The objective of this thesis is to examine the impacts of changes in Canada’s AgriStability program on crop allocation, particularly the change in the payment trigger associated with the shift from Growing Forward (GF) to Growing Forward 2 (GF2). To examine whether this change could affect production decisions, and thereby potentially violate the WTO’s ‘green box’ criteria, farm management models are constructed for representative farms in six different Alberta regions. To incorporate risk and uncertainty into the farm model, I assume that, instead of maximizing overall gross margin, a farmer varies her crop activities to maximize expected utility subject to technological and market constraints. The models are calibrated using positive mathematical programming (PMP), which then facilitates their use for policy analysis; however, PMP is not straightforward in the case of expected utility maximization because a risk parameter also needs to be calibrated. Possible ways to address this issue are examined. Results indicate that the initial introduction of the AgriStability program tilted farmers’ planting decisions towards crops with higher returns and greater risk, but that a change in the AgriStability payout trigger (going from GF to GF2) would not further alter land-use decisions. However, the latter shift does reduce indemnities and farmers’ expected profits. Meanwhile, increases in farmers’ aversion to risk will lead to changes in crop allocations. / Graduate / 0503 / 0508 / sheriliu@uvic.ca

As one of the fastest growing regions in the world, crop production and education remain two of the most important topics for the development of sub-Saharan African (SSA) countries. This dissertation is composed of three chapters that investigate the economic returns to education (Chapter 1 and 2) and assess the policy influence on fertilizer usage (Chapter 3) in two SSA countries, Zimbabwe and Ethiopia. Chapter 1 investigates the casual impact of improved educational attainment on household well-being as reflected by consumption level in Zimbabwe. We use the age-specific exposure to the 1980 education reform as the instrument for the household head educational attainment to identify the economic returns to education. We find that an extra year of household head schooling leads to an 8% increase in per capita household consumption on average when using the multiple rounds of the Income, Consumption and Expenditure Survey (ICES). The impact of enhanced education on household consumption is larger for rural and female-headed households and we also find some evidence that head educational attainment could affect consumption patterns, where additional schooling leads to slightly lower consumption share in food and higher share in non-durable goods. Chapter 2 extends this topic by utilizing a pseudo panel data constructed with multiple waves of repeated cross-sectional data, which allows us to use fixed-effect and other panel data methods to address the problem of unobserved "ability" bias. For pseudo panel, we use age, gender and some other time-persistent criterions to define the cohorts and replace the individual observations with the intra-cohort means. Individual time-invariant factors that influencing both education and consumption are transformed into cohort time-invariant factors, within transformation on the pseudo panel would eliminate such factors leads to achieve unbiased and consistent estimates on the returns to education. We find on average there is a 14% increase in monthly household per capita consumption for each one more year of education for the household head. By further disaggregating our population, we find female-headed households exhibit a return to education of around 15.3%, much higher than its corresponding OLS/IV estimates. On the other hand, we fail to detect such large discrepancy for the male-headed households, suggesting that the overall downward bias of OLS/IV estimates mostly come from female-headed households. Facing significant higher opportunity cost, Zimbabwean females are much less likely to furthering their education when compared to males with similar unobserved ability level which can be one of the major underlying reasons. Chapter 3 investigates the potential effect of fertilizer promotion polices on crop acreage and input intensities in Ethiopia. We use a fully calibrated multi-input and -output model based on the principle of positive mathematical programming (PMP) to assess the policy impact in four major agricultural states in the country. I analyze two policies designed to promote fertilizer use, namely fertilizer import expansion and a universal subsidy program. The results from the simulation model suggest that local farmers actively respond to these promotion policies by adjusting crop acreage and investing more in fertilizer input. However, when the availability of fertilizer in one region is fixed and local farmers face a binding constraint, the behavior responses to the subsidy program alone would be limited. / Doctor of Philosophy / Education and food production are two of the most important issues when we study the development in Sub-Saharan African countries, which are among the fastest developing regions in the world. The dissertation is composed of three manuscripts, aiming to evaluate the economic returns to education and the impact of fertilizer promotion policies in two of the SSA countries, Zimbabwe and Ethiopia. Chapter 1 investigates the returns to education as reflected by household consumption and finds significant positive effect of enhanced education on household well-being. We also find such effect is larger for rural and female-headed households which shed light on the policy of more public investment targeting female and rural education in developing countries. Chapter 2 further extends this topic by combining multiple rounds of survey data and finds larger educational effects on household consumption compared to the results in Chapter 1. Female household heads, facing more barriers in attaining higher education, are an important cause of the higher estimates of returns found in this chapter. Chapter 3 investigates how potential fertilizer promotion polices would affect the regional level of choices on crop acreage and fertilizer input intensities in the major agricultural states in Ethiopia. It finds local farmers will actively adjust their land and fertilizer inputs when facing a fertilizer import expansion in combined with a universal fertilizer subsidy program.

Turkey moves towards integration with EU since 1963. The membership will involve full liberalization of trade in agricultural products with EU. The impact of liberalization depends on the path of agricultural policies in Turkey and the EU. On the other hand, agricultural protection continues to be the most controversial issue in global trade negotiations of World Trade Organization (WTO). To evaluate the impacts of policy scenarios, an economic modeling approach based on non-linear mathematical programming is appropriate. This thesis analyzes the impacts of economic integration with the EU and the potential effects of the application of a new WTO agreement in 2015 on Turkish agriculture using an agricultural sector model. The basic approach is Maximum Entropy based Positive Mathematical Programming of Heckelei and Britz (1999). The model is based on a static optimization algorithm. Following an economic integration with EU, the net export of crops declines and can not tolerate the boom in net import of livestock products. Overall welfare affect is small. Consumers benefit from declining prices. Common Agricultural Policy (CAP) supports are determinative for the welfare of producers. WTO simulation shows that a 15 percent reduction in Turkey&rsquo / s binding WTO tariff commitments will increase net meat imports by USD 250 million.

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Insurance has been considered as a useful tool for farmers to mitigate income volatility. However, there remain concerns that insurance may distort crop production decisions. Positive mathematical programming (PMP) models of farmers’ cropping decisions can be applied to study the effect of agricultural business risk management (BRM) policies on farmers’ decisions on land use and their incomes. Before being used to examine agricultural producer responses to policy changes under the expected utility framework, the models must first be calibrated to obtain the values of the risk aversion coefficient and the cost function parameters. In chapter 2, three calibration approaches are compared for disentangling the risk parameter from the parameters of the cost function. Then, in chapter 3, to investigate the impacts on production incentives of changes in Canada’s AgriStability program, farm management models are calibrated for farms with different cost structures for three different Alberta regions. Results indicate that farmers’ observed attitudes towards risk vary with cost structure. After joining the program, all farmers alter their land allocations to some extent. The introduction of a reference margin limit (RML) in the AgriStability program under Growing Forward 2 (2013-2018), which was retained in the replacement legislation until 2020, has the most negative impact on farmers with the lowest costs. The removal of RML significantly increases the benefits to low-cost farmers. Traditional insurance products provide financial support to farmers. However, for fruit farmers, the products’ quality can be greatly affected by the weather conditions during the stage of fruit development and ripening, which may lead to quality downgrade and a significant loss in revenue with little impacts on yields. Hence, chapters 4 and 5 investigate the conceptual feasibility of using weather-indexed insurance (WII) to hedge against non-catastrophic, but quality-impacting weather conditions to complement existing traditional insurance. Prospect theory is applied to analyze a farmer’s demand for WII. The theoretical model demonstrates that an increase in the volatility of total revenue and the revenue proportion from blueberries increases the possibility of farmers’ participation in WII. On the other hand, the increase in the value loss aversion coefficient and WII’s basis risk leads to less demand for WII. To design a WII product for blueberry growers to hedge against quality risk, a quality index must be constructed and the relationship between key weather conditions, such as cumulative maximum temperature and cumulative excess rainfall, and the quality index should be quantified. The results from a partial least squares structural equation modeling (PLS-SEM) show that the above goals are achievable. Further, rainfall and temperature can be modelled via a time-series model and statistical distributions, respectively, to provide reasonable estimates for calculating insurance premia. / Graduate / 2022-08-05

La crescente attenzione riguardo l’interconnessione tra agricoltura e aspetti ambientali così come la crescita di volatilità dei prezzi dei prodotti agricoli ha posto una nuova enfasi sull’introduzione di misure ambientali nella politiche agricole e sulla ricerca di nuovi strumenti di stabilizzazione del reddito degli agricoltori. La ricerca di questa tesi di dottorato si inserisce in questo contesto e analizza i contratti agro-ambientali, misure della Politica Agricola Comunitaria (PAC) in Unione Europea (UE), sotto una duplice prospettiva. Il primo lavoro di ricerca consiste in un’analisi degli effetti dell’adesione a tali contratti sulle scelte produttive e sulle perfomance economiche degli agricoltori in cinque Paesi dell’UE. I risultati indicano un’eterogeneità di questi effetti: in alcuni Paesi i contratti agro-ambientali sembrano essere più efficaci nel promuovere pratiche agricole sostenibili, così come in alcuni Paesi il pagamento compensativo agro-ambientale sembra non essere sufficiente a compensare la perdita di reddito dei partecipanti. Questo studio è stato condotto combinando il Propensity Score Matching con lo stimatore Difference-in-Differences. Il secondo lavoro di ricerca sviluppa una nuova proposta metodologica che incorpora il rischio in un framework di Programmazione Matematica Positiva (PMP). Il modello elaborato presenta caratteri innovativi rispetto alla letteratura sull’argomento e permette di stimare simultaneamente i prezzi ombra delle risorse, la funzione di costo non lineare dell’azienda agricola e un coefficiente di avversione al rischio specifico per ciascuna azienda. Il modello è stato applicato a tre campioni di aziende e i risultati delle stime testano la calibrazione del modello e indicano valori del coefficiente di avversione al rischio coerenti con la letteratura. Infine il modello è stato impiegato nella simulazione di diversi scenari al fine di verificare il ruolo potenziale di un contratto agro-ambientale come strumento di gestione del rischio a diversi livelli di volatilità dei prezzi agricoli. / The increasing attention to the relationship between agriculture and the environment and the rise in price volatility on agricultural markets has led to a new emphasis on agri-environmental policies as well as to a search for new risk management strategies for the farmer. The research objective of this PhD thesis is in line with this challenging context, since it provides an analysis of the EU agri-environmental schemes (AESs) from two viewpoints. First, an ex-post analysis aims at investigating the AESs for their traditional role as measures which encourage sustainable farming while compensating the farmer for the income foregone in five EU Member States. The effects of AESs participation on farmer’s production plans and economic performances differs widely across Member States and in some of them the environmental payment is not enough to compensate the income foregone of participants. This study has been performed by applying a semi-parametric technique which combines a Difference-in-Differences estimator with a Propensity Score Matching estimator. The second piece of research develops a new methodological proposal to incorporate risk into a farm level Positive Mathematical Programming (PMP) model. The model presents some innovations with respect to the previous literature and estimates simultaneously the resource shadow prices, the farm non-linear cost function and a farm-specific coefficient of absolute risk aversion. The proposed model has been applied to three farm samples and the estimation results confirm the calibration ability of the model and show values for risk aversion coefficients consistent with the literature. Finally different scenarios have been simulated to test the potential role of an AES as risk management tool under different scenarios of crop price volatility.