C. -Y. Cynthia Lin Lawell

We‘ empirically study managed pollination demand using nationally representative farm-level data from US apple farmers. Using a shift-share instrumental variables strategy, as well as demand shocks to inform and bound demand elasticities, we undertake the first known estimate of an own-price managed pollination demand elasticity using farm-level data. We find that honey bee demand may be more elastic than prior work suggests. We reconcile these perspectives by showing that the extensive margin binary choice of whether to rent honey bees at all is relatively price inelastic and is instead driven by other factors such as crop insurance. Results also show that honey bee demand is concave in the scale of production, and that farmers seem to adjust their demand for managed pollination according to variation in local wild pollinator habitat.

In some production processes, there may be an input that is advantageous in the short run but detrimental in the long run, and producers may not be fully aware of its adverse long-run effects. One such input in the context of agricultural production are pesticides: while pesticides may have the initial effect of increasing crop yields, recent insights from soil science show that over time they exert an indirect negative effect on crop yields through their negative effects on soil health. Farmers may not be fully aware of soil microbiomes, however, and as a consequence, may not be making optimal decisions about pesticide use and organic farming adoption. We develop and estimate a dynamic structural econometric model of farmer pesticide use decision-making to examine whether farmers are aware of and account for soil microbiomes. Empirical results show that farmers are acting as if the clean soil stock has very little effect on crop yields, when in fact it increases yields. We use our parameter estimates to simulate counterfactual scenarios in which farmers' beliefs about soil microbe-based ecosystem services are brought in line with findings from plant and soil sciences. We find that informing farmers about soil microbiomes decreases pesticide use, increases organic adoption, and increases farmer welfare.

This paper examines the relationships among energy consumption, economic growth, inequality, and poverty in Iran. We estimate these relationships at both the aggregate and sectoral level using instrumental variables to address endogeneity and simultaneous equation models to enhance efficiency. Results show that decreasing inequality will be beneficial for economic growth, poverty alleviation and energy access. Inequality can negatively affect GDP directly, as well as indirectly through its negative effect on energy consumption. Similarly, inequality can increase poverty both directly as well as indirectly through its negative effect on energy consumption. We also find that increasing energy consumption has multiple benefits: it increases GDP, tends to decrease inequality and decreases poverty. Energy consumption decreases poverty both directly as well as indirectly via its effect on decreasing inequality. Our results therefore suggest that policies to improve energy access are important, and will have the benefits of increasing GDP, decreasing inequality and decreasing poverty.

This article analyzes the entry of corn-ethanol plants in the Midwestern USA, where the majority of corn in the USA is grown, during the second US ethanol boom. In particular, we examine whether the presence of existing ethanol plants affects ethanol plant entry decisions at the county level using discrete response panel models. There are two main channels through which existing ethanol plants may affect ethanol plant entry decisions: a competition effect and an agglomeration effect. Our results show that existing ethanol plants have a negative effect on the probability of ethanol plant entry in a given county. The net negative competition effect dissipates with distance. We also find that existing conglomerates and large ethanol producing firms in neighboring counties have a positive effect on ethanol plant entry, while existing singlet plants in neighboring counties do not. These results provide evidence for both local competition among ethanol plants within counties, as well as possible agglomeration benefits from existing conglomerates and large ethanol producing firms in neighboring counties.

For policymakers, an important long-run question related to the development of renewable industries is how government policies affect decisions regarding the scrapping or upgrading of existing assets. This paper develops a dynamic structural econometric model of wind turbine owners’ decisions about whether and when to add new turbines to a pre-existing stock, scrap an existing turbine, or replace old turbines with newer versions (i.e., upgrade). We apply our model to owner-level panel data for Denmark over the period 1980-2011 to estimate the underlying profit structure for small wind producers (who constitute the vast majority of turbine owners in the Danish wind industry during this time period), and evaluate the impact of technology and government policy on wind industry development. Our structural econometric model explicitly takes into account the dynamics and interdependence of shutdown and upgrade decisions, and generates parameter estimates with direct economic interpretations. Results from the model indicate that the growth and development of the Danish wind industry were driven primarily by government policies as opposed to technological improvements. We use the parameter estimates to simulate counterfactual policy scenarios in order to analyze the relative effectiveness and cost-effectiveness of the Danish feed-in-tar-iff and replacement certificate programs. Results show that both of these policies significantly impacted the timing of shutdown and upgrade decisions made by small wind producers and accelerated the development of the wind industry in Denmark. We also find that when compared with the feed-in-tariff; a declining feed-in-tariff; and the replacement certificate program and the feed-in-tariff combined, the replacement certificate program was the most cost-effective policy both for increasing payoffs of small wind producers and also for decreasing carbon emissions.