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Supply relationships and e‐auctions are complementary procurement forms that specialty coffee roasters can utilize when designing a procurement strategy. We model the roaster's optimal choice of procurement strategies using an extended newsvendor model. By comparing the optimal strategies in a benchmark case solely based on relationships to a case in which auctions can be utilized, we derive the impact of e‐auctions on the procurement quantity and profit under conditions of demand uncertainty. The two‐stage model predicts that the adjustment of procurement using e‐auctions is most beneficial under market circumstances of high demand variability and small firm size. We use industry data to illustrate the market conditions for specialty coffee and discuss the potential impact of e‐auctions on procurement strategies for specialty coffee based on our model. The theoretical propositions in conjunction with current industry data suggest that e‐auctions have great potential to become an integral part of and shape roasters’ procurement approaches in the specialty coffee market....
Firms may fail to adjust instantaneously to fluctuations in demand, which causes “sticky prices.” Demand can also be “sticky” due to certain types of consumer behavior. We estimate inertia in the market for shell eggs sold in Canadian supermarkets. In the absence of price information, the analysis is performed using only quantities purchased by individual consumers. From a sample of five store brands of shell eggs sold in Alberta and Ontario, we find the egg market in Alberta to show considerable inertia, while little evidence of inertia is found for the Ontario market. Implications for egg production and retail sectors are discussed....
This paper analyzes Colorado corn producers’ preferences over both private‐ and environmental public‐good production system attributes, and tests the robustness of alternative data reconstruction and estimation techniques. Irrigated corn production practices are characterized by intensive water and chemical use, resulting in nonpoint source pollution to water bodies as well as soil erosion problems. Data from a stated preference survey are employed to analyze key attributes of experimentally configured irrigation systems, proposed as alternatives to current practices. Panel mixed logit estimations (and several alternative fixed parameter specifications) uncover consistently positive preferences for profit, risk reduction, and, importantly, systems with less environmental impact in terms of nitrate leaching and soil erosion. The analysis also finds evidence of preference heterogeneity and a complementary relationship between the two environmental attributes. Analysis of this kind can be used by policy makers to predict behavioral responses associated with introduction of new technologies, or to assess welfare implications of agricultural policy changes and stricter environmental regulations...
The literature on the interface between agriculture and the environment is highly diverse. This paper organizes this literature into three categories: regulation; adoption of environmental best management practices (BMPs) by farmers; and conservation programs. Within each category, the main research questions are set forth. After reviewing select papers, suggestions for future research are discussed. Academic research in this area has been impressive, but many issues and research questions remain unanswered....
This paper examines the effect of the Clean Development Mechanism regulations that create temporary certified emission reductions on harvesting decisions, land use allocation, and the carbon supply in forest plantations. We develop a model that solves the landowner's harvesting decision when revenues from carbon uptake are included. Rotation intervals and carbon credit supply slightly increase. Fast growing tree species with shorter rotation intervals have relatively more inelastic carbon credit supply curves than slow growing tree species with longer rotations. With moderate carbon prices, most carbon sequestration gains originate from the extensive margin through the expansion of forest land, but approximately 22–35% of total carbon sequestered comes from the intensive margin through an increase in rotation intervals. The contribution to carbon sequestration from the intensive margin is more significant as the carbon price increases....
The risks and opportunities presented by climate change in the Prairie Provinces are related to the dry and variable climate—projected temperature increases that are greater than elsewhere in southern Canada; sensitivity of the water resources, ecosystems, and resource economies to seasonal and interannual variations in climate; and to large departures (e.g., drought) from normal conditions. Agriculture industry would face both positive and negative impacts. The net impacts on agriculture are not clear, as various aspects of adaptation are not well understood. Impacts would be felt on other sectors of the economy as well. A warmer climate will present new opportunities for revenue, cost savings, and recreation. Given that some uncertainties exist in our knowledge of impacts and appropriate adaptation measures, more cooperation between scientists and stakeholders would be desirable....
Food quality attributes arising from farming methods are of increasing interest to many Canadians, examples include environmentally sustainable production practices, humane animal treatment, organic, etc. The credence nature of these attributes necessitates some form of quality assurance to provide credible signals to consumers that these attributes are present. This paper examines trust in private, third‐party, and government organizations to provide credible quality signals for attributes that derive from on‐farm production methods, or “production‐derived” quality attributes. A nationwide survey reveals that farmer, third‐party, and government organizations are similarly trusted to provide accurate information about farming methods, while government standards relating to environmental sustainability were perceived as most effective. Data from a discrete choice experiment are used to explore attitudes toward pesticide‐free and environmentally sustainable quality claims in a bread product, and in particular whether it matters who verifies those quality claims. Results obtained using a latent class multinomial logit model reveal a distinct pattern of heterogeneity in consumer attitudes toward production‐derived quality attributes and toward the verification of those attributes. Those respondents who most value production‐derived food quality also receive the highest utility from government verification and significant negative utility from supermarket or third‐party verification. This segment of Canadian consumers has a clear preference for a more proactive government role in facilitating credible quality assurances for production‐derived quality attributes. In contrast, the source of quality verification was far less important to those consumers holding weaker preferences for production‐derived quality....
The public and private net benefits of retaining wetlands in agricultural cropland in east central Saskatchewan are evaluated in a policy case study. Wetland drainage on agricultural lands continues to occur despite evidence from existing studies concerning societal benefits derived from wetland retention. A simulation model was developed to estimate on‐farm costs and benefits associated with wetland drainage in east central Saskatchewan. The private net benefits were compared to existing estimates of the public benefits to retaining wetlands in this region. The analysis suggests that payments from existing “beneficiary pay” policies, such as public incentive payments to farmers to retain wetlands, are too low to retain wetlands at risk of drainage....
Wetlands are threatened by invasive species worldwide through vectors of aquaculture and aquarium activity. While maritime shipping has received most of the attention for invasive species control, shipping represents a mobile, transitory source of invasion, unlike aquaculture, and aquarium activities that occur in public wetlands. The public wetlands invasive species problem is modeled to compare incentives for one or all users of the public wetlands to reduce the threat of invasive species from aquaculture and aquarium trade activities. The incentives for individual versus coordinated behavior are examined, along with the conditions for all wetland users to select preemptive effort to reduce the invasive species threat. There is great potential for an environmental bond in the lease arrangements to foster preemptive effort to reduce invasive species in wetlands....
Within the Canadian prairies, there has been extensive loss and degradation of wetland and riparian zones, primarily caused by the intensification and expansion of agriculture. Since most of the wetland and riparian areas found within this agricultural landscape are located on privately owned land, effective policy must be informed by an understanding of the socio‐economic characteristics of these landowners. The purpose of this paper is to estimate the compensation required for private landowners to conserve wetland and riparian zones within the Prairie Pothole Region of Saskatchewan and to evaluate the influence of farm characteristics and landowner attitudes on conservation decisions. A survey, targeted at landowners in two distinct regions, was used to evaluate the willingness to accept for conserving riparian areas based on a proposed 10‐year payment program. While the analysis confirms that the magnitude of the payment is an important factor in landowners’ conservation adoption decision, the impact of other factors including landowner experience, planning horizon, and perceptions of wetland values provides important insights into conservation program development and delivery....
This study examines the willingness to pay of Manitobans for wetland retention and restoration using stated preference methods applied to a sample of 1,980 respondents from the provincial population. The approach employed an iterated series of binary choice scenarios framed as referenda and utilized both cheap talk and certainty approaches in the design as well as tests of sensitivity to scope of the environmental improvement. The results suggest that over a five‐year period Manitobans would be willing to pay $296–$326/household/year depending on the level of the wetland program improvement. Using 5% (10%) discount rates these estimates result in present value aggregate payments of $504 ($550) million for retaining wetlands at current levels and about a further $106($110) million (for a total of $611 [$666] million) for restoring wetlands to estimated 1968 levels. Comparison of these benefits with current land values and restoration costs suggests that full restoration may not be economically efficient, but that retention in concert with some restoration may be....
This study reexamines and updates an original bioeconomic model of optimal duck harvest and wetland retention by Hammack and Brown (1974, Waterfowl and Wetlands: Toward Bioeconomic Analysis. Washington, DC: Resources for the Future). It then extends the model to include the nonmarket (in situ) value of waterfowl and the ecosystem service and other amenity values of wetlands in addition to the value of ducks to hunters. The focus is the prairie pothole region of Western Canada. Results indicate that wetlands and duck harvests need to be increased relative to historical levels, confirming Hammack and Brown's original conclusions. Including amenity values leads to a significant increase in the quantity of wetlands and hunters’ harvests of ducks relative to models that focus only on hunting values....
There has been great interest in recent decades in “ecosystem services.” One of the services most often mentioned is the retention of nutrients. I construct a simple model of agricultural land use under a regulatory requirement that nutrient loading cannot exceed a fixed ceiling. Farmers decide the quantity of residual nutrients they will generate, how much land they will allocate to production, and, consequently, how much land that could have been used for production they will instead preserve for the retention of nutrients. I develop three propositions. First, when the regulatory constraint is relatively weak, there will be a corner solution in which no land is set aside to provide the service of nutrient retention. Second, for any given regulatory constraint, there is a maximum amount of land that would be set aside to provide ecosystem services, regardless of the efficiency with which preserved land performs the nutrient retention function. Third, when it would prove very valuable to set some land aside for nutrient retention, less land in total may optimally be preserved for this purpose than when the service is less valuable. I illustrate the implications of this model with an application to the Chesapeake Bay watershed....
This research uses a sequence of hedonic spatial regressions across successively larger ranges of contiguous census‐block groups (CBGs) to identify priority areas for wetlands restoration along the Louisiana coast under the Coastal Wetlands Planning, Protection, and Restoration Act (CWPPRA). Marginal implicit prices of wetlands and open water from the regressions were translated into amenity values received by single‐family house owners within five Queen orders of CBGs. Differences between amenity values of wetlands and open water were used to proxy the amenity values of four potential restoration sites. These differences were summed over housing locations within each order of contiguous GBG neighbors and across the orders for each site. Based on the aggregate amenity value per acre from wetlands restoration and under the assumption that most restoration projects are designed to benefit as wide an area as possible, the priority ranking for restoration becomes: (1) Fresh Bayou, (2) Sabine National Wildlife Refuge, (3) Bayou LaBranchee, and (4) Barataria Bay Waterway....
Wetland habitat continues to be lost in many watersheds across Canada and new program tools are needed to help restore drained wetlands. We used a reverse auction to restore drained wetlands in the Assiniboine River Watershed (ARW) of east‐central Saskatchewan which is an important target area for wetland restoration in the North American Waterfowl Management Plan (NAWMP). The reverse auction format was discriminative, with sealed bids and two rounds of bidding. Bidders could submit bids for 12‐year term agreements and/or perpetual conservation easements, and bids were submitted by quarter section (160 acres). Bids could be either in cultivated cropland or perennial forage, and were evaluated using an environmental benefits index based on the incremental increase in predicted hatched waterfowl nests relative to bid price. Potential bidders were solicited via contacts with existing conservation project cooperators, and a public media campaign. In the first round, 20 bidders submitted 118 bids to restore 713 wetlands totaling 670 acres at a price of $837,000. All bids were for 12‐year term agreements. Bid prices to restore drained wetlands within cultivated land were higher than for perennial forage. In the second round, 30 bids from seven bidders were approved to restore 211 wetlands totaling 211 acres in perennial forage at a price of $182,000. The price of successful bids varied from $20.83 to $391.22 per acre per year (average $118.52). The reverse auction provided information on cost variability and funding required for achieving NAWMP wetland restoration objectives in the ARW....
Wetlands and waterfowl in the prairie pothole region (PPR) of North America are inextricably linked to agriculture. Government and private agencies must therefore understand agricultural land‐use change to implement effective conservation. We develop a land‐use model to predict the proportion of land in eight agricultural uses in Alberta, Manitoba, and Saskatchewan. We then use the model to simulate future land use to better understand the potential impacts of agricultural land‐use change on wetland and waterfowl habitat. We also simulate acreage‐based subsidy programs to investigate their potential effectiveness as conservation payment programs. Last, we compare predicted subsidy impacts across space with waterfowl densities to highlight the potential for spatial targeting to increase conservation cost‐effectiveness. Our results indicate that agricultural expansion and intensification are likely to continue, with a predicted increase of over 10 million acres of intensive spring crops. Predicted conversion of pasture land (which contains the most productive wetlands and waterfowl habitat) is heterogeneous across Canada's pothole region, suggesting the potential for spatially targeted conservation programs. Simulations of alternative conservation targeting strategies indicate that limited conservation dollars should be targeted toward high‐quality habitat that is at relatively low risk of converting....
Concentration levels in Canadian beef packing have increased dramatically over the last two decades, raising concerns about the possible use of market power in cattle procurement markets. This paper uses establishment‐level data to test the hypothesis that Canadian beef packers use oligopsony power to pay lower prices for cattle than those which would prevail in a competitive market. A four‐equation econometric system is estimated using generalized method of moments. No evidence is found that beef packers behaved in an anticompetitive manner on a national basis when procuring cattle during the period examined. This reinforces conclusions reached by previous studies using different data sets and estimation methods. However, given the lack of assurances that the U.S. slaughter market will remain open to Canadian cattle exporters, regulators must remain vigilant in monitoring the procurement practices of beef packers. There is also a need for greater levels of data disaggregation to allow fed and cull cattle procurement markets to be studied separately, perhaps even on a regional basis....
Habit persistence is related to recurring food safety incidents in the context of the initial three cases of bovine spongiform encephalopathy (BSE) in Canadian cows. We test Engel functions, using generalized method of moments procedures, to analyze the dynamics of monthly beef expenditure shares of a sample of Canadian households during years 2002 through 2005. From microlevel panel data which followed meat expenditures by Canadian households before and after the first three BSE cases, which were discovered in 2003 and 2005, it is seen that households’ reactions to these followed a similar general pattern: households reduced beef purchase expenditures following the discovery of BSE but expenditures subsequently recovered. Following the initial BSE event, we identify an immediate negative impact on beef expenditures. However, in the case of the second two BSE events, this negative impact was not evident until two months after the BSE announcements. The results suggest that habit persistence initially limited households’ reductions of beef purchases following the first BSE event. However, households with higher beef expenditure shares reduced expenditure more than others following the second two BSE events, suggesting that habitual patterns of high levels of consumption tended to change with the recurrence of these food safety events....
This study estimates the social benefits of controlling two very different forest insect outbreaks in New Brunswick (NB) and Saskatchewan (SK), namely spruce budworm (SBW) (Choristoneura fumiferana) and forest tent caterpillar (FTC) (Malacosoma disstria). Using dichotomous choice contingent valuation mail surveys, households in NB and SK were asked to indicate their willingness‐to‐pay (WTP) for controlling future SBW and FTC outbreaks. A majority of respondents (over 80% in each province) favored controlling outbreaks of these insects. In both provinces, respondents were on average willing to pay more for controlling SBW outbreaks compared to FTC outbreaks. Aggregate social benefits (measured via compensating surplus) associated with proposed insect control programs in NB resulted in annual social benefits of $14.3–20.8 million for SBW control, and $7.9–14.5 million for FTC control. Comparable net benefits in SK were $22.2–32.4 million for SBW control, and $11.7–22.0 million for FTC control. These results highlight the significance and uniqueness of social benefits generated from controlling outbreaks of these insects, and provide a foundation for incorporating them into a full benefit‐cost analysis used to help make more informed and efficient policy decisions....
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