Research Projects

Projects Funded for 2020-2021

The Role of Land Reform in Chilean Agricultural Exports

  • Ashish Shenoy

The Impacts of Wildfires on Water Utilities and Communities in California

  • Mehdi Nemati
  • Samane Zare

The Impacts of Maritime Emissions Standards

  • Jamie Hansen-Lewis
  • Michelle Marcus

Abstract

Specific Objectives of the Project:
1. Evaluate the impact of maritime emissions standards on air quality in California and in other coastal states
2. Relate and test the equivalence of ex-ante and ex-post methods of air quality policy evaluation
3. Examine the role of maritime emissions on a range of potential outcomes, such as agricultural yields, worker productivity, and infant health, in California
Project Report/Summary of Results:
1. We found that maritime fuel standards, specifically the 2012 Sulfur Emissions Control Area (ECA), led to reductions in fine particulate matter concentrations (PM2.5). On average, the policy resulted in an 0.35 microgram per cubic meter (3.8%) improvement in PM2.5 (p=0.002). We failed to find evidence that the policy predicted trends in air quality in the years prior to implementation (pre-trends).
The data indicated that air quality improvements differed significantly in locations where the jurisdiction of the policy was less than the full 200 nautical miles. Whereas locations with the full jurisdiction had relatively consistent improvements, areas with partial jurisdiction, which included southern California and Florida, had marked improvements in the initial year of the policy and the year the policy became more stringent, but little improvement in intervening years.

2. Overall, we rejected the equivalence of the ex-ante predictions from the EPA and ex-post observations. For a one microgram per cubic meter planned improvement in PM2.5, we estimated PM2.5 fell 0.45 micrograms per cubic meter on average.
Notably, we detected differences in the performance of the ex-ante predictions between areas with full jurisdiction and areas with partial jurisdiction. For the full jurisdiction locations, we failed to reject the equivalence of the ex-ante predictions and ex-post observations. For the partial jurisdiction locations after the initial years, we rejected the equivalence of the ex-ante predictions from the EPA and ex-post observations.

One explanation for this result is that the ex-ante predictions do not account for behavioral changes in reaction to the policy. Ships are best situated to subvert the policy where the jurisdiction is small because they do not need a large route detour to use highly polluting fuels. For example, within 80 miles of Imperial county, a location of significance for Californian agriculture, ships could continue polluting. These findings indicate that transport model predictions commonly employed to justify pollution regulation work well in a world without behavioral modification but also risk significantly overstating the realized impact of regulation.

3. Thus far, we have examined the impact of the fuel standards on the rate of low infant birthweight and community demographics. We found significant improvements in the rate of low infant birthweight. The policy was associated with an 2.2% fall in the rate low birthweight (p<0.001). We also failed to find evidence that the policy treatment predicted trends in infant heath in the years prior to implementation (pre-trends). In a robustness check, we found that the policy was associated with changes in the demographic composition of mothers. This result indicates that a change in the composition of mothers, rather than air quality, contributed to the improvement in infant health associated with the policy. We are still evaluating the salience of the air quality changes from this policy to determine if the demographic change was a result of the policy or a result of an unobserved factor that coincided with the policy.

The Impacts of COVID-19 on the Farm Labor Supply and Farming Decisions in California

  • J. Edward Taylor
  • Bryan Little
  • Sara Neagu-Reed
  • Diane Charlton

The Impacts of Climate Change on Global Grain Production, Accounting for Adaptation

  • Michael Anderson
  • Andrew Hultgren
  • Solomon Hsiang

The Effects of a Declining Farm Labor Supply on Fruit and Vegetable Production in California

  • Pierre Mérel
  • Zachariah Rutledge

The Effectiveness of Reforestation: The Tradeoff between Climate Change Mitigation and Adaptation

  • Dalia Ghanem
  • Daria (Dasha) Ageikina

Recent Water Quality Policy and Agriculture

  • Joseph Shapiro

Abstract

Specific Objectives of the Project:
Re-examine the economic logic that the US Environmental Protection Agency used to justify the Navigable Waters Protection Rule; use machine learning and artificial intelligence algorithms to determine the scope of these water quality regulations.

Project Report/Summary of Results:
The first component resulted in a published publicly available report that received media coverage. It also resulted in a peer-reviewed journal article in Science.

The second component trailed a number of graduate students, and resulted in a preliminary set of results and series of meetings with senior staff at the US Environmental Protection Agency to convey the approach and initial results. This is an ongoing project that will involve research and policymaker outreach over multiple years as the EPA revises the Clean Water Act.

Quantifying Spatially Resolved Agricultural Runoff Based Nonpoint Source Pollution in California Waterways

  • J. Keith Gilless
  • Peiley Lau

Producer Response to “Private” Food Safety Standards: Theory and Application to California Tree Nuts

  • Julian Alston
  • Sarah Smith

Predicting Demand for Plant-Based Meat

  • Meredith Fowlie
  • Hal Giuliani Gordon

Pasture, Rangeland, and Forage Insurance Program: Risk Management Implications for California Ranchers

  • Tina Saitone
  • James Keeler

Land Use and Water Impacts of Cannabis Cultivation

  • Katrina Jessoe
  • Michele Baggio

Abstract

Specific Objectives of the Project:
The objectives of this proposal are to empirically estimate the effect of the legalization of cannabis cultivation on agricultural labor, agricultural land prices, agricultural land use and water quality in California.

Project Report/Summary of Results:
Funding from the Giannini Foundation allowed us to begin to assemble a panel dataset comprised of satellite imagery data at a 30mx30m for agricultural land parcels in Humboldt and Mendocino counties spanning the years 1995 to 2020. We also constructed data on the cannabis laws in each county of California, including activities that are permitted and the date that these laws took effect. In our next stage of research, we will designate water bodies, forested land, roads and cannabis using a machine learning approach.

Investigating COVID-19 Pandemic Effects in California’s Urban/Rural (Metro/ Micro Central and Non Central) Counties’ Mobility and Businesses

  • Sofia Villas-Boas
  • James Sears

Impact of the U.S.-China Trade War on California Agriculture

  • Colin Carter
  • Sandro Steinbach
  • Jiayi (Carol) Dong

Abstract

Specific Objectives of the Project:
In 2018 the U.S. government started a trade war with China and other trading partners. In response to import tariffs imposed by the U.S., China and other countries responded with retaliatory import tariffs, explicitly targeting U.S. agricultural exports. This study investigated the consequences of retaliatory tariffs on the agricultural and food industry in California. We had two specific objectives. First, we measured the ‘net’ impact of the retaliatory import tariffs on California’s agricultural and food exports. Second, we measured the extent to which U.S. federal trade-war subsidies offset producer losses arising from the retaliatory tariffs.

Project Report/Summary of Results:
The U.S. substantially increased a number of import tariffs in 2018, precipitating a trade war that was very costly to U.S. agriculture, given its dependence on international trade. The losses arose because a number of trading partners retaliated with import tariffs targeted at U.S. agricultural exports. The U.S. government then created a Market Facilitation Pro-gram (MFP) to compensate U.S. farmers for trade war losses. We have found that except for cotton and rice, California farmers were not made whole by the MFP payments. California’s producers of tree nuts, dairy, and processed fruits and vegetables were the biggest losers.
Our research concludes that the U.S. government under-estimated the overall economic losses incurred by California’s agricultural and food producers due to the 2018 trade war. While the MFP program overcompensated some farmers, others faced substantial trade-war losses that outweighed MFP payments. Particularly export-oriented food processors were heavily affected by retaliatory tariffs but received no compensation from the U.S. government. The unequal treatment of agricultural and food producers impacted by the 2018 trade war is a pattern also observed in other states. However, these inequalities are more pronounced in California than in any other state. California’s producers focus on high value-added products and have a significant stake in reducing trade barriers everywhere and in particular in China. We believe the MFP payments may have jeopardized international trade arrangements because the excessive payments violated U.S. farm subsidy commitments to the World Trade Organization (WTO), and this could be challenged at the WTO. This means the effects of the trade war may drag on.

Impact of SGMA on Crop Mix in California

  • Bruce Babcock
  • Dat Tran

Evaluating Optimal and Second-Best Nitrogen Regulations in California

  • James Sallee
  • Connor Jackson

Estimation of Demand and Price Aggregators: Application to US and California Household Scanner Data

  • Thibault Fally

Effects of Federal Milk Marketing Orders on U.S. Imports and Exports of Dairy Products

  • Daniel Sumner
  • Tristan Hanon

Economics Impact of the November 2018 Romaine E. coli Outbreak: Lessons for California Moving Forward

  • Kristin Kiesel
  • Ashley Spalding

Abstract

Specific Objectives of Project:
On November 20, 2018, health agencies in the U.S. and Canada issued a food safety alert, advising consumers, retailers, and restaurants not to eat, serve, or sell any romaine lettuce or mixed salads containing romaine due E. coli. The Leafy Greens Marketing Agreement (LGMA) and other industry produce associations joined in this call on the same day, urging an industry-wide voluntary withdrawal of all romaine lettuce in marketing channels and inventory. On November 26, the United States Centers for Disease Control (CDC) and Food and Drug Administration (FDA) updated warnings to specify avoidance of romaine lettuce harvested from central and northern California. On January 9, 2019, the CDC declared the outbreak over, and Adam Bros. Inc. farm in Santa Barbara County was identified as the source of the outbreak.

Food-safety issues capture the attention of the media and consumers. Regulators face the challenge of balancing human health and welfare against the economic consequences of alerts and recalls. While farmers, handlers, food-service firms and retailers are all affected economically by a food-safety incident, the magnitude of financial losses and their determinants and distribution have been rarely studied over the entire supply chain. We use a unique combination of public and proprietary datasets to estimate the direct and indirect effects of this highly publicized outbreak on sales of romaine as well as other leafy greens for all of these supply chain actors. We further provide an estimate of the overall social welfare loss and discuss the magnitude of economic losses, incentives faced by supply chain actors, and implications for government regulation.

Project Report/Summary of Results:
We decomposed damages into those associated with changes in prices for product that was sold during the outbreak and its aftermath, and those associated with romaine that could not be harvested, processed, and sold due to the outbreak and its aftermath. USDA, Agricultural Marketing Service data on farmgate prices, proprietary wholesale price data for the food service and retail marketing chains, and Nielsen retail scanner data allowed us to estimate changes in prices and quantities along the supply chain associated with the outbreak and its aftermath. We then use these results to estimate romaine prices and quantities in the ``but-for world'' that would have unfolded had the incident not occurred. The comparison of prices and quantities in the real-world and but-for-world scenarios for growers, handlers, and retailers reveal who benefited and who lost as a consequence of the incident. Recent changes in the structure of the produce industry and data limitations led to an estimation of damages under several scenarios and whenever possible, we consider additional losses or offsetting gains in other leafy greens categories.

For both romaine leaf and hearts, our regression results indicate spot-market prices were higher through the first six weeks of the outbreak than in the “but-for world,” indicating growers with romaine that was safe to sell during the outbreak was sold at a substantial premium. Price effects were negative during the remainder of the study period for romaine hearts and through week 1 of the post-outbreak period for romaine leaf, potentially due to decreases in demand for romaine and/or increases in the supply of safe romaine as warnings were removed from various growing regions. Further regressions found positive effects for contract prices paid to growers.
Regressions estimating quantity and price effects for food service wholesalers indicate that, relative to the “but-for world,” there were large decreases in the quantity of romaine sold to food service providers in the first week of the outbreak followed by smaller decreases through week 10 of the post-outbreak period. Similar to growers, wholesalers were initially able to capture a premium for safe romaine, but premiums were both smaller and more short-lived than for growers. Average prices paid to wholesalers increased weeks 2 through 4 of the outbreak by 24% to 41%, followed by moderate decreases in price through to the end of the post-outbreak period.
On the retail side, we estimated price effects for both wholesalers and retailers and quantity effects for retailers. For wholesalers, there is a negative price shock in week 2 of the outbreak in all categories followed by nonexistent or small and positive price increases relative to a no-outbreak scenario. We found modest or nonexistent retail price effects, with the largest effects being for romaine hearts. This is consistent with the fact that retail base prices are relatively stable in the short term. We find decreases in retail sales relative to the “but-for world” associated with nearly every week of the study period. The decreases are most pronounced in week 2 of the outbreak. While decreases in sales associated with the early weeks of the outbreak can be partially attributed to retailers removing unsafe product from shelves, the persistent decreases in sales throughout the post-outbreak period indicate consumers shifted consumption away from products containing romaine.

Based on the econometric results, we estimated that total romaine industry damages range from $52.7 million (grower contact prices vary, and buyers bear all pipeline damages) to $177.1 million (grower contract prices are fixed, and handlers bear all pipeline damages). Based on information regarding the extent of pipeline damage-sharing in each channel and contract price provisions, our most representative estimate of damages is $105.3 million. Cross-commodity effects for iceberg lettuce provided some offsetting gains. Food service firms can change the composition of their orders, like consumers in the store, but unlike retailers ordering bagged salad mixes. Iceberg lettuce producers obtained an estimated $11.5 million in benefits, likely due to such substitutions.

In addition to industry losses, there were losses sustained elsewhere in the economy. Particularly, we considered the effect of the outbreak on the welfare of consumers of romaine and suppliers of inputs to the romaine industry. Our estimated additional social losses range from $48.5 million to $59.9 million depending on the elasticity of demand for romaine lettuce.

In summary, our analysis provides two striking insights. First, the greatest losses occur in the retail marketing channel at the handler-retailer level of exchange, with an overwhelming share of losses in the retail channel. Second, growers gain from the food-safety incident, netting $4.3 million in our most representative estimate. These imply that as long as LGMA membership is voluntary and some handlers choose not to join, a subset of industry players are likely to be disproportionately imposing costs on the entire industry. Second, growers, who are in almost all cases the source of a food-safety incident, do not have a direct financial incentive to improve their practices to reduce the chance of an incident.

Do Eucalyptus Trees Increase Wildfire Spread and Threaten California Agriculturalists?

  • Maximilian Auffhammmer
  • George Pardee Jr.

Abstract

Specific Objectives of the Project:
(1) Estimate whether eucalyptus trees increase wildfire spread relative to other land use types, including other forest, cropland, or rangeland.
(2) Assess wildfire threat to California agriculturalists from eucalyptus trees

Project Report/Summary of Results: We exploit exogenous variation in wind direction to estimate whether eucalyptus trees increase fire spread. Contrary to popular belief, we find no evidence that eucalyptus trees increase total burn area relative to other forest types. Using the full sample of 188,926 fires in California between 1992 and 2015, we estimate that eucalyptus trees decrease total burn area by 8.8 percentage points. When we restrict the sample to the 7% of fires that burn more than 10 acres (0.04 km2), the effect of eucalyptus is indistinguishable from zero (0.8 percentage point decrease with a standard error of 0.6 percentage points). We conclude that California agriculturalists face little fire threat from eucalyptus trees. Removing eucalyptus trees does not appear to be an effective strategy for mitigating the threat of wildfires in California.

Do Beekeepers Value Cover Crop Use in Almond Production?

  • Brittney Goodrich
  • Jerrod Penn

Distribution of Federal Support to U.S. Farmers

  • Ethan A. Ligon

Demand for Plant-Based Products: Implications for California Agriculture and Agribusiness

  • Richard Sexton
  • Stamatina Kotsakou

Cooperative and Market Approaches to Regional Salinity Nonpoint Pollution Control: Application to the San Joaquin Valley (SJV), California

  • Ariel Dinar
  • Nigel Quinn

California’s Organic Agricultural Production

  • Rachael Goodhue
  • Hanlin Wei

Abstract

Specific Objectives of the Project:
• Complete a report that presents statistics on California’s organic agricultural production and the structure of the organic industry at the farm level using CDFA organic registry data
• Analyze the evolution of the industry’s structure utilizing the registry data and other data on organic acreage in California

Project Report/Summary of Results:
California’s organic agricultural production generated over $3 billion in farmgate sales in 2016, the most recent year in which detailed production information was available. Milk, strawberries, carrots, winegrapes and table grapes had the highest sales. Over 3,100 organic operations registered with the state. Over half of these operations produced fruit and nut crops. A majority of organic operations are in coastal regions. Organic operations have grown larger over time.

Assessing the Feasibility of GM Labeling: The Case of Bt Eggplant in Bangladesh

  • David Zilberman
  • A Ahsanuzzaman
  • Carly Trachtman

Assessing Measurement Error in Remotely Sensed Land Use Data for Economic Applications

  • Ellen Bruno

A New Method to Jointly Estimate Yield Response and Crop Choice

  • Mark Agerton
  • Matthieu Stigler

Air Pollution Exposure and Agricultural Worker Productivity

  • Tim Beatty
  • Alexandra Hill

Short-Term Impact of the Trade War on U.S. Soybean Futures Prices and Spreads

  • Jeffrey Perloff
  • Shuo Yu

Abstract

Specific Objectives of the Project:
We quantified the short-term impact of tariffs and the corresponding relief payments on soybean futures prices.

Project Report/Summary of Results:
Due to the 2018–2019 trade wars, U.S. agricultural and food products have suffered eight waves of retaliatory tariffs from Canada, China, Mexico, the EU, and Turkey. The COVID-19 pandemic further isolated the economies in 2020. We studied the futures market effects of these tariffs on various U.S. crops, particularly soybeans.

We estimated reduced-form regressions of real futures prices or spreads on retaliatory tariffs and a set of event indicators to quantify the short-term impact of retaliatory tariffs and the corresponding relief payments on soybean prices. We controlled for the COVID-19 epidemic, related U.S. government direct payments, weather shocks, and information from USDA reports. Our analysis used price data from the Barchart website, tariff data from official documents published by the tax bureaus of each country and the World Trade Organization (WTO) Tariff Download Facility (TDF) database, USDA World Agriculture Supply and Demand Estimation Reports, and weather data from the Google earth engine from 2004 to 2020.

We found that a 25% increase in a retaliatory tariff, holding projections and weather variables constant, decreased the real futures price by 14.25% while the tariff was in place. The effect on the futures price spread grew with the length of the spread. It reached its peak at a one-year spread. Thus, the price pass-through of the tariff increase was large, and farmers suffered from the retaliatory tariff in the short run.

Agricultural Labor in a Dynamic Economy

  • Alan Olmstead
  • Paul Rhode