 Multiple Accounts and Alternative Criteria 
    2.3.1 Environmental Quality 
    2.3.2 Regional Economic Development and Employment: Indirect Benefits 
    2.3.3 Other Social Effects 
    2.3.4 Concluding Observations about Multiple Accounts 
    2.4 Alternative Methods for Evaluating Projects 
    2.4.1 Cost-Effectiveness Analysis 
    2.4.2 Multiple Criteria Decision Making 
    2.4.3 Life-Cycle Assessment 
    2.4.4 Cumulative Effects Analysis 
    2.5 Extreme Events and Irreversibility 
    2.6 Discounting and Choice of Discount Rate 
    2.6.1 Dilemmas in Choosing a Discount Rate in Cost-Benefit Analysis 
    2.6.2 Risk Adjusted Discount Rates 
    2.6.3 Discounting in an Intergenerational Context
    Guide to the Literature
    Food for Thought 

    Chapter 3. Externalities and Nonmarket Valuation
    3.1 Cost Function Approach 
    3.2 Expenditure Function 
    3.2.1 Hedonic Pricing 
    3.2.2 Recreation Demand and the Travel Cost Method 
    3.3 Contingent Methods or Direct Approaches 
    3.3.1 Contingent Valuation Method 
    3.3.2 Choice Experiments/Stated Preferences 
    3.3.3 Constructed Preferences/Stakeholder Method 
    3.3.4 Fuzzy and ad hoc Methods for Determining Nonmarket Values 
    3.4 Benefit Transfer 
    3.5 Concluding Discussion 
    Guide to Literature 
    Food for Thought 

    Chapter 4. International Trade and Applied Welfare Analysis
    4.1 Spatial Price Equilibrium Trade Modelling 
    4.2 Unrestricted Free Trade 
    4.3 Trade and the Measurement of Wellbeing in Multiple Markets 
    4.3.1 Vertical Chains 
    4.3.2 Vertical and Horizontal Chains 
    4.4 Economic Policy and Trade: Examples 
    4.4.1 EU Import Restrictions on Canadian Durum Wheat 
    4.4.2 Incentivizing Anti-Dumping and Countervail Duty Complaints: Byrd Amendment 
    4.4.3 Restricting Log Exports 
    4.5 Concluding Discussion 
    Appendix 4.A: Mathematics of Supply Restrictions 
    Appendix 4.B: Calculation of Objective Function in SPE Models 
    Guide to Literature
    Food for Thought 

    Chapter 5. Governance, Rent-Seeking, Global Trade and the Agreement on Agriculture
    5.1 Institutions and Governance 
    5.1.1 Models of Government 
    5.1.2 Takings 
    5.1.3 Institutions 
    5.1.4 Financing Government and Public Projects 
    5.2 Land Use and the Principal-Agent Problem 
    5.3 International Trade Negotiations and Agriculture 
    5.3.1 Agreement on Agriculture 
    5.3.2 Agreement on Subsidies and Countervail Measures 
    5.4 Tariff Rate Quota (TRQ) 
    5.5 Concluding Discussion 
    Guide to Literature 
    Food for Thought 

    Chapter 6. Analysis of Agricultural Policy: Theory
    6.1 Background to Analysis of Agricultural Policy 
    6.2 Stock-Holding Buffer Fund Stabilization 
    6.3 Quotas and Supply-Restricting Marketing Boards 
    6.3.1 Quota and General Equilibrium Welfare Measurement 
    6.3.2 Quota Buyouts 
    6.3.3 Designing and Dismantling a Multi-Region Quota Program 
    6.4 Price Discrimination 
    6.5 Agricultural Technology: Genetically Modified Organisms 
    6.5.1 Agricultural Research and Development 
    6.5.2 Genetically Modified Organisms 
    6.6 Measuring Externalities in Agriculture 
    6.7 Concluding Discussion 
    Guide to Literature 
    Food for Thought 

    Chapter 7. Agricultural Policies in the U.S. and Canada
    7.1 Agricultural Support: A Brief Overview 
    7.2 U.S. Agricultural Policy 
    7.2.1 Analysis of U.S. Price Support Programs 
    7.2.2 Reducing Production and Disposing of Excess Grain 
    7.2.3 Decoupling 
    7.2.4 Moving Forward 
    7.3 Canadian Agricultural Policy 
    7.3.1 State Trading: The Canadian Wheat Board (1935-2012) 
    7.3.2 Crop Insurance 
    7.3.3 Western Grain Stabilization Act (1976) 
    7.3.4 Transportation Programs and Subsidies 
    7.3.5 Supply Management 
    7.5 Concluding Discussion 
    Guide to Literature 
    Food for Thought 

    Chapter 8. Agricultural Policy in Europe and Asia
    8.1 Agricultural Policy Reform in the European Union 
    8.1.1 Background to the European Union 
    8.1.2 High and Increasing Costs of Agricultural Programs 
    8.1.3 Integration of New Members 
    8.1.4 Reform of the CAP and Increasing Environmental Concerns 
    8.1.5 Further Analysis of Sector-Level Programs 
    8.1.6 Brexit 
    8.2 Agriculture in Developing Countries 
    8.2.1 Economy-wide Economic Reform and Chinese Agriculture 
    8.2.2 India and the Rice Economy 
    Guide to Literature 
    Food for Thought 

    Chapter 9. Agricultural Business Risk Management 
    9.1 Privatizing Agricultural Hedges: Financial Products versus Insurance 
    9.1.1 Index Insurance and Derivatives 
    9.1.2 Futures Trading and Options 
    9.2 Agricultural Business Risk Management in the United States 
    9.2.1 Deep Loss Protection: The Federal Crop Insurance Program 
    9.2.2 Agricultural Business Risk Management Programs in the 2008 Farm Bill 
    9.2.3 Agricultural Business Risk Programs in the 2014 and 2018 Farm Bills 
    9.2.4 Dairy 
    9.2.5 Trade Issues 
    9.3 Agricultural Business Risk Management in Canada 
    9.3.1 The Shift from Price Support to Risk Management 
    9.3.2 Enter Growing Forward 
    9.3.3 Shift from Growing Forward (GF) to Growing Forward 2 (GF2) 
    9.3.4 Evaluation of Canada’s Agricultural Business Risk Programs 
    9.3.5 Going Forward: Canadian Agricultural Partnership 
    9.4 Concluding Discussion: Lessons for Agricultural Business Risk Management 
    9.4.1 Do Agricultural BRM Programs Distort Production? 
    9.4.2 Comparison of U.S. and Canadian Approaches to Risk Management 
    Appendix 9.A: A Brief Look at the Economics of Risk and Risk Aversion 
    9.A.1 Systemic versus Idiosyncratic Risk 
    9.A.2 Expected Income Maximization and the Risk Aversion Coefficient 
    Guide to Literature 
    Food for Thought 

    Chapter 10. Climate Change and Applied Welfare Economics
    10.1 Anthropogenic Climate Change and its Impact 
    10.1.1 Climate Sensitivity 
    10.1.2 Damages 
    10.2 Economic Evaluation: The Role of Integrated Assessment Models 
    10.2.1 Climate Models and Policy Models 
    10.2.2 Carbon Price Policy Variable 
    10.3 Economic Impacts of Climate Change on Agriculture 
    10.3.1 Land Rents and the Regression Approach 
    10.3.2 Mathematical Representation of Landowner Decisions 
    10.4 Climate Change and Food Security 
    10.5 Discounting and Climate Urgency 
    10.5.1 Discounting Carbon 
    10.5.2 Economics of Wood Biomass Energy: Climate Urgency and Discounting 
    10.6 Mitigating Climate Change 
    10.6.1 International Action to Mitigate Climate Change 
    10.6.2 Agricultural Role in Mitigating Climate Change 
    10.6.3 Managing for Carbon: Carbon Pools and Fossil Fuel Substitution 
    10.7 Discussion 
    Guide to Literature
    Food for Thought 

    References

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