Abstract Quantifying the regional economic impacts of crop production is critical for assessing the broader implications of access to natural resources and government policies. However, most existing estimates rely on input–output models with restrictive assumptions, and competing theories of economic mechanisms provide little guidance on the sign or magnitude. We estimate local economic spillovers by exploiting a large increase in crop production that occurred due to the expansion of irrigation in counties overlying the High Plains Aquifer after World War II. While crop production was directly impacted by access to groundwater, we find that livestock product sales also increased significantly, reaching a 235% increase in sales compared to counties outside the aquifer. The primary spillover to non‐farm sectors was an increase in sales in the wholesale sector, perhaps driven by sales of agricultural‐related products. These findings provide evidence of coagglomeration incentives, where clusters of agricultural industries find it optimal to produce within the same region.
Abstract In past analyses of animal replacement decisions, studies have claimed that dairy farms often replace dairy cows too early to be maximizing profits. I estimate a structural model of asset replacement to determine the motives behind early replacement of dairy cows. I specifically test whether the costs from premature removal, an event where cows are removed off‐schedule due to health problems, explain replacement ages on dairy farms that are considered by previous studies to be unprofitable. Using data from over 1000 Wisconsin dairy farms, I find that a cow prematurely leaving the herd costs $2300 per removal, totaling $75 million in lost profit over the sample period. This cost is larger than what has been previously assumed, especially for dairies with less than 200 cows, suggesting that replacement rates appear unprofitable because previous analyses underestimated these costs. Dairy farms may benefit from prioritizing cow longevity and health over productivity to both cut costs and address environmental externalities from dairy. These results highlight the economic damages from poor cattle health on US dairy farms and the extent to which there may be cost savings from increasing cattle resilience to conditions that cause unexpected removal.
Abstract This study assesses the effects of the 2009 Black Saturday Bushfires (BSB), which primarily occurred in rural regions of Victoria and represent the deadliest bushfire event in Australia's history, on household energy poverty. Using a linear panel event‐study, an entropy‐balanced event‐study, and a staggered difference‐in‐differences (DiD) design, applied to matched longitudinal household and geographical data, our results suggest a significant increase in the likelihood of experiencing energy poverty among households residing within 15 km of wildfire areas. Specifically, we find that for households directly affected by the fires, the likelihood of being in energy poverty increases by 9.9–11.3 percentage points in 2010 and by 13.2–16.7 percentage points in 2011 across specifications, compared to 2005–2007, which is the reference period. We find that the data are statistically consistent with life satisfaction, perceived safety and quality of life fully mediating the effect of BSB exposure on energy poverty in 2010, and with perceived safety fully mediating the relationship in 2011. We also find that adopting longer‐term financial planning mitigated the adverse effects of BSB exposure on energy poverty.
Abstract In order to quantify the impact of agricultural policy uncertainty on European farmers' investment behavior, we construct a newspaper‐based monthly index of European agricultural policy uncertainty from 2013 to 2023. We use 327,224 newspaper articles to assess and compare the trends in policy uncertainty across five top agricultural producers in Europe, that is, Germany, the United Kingdom, France, Spain and Italy. We connect this index of policy uncertainty to bookkeeping data from 13,706 farms in these five countries over the period 2014–2018 ( N = 68,530) to estimate the relationship between policy uncertainty and investment decisions. We find an increasing trend in agricultural policy uncertainty, with significant peaks around key events such as the COVID‐19 pandemic, the introduction of the European Green Deal and Brexit. Despite the presence of a common policy environment, agricultural policy uncertainty is heterogeneous across countries and captures country‐specific uncertainties such as elections and weather shocks. Anticipated policy uncertainties, such as those arising from Brexit and the European Green Deal, allow farmers to analyze optimal responses and make investment plans, and therefore, if they affect farm investment, they do so smoothly over time (e.g., bringing investment forward). In contrast, unanticipated uncertainties, or policy uncertainty shocks, like those caused by the Russian food import ban of 2014 or the US‐China trade war are negatively correlated to farm investment.
Agrodealers play a critical role in rural economies, selling essential inputs for agricultural production, stocking new products, and providing farmers with technical advice. However, uncertainty can discourage them from stocking newer, less familiar products, limiting the availability of innovative technologies and leading to market failures and low-innovation equilibria. We provided Kenyan agrodealers with a 10% price discount on new, drought-tolerant maize hybrids. The discount increased the likelihood that the agrodealer stocked the new hybrids and increased the share of the new hybrids in overall sales. In an information-deprived environment, the discount encouraged dealers to gather more information about the seeds and increased agrodealers' sales effort.
