IDEAS home Printed from https://ideas.repec.org/p/ags/eaa107/6601.html
   My bibliography  Save this paper

Why Stochastics Matter: Analyzing Farm And Biofuel Policies

Author

Listed:
  • Westhoff, Patrick C.
  • Brown, Scott
  • Binfield, Julian C.R.

Abstract

Standard deterministic analysis of agricultural and biofuel policies can yield incomplete or misleading results. Stochastic analysis is especially important when policies have asymmetric effects and when there is intrinsic interest in uncommon events or the distribution of possible outcomes. The paper examines four recent cases where a stochastic approach was critical to a complete and balanced examination of important US policy issues. In each case, a stochastic model of the US agricultural and biofuel sectors was used to estimate 500 sets of possible market outcomes for the 2007- 2016 period. Changes in support levels, a proposed revenue-based program, possible World Trade Organization limits on internal support measures, and biofuel use mandates are all found to have potential impacts that could have been missed by traditional deterministic analysis. A stochastic approach could also be valuable in looking at EU policy questions such as possible reductions in intervention prices and export subsidies.

Suggested Citation

  • Westhoff, Patrick C. & Brown, Scott & Binfield, Julian C.R., 2008. "Why Stochastics Matter: Analyzing Farm And Biofuel Policies," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6601, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa107:6601
    DOI: 10.22004/ag.econ.6601
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/6601/files/cp08we02.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.6601?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Beghin, John C. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Fuller, Frank H. & Hart, Chad E. & Kovarik, Karen P. & Tokgoz, Simla & Yu, Tun-Hsiang & Wailes, Eric J. & Chavez, Edward & Woma, 2007. "FAPRI 2007 U.S. And World Agricultural Outlook," Staff General Research Papers Archive 12805, Iowa State University, Department of Economics.
      • Beghin, John C. & Dong, Fengxia & Elobeid, Amani E. & Fabiosa, Jacinto F. & Fuller, Frank H. & Hart, Chad E. & Kovarik, Karen & Tokgoz, Simla & Yu, Tun-Hsiang (Edward) & Wailes, Eric J. & Chavez, Eddi, 2007. "FAPRI 2007 U.S. and World Agricultural Outlook," FAPRI Staff Reports 7296, Food and Agricultural Policy Research Institute (FAPRI).
    2. Fapri, 2007. "Economic Impacts of Not Extending Biofuels Subsidies," FAPRI-MU Report Series 42189, Food and Agricultural Policy Research Institute (FAPRI).
    3. Babcock, Bruce A. & Beghin, John C. & Fuller, Frank H. & Mohanty, Samarendu & Fabiosa, Jacinto F. & Kaus, Phillip J. & Fang, Cheng & Hart, Chad E. & Matthey, Holger & de Cara, Stephane & Kovarik, Kare, 2001. "FAPRI 2001 U.S. and World Agricultural Outlook," FAPRI Staff Reports 32052, Food and Agricultural Policy Research Institute (FAPRI).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jacinto F. Fabiosa & John C. Beghin & Fengxia Dong & JAmani Elobeid & Simla Tokgoz & Tun-Hsiang Yu, 2010. "Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model," Land Economics, University of Wisconsin Press, vol. 86(4), pages 687-706.
    2. Yu, Tun-Hsiang (Edward) & Bessler, David A. & Fuller, Stephen W., 2006. "Cointegration and Causality Analysis of World Vegetable Oil and Crude Oil Prices," 2006 Annual meeting, July 23-26, Long Beach, CA 21439, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Lihong Lu McPhail & Bruce A. Babcock, 2008. "Short-Run Price and Welfare Impacts of Federal Ethanol Policies," Center for Agricultural and Rural Development (CARD) Publications 08-wp468, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Frank H. Fuller & John C. Beghin & Stephane De Cara & Jacinto F. Fabiosa & Cheng Fang & Holger Matthey, 2001. "China's Accession to the WTO: What Is at Stake for Agricultural Markets?," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 01-wp276, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    5. Thomas Fellmann & Myrna Leeuwen & Petra Salamon & Ali Koc & Gulden Boluk, 2012. "EU Enlargement to Turkey: Potential Effects on Turkey’s Agricultural Income and Markets," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 2(2), pages 1-16, December.
    6. Schmit, Todd M. & Verteramo, Leslie & Tomek, William G., 2009. "Implications of Growing Biofuel Demands on Northeast Livestock Feed Costs," Agricultural and Resource Economics Review, Cambridge University Press, vol. 38(2), pages 200-212, October.
    7. Srivastava, S.K. & Mathur, V.C. & Sivaramane, N. & Kumar, Ranjit & Hasan, Rooba & Meena, P.C., 2013. "Unravelling Food Basket of Indian Households: Revisiting Underlying Changes and Future Food Demand," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 68(4), pages 1-17.
    8. Amani Elobeid & John Beghin, 2006. "Multilateral Trade and Agricultural Policy Reforms in Sugar Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 57(1), pages 23-48, March.
    9. Jacinto F. Fabiosa & Yekaterina S. Ukhova, 2000. "New Aggregate and Source-Specific Pork Import Demand Elasticity for Japan: Implications to U.S. Exports," Center for Agricultural and Rural Development (CARD) Publications 00-wp253, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    10. Fang, Cheng & Beghin, John C., 2002. "Urban Demand for Edible Oils and Fats in China: Evidence from Household Survey Data," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 732-753, December.
    11. Nolte, Stephan & Grethe, Harald, 2012. "Der Markt für Zucker," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(Supplemen), pages 1-14, February.
    12. Frank Fuller & John C. Beghin & Jacinto Fabiosa & Samarendu Mohanty & Cheng Fang & Phillip Kaus, 2002. "Accession of the Czech Republic, Hungary and Poland to the European Union: Impacts on Agricultural Markets," The World Economy, Wiley Blackwell, vol. 25(3), pages 407-428, March.
    13. Taylor, Richard D. & Koo, Won W., 2012. "2012 Outlook of the U.S. and World Wheat Industries, 2012-2021," Agribusiness & Applied Economics Report 133393, North Dakota State University, Department of Agribusiness and Applied Economics.
    14. Searchinger, Timothy D. & Heimlich, Ralph E., 2008. "Estimating Greenhouse Gas Emissions from Soy-based US Biodiesel when Factoring in Emissions from Land Use Change," Lifecycle Carbon Footprint of Biofuels Workshop, January 29, 2008, Miami Beach, Florida 49099, Farm Foundation.
    15. Patton, Myles & Binfield, Julian C.R. & Moss, Joan E. & Kostov, Philip & Zhang, Lichun & Davis, John & Westhoff, Patrick C., 2008. "Impact of the abolition of EU Milk quotas on Agriculture in the UK," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6650, European Association of Agricultural Economists.
    16. Ujjayant Chakravorty & Marie-Hélène Hubert & Linda Nøstbakken, 2009. "Fuel Versus Food," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 645-663, September.
      • Chakravorty, Ujjayant & Hubert, Marie-Helene & Nostbakken, Linda, 2009. "Fuel versus Food," Working Papers 2009-20, University of Alberta, Department of Economics.
      • Ujjayant Chakravorty & Marie-Hélène Hubert & Linda Nøstbakken, 2009. "Fuel Versus Food," Post-Print halshs-01117673, HAL.
    17. Somwaru, Agapi & Dirkse, Steve, 2012. "Dynamic PEATSim Model: Documenting Its Use in Analyzing Global Commodity Markets," Technical Bulletins 129359, United States Department of Agriculture, Economic Research Service.
    18. Nolte, Stephan, 2008. "The Future Of The World Sugar Market--A Spatial Price Equilibrium Analysis," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6663, European Association of Agricultural Economists.
    19. Kruse, John R., 2003. "Implications Of The 2002 U.S. Farm Act For World Agriculture," Proceedings of the 9th Agricultural and Food Policy Systems Information Workshop, 2003: Farm Policy Development and Policy Tensions under NAFTA 16808, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    20. Jordan Schwartz & José Luis Guasch & Gordon Wilmsmeier, 2009. "Logistics, Transport and Food Prices in LAC: Policy Guidance for Improving Efficiency and Reducing Costs," IDB Publications (Working Papers) 9324, Inter-American Development Bank.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:eaa107:6601. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.