Economics Research International The latest articles from Hindawi Publishing Corporation © 2014 , Hindawi Publishing Corporation . All rights reserved. The Collaboration of SMEs through Clusters as Defense against Economic Crisis Thu, 24 Jul 2014 00:00:00 +0000 The aim of this paper is to present the realistic solution to the survival problem that SMEs have during the economic crisis. The role of SMEs is very important in the development of the regional and national economy of each country, particularly for small countries like Greece. On the other hand, universities also play a significant role in the national economy, since they provide Know-How and important research in the SMEs. Nevertheless, due to their small size and financial weakness, especially on the grounds of economic crisis, SMEs would not be able to cover on their own the cost of purchase of university research. The author of this working paper suggests the collaboration of SMEs in the form of clusters so as to be able to self-fund and absorb university Know-How at the same time. Ioannis Makedos Copyright © 2014 Ioannis Makedos. All rights reserved. Relationship between Fiscal Subsidies and CO2 Emissions: Evidence from Cross-Country Empirical Estimates Wed, 23 Jul 2014 06:41:30 +0000 Countries disburse subsidies with various motivations, for example, to promote industrial development, facilitate innovation, support national champions, and ensure redistribution. The devolution of subsidies may however also encourage economic activities leading to climate change related concerns, reflected through higher greenhouse gases (GHGs) emissions, if such activities are conducted beyond sustainable point. Through a cross-country empirical analysis involving 131 countries over 1990–2010, the present analysis observes that higher proportional devolution of budgetary subsidies leads to higher CO2 emissions. The countries with higher CO2 emissions are also characterized by higher per capita GDP, greater share of manufacturing sector in their GDP, and higher level of urbanization. In addition, the empirical findings underline the importance of the type of government subsidy devolution on CO2 emission pattern. The analysis underlines the importance of limiting provision of subsidies both in developed and developing countries. Sacchidananda Mukherjee and Debashis Chakraborty Copyright © 2014 Sacchidananda Mukherjee and Debashis Chakraborty. All rights reserved. Trade Negotiation Capacity and Health Carve-Outs in Trade Agreements Wed, 23 Jul 2014 06:38:01 +0000 There is a dearth of scholarship on the relationship between international trade and health status in countries. This paper contributes to filling this gap by proposing a formal analytical framework to study the link between the extent of health issues carved out from trade agreements by negotiating countries and their expenditure on public health. We also examine the role played by the nature of the political and fiscal regime prevalent in the country in the securing of the carve-outs. The model predicts that a higher level of carve-outs is more likely for countries that have relatively low levels of public health spending and which tend to be more politically free and fiscally liberal. We provide anecdotal evidence that supports our findings. Sheikh Shahnawaz Copyright © 2014 Sheikh Shahnawaz. All rights reserved. An Empirical Estimation of the Underground Economy in Ghana Mon, 21 Jul 2014 08:20:49 +0000 The main aim of this paper is to estimate the size of the underground economy in Ghana during the period 1983–2003. There is no agreement on the appropriate estimation approach to adopt to measure the size of the underground activities. To this end, we employ the well-applied currency demand approach in our measurement. Parameter estimates from the estimated currency demand equation are used in quantifying the ratio of “underground” to “measured” output/income for the Ghanaian economy. The estimated long-run average size of the underground economy to GDP for Ghana over the period is 40%. The underground economy is found to vary from a high of 54% in 1985 to a low of 25% in 1999. Estimates may represent lower bound estimates. Edward Asiedu and Thanasis Stengos Copyright © 2014 Edward Asiedu and Thanasis Stengos. All rights reserved. Determinants of Household Savings in India: An Empirical Analysis Using ARDL Approach Wed, 16 Jul 2014 06:00:11 +0000 Indian economy witnessed significant transformations in the postreform period both in terms of change in policy paradigm adopting greater market orientation and overall macroeconomic performance with development of a broad-based financial market and increasing global integration. Guided by the fact that domestic savings play a critical role in augmenting capital accumulation and contributing to achieve and sustain high economic growth, an attempt to review and reassess the role of various factors influencing domestic savings under the changed environment is quite relevant for sustaining the growth momentum. In this backdrop, the present study empirically analyzed the role of various determinants of household savings in India with the latest available data. It employed ARDL approach for this purpose due to its suitability for estimating an equation with a mix of stationary and nonstationary variables of order (1) and address potential endogeneity problems. The estimated results revealed that GDP, dependency ratio, interest rate, and inflation have statistically significant influence on household savings in India, both in the long run and short run. As regards policy implications, we suggest that ensuring price stability and avoiding any disruption to the growth process will be useful for augmenting savings and sustaining the savings-growth spiral in India. Amaresh Samantaraya and Suresh Kumar Patra Copyright © 2014 Amaresh Samantaraya and Suresh Kumar Patra. All rights reserved. Domestic Investment, Foreign Direct Investment, and Economic Growth Nexus: A Case of Pakistan Sun, 29 Jun 2014 08:00:28 +0000 This study aims to find dynamic interaction between domestic investment, foreign direct investment, and economic growth in Pakistan for the period 1976–2010. Phillips and Perron (PP) test is used to assess unit root in the concerned data series. Johansen cointegration approach applied to examine the long run relationship and Toda-Yamamoto causality approach is exercised to evaluate causal linkages. Besides foreign direct investment inflow to Pakistan and domestic investments variables, this study also used GDP as a third variable in order to avoid misspecification problems in the model and also to know the interrelationship between the variables. The empirical findings of this study reveal the existence of long run relationship between domestic investments, foreign direct investment, and economic growth, further supported by Toda-Yamamoto causality, and bidirectional causality has been found between FDI and domestic investment implying that both domestic investment and FDI cause each other. Irfan Ullah, Mahmood Shah, and Farid Ullah Khan Copyright © 2014 Irfan Ullah et al. All rights reserved. Bankruptcy Problem Allocations and the Core of Convex Games Wed, 25 Jun 2014 07:56:31 +0000 A well-known result related to bankruptcy problems establishes that a vector is a bankruptcy allocation if and only if it belongs to the core of the associated O’Neill’s bankruptcy game. In this paper we show that this game is precisely the unique TU-game based on convex functions that satisfies the previous result. In addition, given a bankruptcy problem, we show a way for constructing bankruptcy games such that the set of bankruptcy allocations is a subset of their core or their core is a subset of the set of bankruptcy allocations. Also, we show how these results can be applied for finding new bankruptcy solutions. William Olvera-Lopez, Francisco Sanchez-Sanchez, and Iván Tellez-Tellez Copyright © 2014 William Olvera-Lopez et al. All rights reserved. Regional Convergence in Greece (1995–2005): A Dynamic Panel Perspective Wed, 25 Jun 2014 05:55:04 +0000 This paper discusses the issue of regional convergence in Greece during the period 1995–2005. Following the theoretical concept of Barro and Salla-i-Martin, 1990 (- and -convergence concepts), several tests are conducted to test for conditional or unconditional convergence across Greek regions including GMM estimation of Barro regressions. The results indicate absence of convergence across NUTS II regions while there is evidence of convergence at prefectural level (NUTS III). The effect of agriculture industry and services sector is examined and services are found to have significant impact on growth and convergence. Finally, we examine the effect of the implementation of the European funding programs in some detail. Mike Tsionas, Stylianos Sakkas, and Nikolaos C. Baltas Copyright © 2014 Mike Tsionas et al. All rights reserved. Optimal Penalties on Deviations from Budgetary Targets Mon, 02 Jun 2014 09:18:53 +0000 Beyond traditional arguments justifying the introduction of fiscal rules, this paper analyses their potential contribution to an indirect budgetary coordination between the member countries of a monetary union. Indeed, thanks to appropriate fiscal penalties, the noncooperative and decentralized equilibrium could get closer to the optimal equilibrium where the budgetary authorities cooperate. Our macroeconomic model shows that whatever penalty on the structural budgetary deficit would be optimal in case of asymmetric shocks. A moderate penalty on the excessive indebtedness level would be optimal in “normal times,” or in case of asymmetric shocks if openness to trade and price flexibility are sufficiently high, whereas the share of public consumption in GDP, taxations rates, and indebtedness levels is sufficiently weak in the monetary union. Besides, in case of symmetric shocks, a fiscal penalty would be useful to decrease the excessive budgetary activism, even if it doesn’t allow reaching the optimal and first-best equilibrium. Furthermore, the fiscal penalty should always be an increasing function of the share of public consumption in GDP and of taxation rates but a decreasing function of the strength of automatic stabilizers, of openness to trade, and of price flexibility in the member countries of the monetary union. Séverine Menguy Copyright © 2014 Séverine Menguy. All rights reserved. The Remittances-Output Nexus: Empirical Evidence from Egypt Thu, 22 May 2014 08:27:59 +0000 This paper examines the long-run causal link between remittances and output in Egypt for the period 1977–2012. The long-run causal link is examined using the autoregressive distributed lag (ARDL) bounds test for cointegration, along with a vector error-correction model to estimate the short- and long-run parameters of equilibrium dynamics. Results show that remittances and GDP are cointegrated, with a statistically significant, positive causality running from remittances to output, while output is found not to be a long-run forcing factor of remittances in Egypt. The findings of this paper shed light on the importance of remittances for promoting economic growth in Egypt. Governmental policies that attract more remittance inflows, along with their efficient use, could promote economic growth in Egypt. Mesbah Fathy Sharaf Copyright © 2014 Mesbah Fathy Sharaf. All rights reserved. Risk Management at the Macroeconomy Level and Development in Developing Countries Mon, 19 May 2014 10:51:52 +0000 This paper examines the impact of risk management at the macroeconomy level on economic development in developing countries. Based on data from the World Bank, we use a sample of sixty-three developing economies and find that selected indicators related to risk management at the macroeconomy level do have a statistically significant effect on economic development in these countries. We observe that high inflation rates do not seem to statistically affect economic development even though the coefficient estimate of this variable does have the anticipated negative sign. Regression results show that almost sixty percent of cross-developing country variations in purchasing power parity per capita gross national income can be explained by its linear dependency on the share of international reserves in the GDP and the Worldwide Governance Indicators average. Statistical results of such empirical examination will assist governments in developing countries identify risk management strategies at the macroeconomy level that may be used as powerful instruments for economic development. Minh Quang Dao Copyright © 2014 Minh Quang Dao. All rights reserved. Segmented Labor Markets and the Distributive Cycle: A Roadmap towards Inclusive Growth Wed, 30 Apr 2014 07:18:00 +0000 The paper builds on the Goodwin (1967) model which describes the distributive cycle of capitalist economies whereby mass unemployment is generated periodically through the conflict about income distribution between capital and labor. We add to this model a segmented labor market structure with fluid, latent, and stagnant components. The model exhibits a unique balanced growth path which depends on the speeds with which workers are pushed into or out of the labor market segments. We investigate the stability properties of this growth path with segmented labor markets and find that, though there is a stabilizing inflation barrier term in the wage Phillips curve, the interaction with the latent and stagnant portions of the labor market generates potentially (slowly) destabilizing forces if policy measures are absent that regulate these labor markets. We then introduce an activating labor market policy, where government in addition acts as employer of last resort thereby eliminating the stagnant portion of the labor market, whilst erecting benefit systems that partially sustain the incomes of workers that have to leave the floating/latent labor market of the private sector of the economy. We show that such policies guarantee the macrostability of the economy’s balanced growth path. Matthieu Charpe, Peter Flaschel, Florian Hartmann, and Christopher Malikane Copyright © 2014 Matthieu Charpe et al. All rights reserved. The Government Subsidy Strategy Choice for Firm’s R&D: Input Subsidy or Product Subsidy? Tue, 15 Apr 2014 00:00:00 +0000 To encourage enterprises to conduct technology innovation, the government needs to formulate appropriate subsidies policy. This paper compares two R&D subsidy policies in a supplier-manufacturer supply chain, in which the manufacturer conducts R&D activity for quality improvement. By means of game theory, we investigate the optimal decisions of the players under the two R&D subsidy policies, that is, input subsidy policy and product subsidy policy. Finally, we compare the profits and welfare to explore the better R&D subsidy policy and provide decision support for government to formulate subsidy policy. The results show that under input subsidy policy the optimal production output, quality improvement, profits, government subsidies, and social welfare are all lower than those of product subsidy policy. Therefore, the government should use product subsidy strategy to encourage enterprise R&D activities. Zhiying Liu and Qinqin Li Copyright © 2014 Zhiying Liu and Qinqin Li. All rights reserved. Bioeconomics of Commercial Marine Fisheries of Bay of Bengal: Status and Direction Thu, 03 Apr 2014 00:00:00 +0000 The fishery of the Bay of Bengal (BOB) is assumed to be suffering from the overexploitation. This paper aims to assess the sustainability of current level of fishing effort as well as possible changes driven by anthropogenic and climate driven factors. Therefore, the commercial marine fishery of BOB for the period of 1985/86 to 2007/08 is analyzed by applying Gordon-Schaefer Surplus Production Model on time series of total catch and standardized effort. Static reference points such as open-access equilibrium, maximum economic yield, and maximum sustainable yield are established. Assumptions about potential climatic and anthropogenic effects on r (intrinsic growth rate) and K (carrying capacity) of BOB fishery have been made under three different reference equilibriums. The results showed that the fishery is not biologically overexploited; however, it is predicted to be passing a critical situation, in terms of achieving reference points in the near future. But, on the other hand, economic overfishing started several years before. Higher fishing effort, and inadequate institutional and legal framework have been the major bottlenecks for the proper management of BOB fisheries and these may leads fishery more vulnerable against changing marine realm. Thus, the present study calls for policy intervention to rescue the stock from the existing high fishing pressure that would lead to depletion. Ahasan Habib, Md. Hadayet Ullah, and Nguyen Ngoc Duy Copyright © 2014 Ahasan Habib et al. All rights reserved. Exchange Rate Movement and Foreign Direct Investment in Asean Economies Sun, 30 Mar 2014 09:34:44 +0000 The inflows of foreign direct investment (FDI) are important for a country's economic development, but the world market for FDI has become more competitive. This paper empirically analyses the exchange rate movements and foreign direct investment (FDI) relationship using annual data on ASEAN economies, that is, Malaysia, the Philippines, Thailand, and Singapore. By employing ARDL bounds test approach, the empirical results show the existence of significant long-run cointegration between exchange rate and FDI for the case of Singapore, Malaysia, and the Philippines with all countries recording negative coefficient implying that the appreciation of Singapore dollar, Malaysian ringgit, and the Philippine peso has a positive impact on FDI inflows. Using the ECM based ARDL approach for causality test, both Singapore and the Philippines show long-run bidirectional causality between exchange rate and FDI whereas long-run unidirectional causality running from the exchange rate to FDI in Malaysia. Furthermore, this study also found that short-run unidirectional causality running from the exchange rate to FDI exists in Singapore. Jaratin Lily, Mori Kogid, Dullah Mulok, Lim Thien Sang, and Rozilee Asid Copyright © 2014 Jaratin Lily et al. All rights reserved. Predictable Dynamics in the Small Stock Premium Thu, 20 Feb 2014 08:34:52 +0000 We start this paper by providing a detailed study of how the mean monthly return on the Small-Minus-Big (SMB) Fama-French factor is affected by the January effect and the stock market return during the preceding month and preceding calendar year. We then proceed to building a predictive model for the monthly SMB factor return that incorporates the January effect and the dependence on both the market return during the preceding month and preceding calendar year. Our findings suggest that a positive small stock premium appears mainly during the years following the years with a negative return on the market as the result of a delayed and stronger reaction of small stocks to good news and a stronger January effect. We also argue that the January effect constitutes a much lesser part of the size effect than it was previously supposed. Valeriy Zakamulin Copyright © 2014 Valeriy Zakamulin. All rights reserved. Evaluation of the 2006–2008 Food Crisis on Household Welfare: The Case of the Sultanate of Oman Sun, 16 Feb 2014 15:31:51 +0000 The objective of this paper is to evaluate the impact of high food prices during the 2006–2008 food crisis period on the welfare of households in the Sultanate of Oman. The welfare impacts of price changes are estimated using the Hicksian compensating variation (CV) methodology. The compensating variation was estimated for 4 different income household groups as well as two location groups (urban-rural). Results suggest that all household groups suffered welfare losses due to the food crisis. On average, Omani households need to be compensated about 10.3% of their income for the price increase they experienced during the 2006–2008 period. Rural households are more affected than urban households with a required compensation of 12.4% and 9.87%, respectively. In all cases most of the impact is felt on the first round where no consumption adjustment is made; the second round effect is comparatively small compared to the first-order effect. Total compensation required to compensate all households amounts to O.R. 266 M, that is, a 1.14% of GDP, whereas a compensation targeted to the low-income quartile amounts only to O.R. 26.7 M representing 0.1% of GDP. Houcine Boughanmi, Ahmed Al Shamakhi, Msafiri Mbaga, and Hemesiri Kotagama Copyright © 2014 Houcine Boughanmi et al. All rights reserved. Contribution of Co-Skewness and Co-Kurtosis of the Higher Moment CAPM for Finding the Technical Efficiency Thu, 16 Jan 2014 10:00:12 +0000 The objective of this paper is to present the technical efficiency of individual companies and their respective groups of Bangladesh stock market (i.e., Dhaka Stock Exchange, DSE) by using two risk factors (co-skewness and co-kurtosis) as the additional input variables in the Stochastic Frontier Analysis (SFA). The co-skewness and co-kurtosis are derived from the Higher Moment Capital Asset Pricing Model (H-CAPM). To investigate the contribution of these two factors, two types of technical efficiency are derived: (1) technical efficiency with considering co-skewness and co-kurtosis (WSK) and (2) technical efficiency without considering co-skewness and co-kurtosis (WOSK). By comparing these two types of technical efficiency, it is noticed that the technical efficiency of WSK is higher than the technical efficiency of WOSK for the individual companies and their respective groups. As per available literature in the context Bangladesh stock market, no study has been conducted thus far to measure technical efficiency of companies and their respective groups by using the risk factors which are derived from the H-CAPM. In this research, the link between H-CAPM and SFA is established for measuring technical efficiency and it is believed that the findings of this study may be applied to other emerging stock markets. Md. Zobaer Hasan and Anton Abdulbasah Kamil Copyright © 2014 Md. Zobaer Hasan and Anton Abdulbasah Kamil. All rights reserved. Economics of Bioenergy Tue, 31 Dec 2013 08:51:44 +0000 Amani Elobeid, Miguel Carriquiry, Silvia Secchi, and Tun-Hsiang (Edward) Yu Copyright © 2013 Amani Elobeid et al. All rights reserved. Biofuel Expansion, Fertilizer Use, and GHG Emissions: Unintended Consequences of Mitigation Policies Mon, 30 Dec 2013 11:58:30 +0000 Increased biofuel production has been associated with direct and indirect land-use change, changes in land management practices, and increased application of fertilizers and pesticides. This has resulted in negative environmental consequences in terms of increased carbon emissions, water quality, pollution, and sediment loads, which may offset the pursued environmental benefits of biofuels. This study analyzes two distinct policies aimed at mitigating the negative environmental impacts of increased agricultural production due to biofuel expansion. The first scenario is a fertilizer tax, which results in an increase in the US nitrogen fertilizer price, and the second is a policy-driven reversion of US cropland into forestland (afforestation). Results show that taxing fertilizer reduces US production of nitrogen-intensive crops, but this is partially offset by higher fertilizer use in other countries responding to higher crop prices. In the afforestation scenario, crop production shifts from high-yielding land in the United States to low-yielding land in the rest of the world. Important policy implications are that domestic policy changes implemented by a large producer like the United States can have fairly significant impacts on the aggregate world commodity markets. Also, the law of unintended consequences results in an inadvertent increase in global greenhouse gas emissions. Amani Elobeid, Miguel Carriquiry, Jerome Dumortier, Francisco Rosas, Kranti Mulik, Jacinto F. Fabiosa, Dermot J. Hayes, and Bruce A. Babcock Copyright © 2013 Amani Elobeid et al. All rights reserved. Insider Power and Average Labor Demand When Recessions Are Prolonged Mon, 25 Nov 2013 18:53:58 +0000 This paper examines how insider power in wage negotiations affects average labor demand when recessions are more persistent than booms. It shows that the effect of insider power on average labor demand is more contractionary the greater is the persistence of troughs relative to booms. This analysis is a contribution to the discussion of why the existence of dual labor markets (in which insider power is strong) is negative for employment in the current situation of more prolonged troughs. Pilar Díaz-Vázquez Copyright © 2013 Pilar Díaz-Vázquez. All rights reserved. The Impact of US Biofuels Policy on Agricultural Production and Nitrogen Loads in Alabama Sun, 24 Nov 2013 10:48:10 +0000 The Energy Independence Security Act aims to increase the production of renewable fuels in order to improve the energy efficiency of the United States of America. This legislation set the biofuel production goal at 136.3 million m3 by 2022, with approximately 79 million m3 derived from advanced biofuels or renewable fuels other than corn ethanol. A bioeconomic model was used to assess the potential impact of the biofuel mandate in terms of nitrogen loss associated with corn production in northern Alabama considering the El Nino Southern Oscillation phases. From simulations conducted at the watershed level, the expansion in biofuel production would increase the production of corn by 122.89% with associated increase in nitrogen loss of 20%. Furthermore, nitrogen loss would be more severe in climatic transition towards La Nina. Ermanno Affuso and Leah M. Duzy Copyright © 2013 Ermanno Affuso and Leah M. Duzy. All rights reserved. Evidence on the Efficient Market Hypothesis from 44 Global Financial Market Indexes Thu, 31 Oct 2013 18:40:33 +0000 This paper employs Granger causality tests to identify the impacts of historical information from global financial markets on their current levels in 30-day windows. The dataset consists primarily of the daily index levels of the (1) open, (2) closed, (3) intraday high, (4) intraday low, and (5) trading volume series for the world’s 37 most influential equity market indexes, two crude oil prices, a gold price, and four major money market prices in the United States are used as control groups. Our results indicate a persistent impact of historical information from global markets on their current levels, and this impact duplicates itself in a cyclical pattern consistently over decades. Such persistence in the patterns causes some market indexes to be upgraded to global or regional market leaders. These findings can be interpreted as constituting violations of the weak-form efficient market hypothesis. The results also reveal recursive impacts of information in these markets and the existence of an information digestion effect. Huijian Dong, Helen M. Bowers, and William R. Latham Copyright © 2013 Huijian Dong et al. All rights reserved. Migration-Driven Aggregation Behaviors of Job Markets in a Multi-Group Environment Mon, 21 Oct 2013 09:47:46 +0000 This paper introduces a new model describing the aggregate growth of job markets. We divide the job market in each city into two groups: native job market of size and an immigrant job market of size . A reversible migration of jobs exists in both groups. In addition, the interaction between these two groups creates both native and immigrant jobs. A loss of native jobs also takes place due to the interaction. Through studying initial conditions, job-creation rate, and job-loss rate we discover some meaningful results. The size change of native job market is closely related to that of the migration rate, native job-creation rate, and native job-loss rate. We assume that these rates are proportional to the sizes of two groups and find out that for certain initial conditions, immigrants influence native job markets positively. They create more jobs for both job markets. In addition, we can make conclusions about the future trend of the flow of jobs. People will move to places like big cities where there is a higher concentration of job opportunities. Ruoyan Sun Copyright © 2013 Ruoyan Sun. All rights reserved. The Short-Run and Long-Run Relationships between Mortality and the Business Cycle in Canada Thu, 18 Jul 2013 10:37:24 +0000 This paper investigates the relationship between health and the business cycle for the Canadian economy. The majority of existing literature shows a procyclical relationship between death rates and indicators of the business cycle, suggesting that recessions are good for one’s health. We use a time series error correction model to determine the short-run and long-run impacts of the unemployment rates on death rates. Our results indicate that temporary slowdowns in economic activity are associated with lower death rates. Moreover, once we stratify the data by sex, we find a long-run negative relationship between the unemployment rate and death rates for both sexes. Zuzana Janko, J. C. Herbert Emery, and Pierre Guenette Copyright © 2013 Zuzana Janko et al. All rights reserved. Land Use Change from Biofuels Derived from Forest Residue: A Case of Washington State Mon, 03 Jun 2013 14:12:49 +0000 Biofuel policy in the United States is transitioning away from corn towards second-generation biofuels in part because of the debate over environmental damages from indirect land use change. We combine a spatially explicit parcel level model for land use change in Washington State with simulations for biofuel policy aimed at utilizing forest residue as feedstock. Using a spatially explicit model provides greater precision in measuring net returns to forestland and development and indicates which areas will be most impacted by biofuel policy. The effect of policy is simulated via scenarios of increasing net returns to forestry and of siting feedstock-processing plants. Our results suggest that forestland will increase from such a policy, leading to a net reduction in atmospheric carbon from indirect land use change. This is in contrast to the experience of corn ethanol where the change in carbon emissions is potentially positive and large in magnitude. Daniel Brent and Sergey Rabotyagov Copyright © 2013 Daniel Brent and Sergey Rabotyagov. All rights reserved. US Agriculture under Climate Change: An Examination of Climate Change Effects on Ease of Achieving RFS2 Wed, 15 May 2013 17:05:22 +0000 The challenges and opportunities facing today's agriculture within the climate change context are at least twofold: in addition to adapting to a potentially more variable climate, agriculture may also take on the addition role of mitigating GHG emissions—such as providing renewable fuels to replace fossil fuels to some extent. For the US, a large-scale GHG mitigation effort through biofuels production pursuant to the Renewable Fuel Standard (RFS2) is already unfolding. A question thus naturally arises for the RFS2-relevant US agricultural sector: will climate change make it harder to meet the volume goals set in the RFS2 mandates, considering that both climate change and RFS2 may have significant impacts on US agriculture? The agricultural component of FASOMGHG that models the land use allocation within the conterminous US agricultural sector is employed to investigate the effects of climate change (with autonomous adaptation at farm level), coupled with RFS2, on US agriculture. The analysis shows that climate change eases the burden of meeting the RFS2 mandates increasing consumer welfare while decreasing producer welfare. The results also show that climate change encourages a more diversified use of biofuel feedstocks for cellulosic ethanol production, in particular crop residues. Yuquan W. Zhang and Bruce A. McCarl Copyright © 2013 Yuquan W. Zhang and Bruce A. McCarl. All rights reserved. Economic Impact of Harvesting Corn Stover under Time Constraint: The Case of North Dakota Tue, 30 Apr 2013 08:49:41 +0000 This study examines the impact of stochastic harvest field time on profit maximizing potential of corn cob/stover collection in North Dakota. Three harvest options are analyzed using mathematical programming models. Our findings show that under the first corn grain only harvest option, farmers are able to complete harvesting corn grain and achieve maximum net income in a fairly short amount of time with existing combine technology. However, under the second simultaneous corn grain and cob (one-pass) harvest option, farmers generate lower net income compared to the net income of the first option. This is due to the slowdown in combine harvest capacity as a consequence of harvesting corn cobs. Under the third option of separate corn grain and stover (two-pass) harvest option, time allocation is the main challenge and our evidence shows that with limited harvest field time available, farmers find it optimal to allocate most of their time harvesting grain and then proceed to harvest and bale stover if time permits at the end of harvest season. The overall findings suggest is that it would be more economically efficient to allow a firm that is specialized in collecting biomass feedstock to participate in cob/stover harvest business. Thein A. Maung and Cole R. Gustafson Copyright © 2013 Thein A. Maung and Cole R. Gustafson. All rights reserved. Induced Land Use Emissions due to First and Second Generation Biofuels and Uncertainty in Land Use Emission Factors Thu, 04 Apr 2013 09:43:35 +0000 Much research has estimated induced land use changes (ILUCs) and emissions for first generation biofuels. Relatively little has provided estimates for the second generation biofuels. This paper estimates ILUC emissions for the first and second generation biofuels. Estimated ILUC emissions are uncertain not only because their associated land use changes are uncertain, but also because of uncertainty in the land use emission factors (EFs). This paper also examines uncertainties related to these factors. The results suggest that converting crop residues to biofuel has no significant ILUC emissions, but that is not the case for dedicated energy crops. Use of dedicated energy crops transfers managed natural land and marginal land (cropland-pasture) to crop production. Producing biogasoline from miscanthus generates the lowest land requirement among alterative pathways. The largest land requirement is associated with switchgrass. The difference is due largely to the assumed yields of switchgrass and miscanthus. The three major conclusions from uncertainty in emissions analyses are (1) inclusion or exclusion of cropland-pasture makes a huge difference; (2) changes in soil carbon sequestration due to changes in land cover vegetation play an important role; and (3) there is wide divergence among the emission factor sources, especially for dedicated crop conversion to ethanol. Farzad Taheripour and Wallace E. Tyner Copyright © 2013 Farzad Taheripour and Wallace E. Tyner. All rights reserved. Economic Impacts of Using Switchgrass as a Feedstock for Ethanol Production: A Case Study Located in East Tennessee Wed, 20 Mar 2013 13:16:36 +0000 One of the major motivations to establish a biobased energy sector in the United States is to promote economic development in the rural areas of the nation. This study estimated the economic impact of investing and operating a switchgrass-based ethanol plant in East Tennessee. Applying a spatially oriented mixed-integer mathematical programming model, we first determined the location of biorefinery, feedstock draw area, and the resources used in various feedstock supply systems by minimizing the total plant gate cost of feedstock. Based on the model output, an input-output model was utilized to determine the total economic impact, including direct, indirect, and induced effects of feedstock investment and annual production in the study region. Moreover, the economic impact of ethanol plant investment and annual conversion operation was analyzed. Results suggest that the total annual expenditures in an unprotected large round bale system generated a total $92.5 million in economic output within the 13 counties of East Tennessee. In addition, an estimated $234 million in overall economic output was generated through the operation of the biorefinery. This research showed that the least-cost configuration of the feedstock supply chain influenced the levels and types of economic impact of biorefinery. Burton C. English, Tun-Hsiang Edward Yu, James A. Larson, R. Jamey Menard, and Yuan Gao Copyright © 2013 Burton C. English et al. All rights reserved.