JULY 2008



Discouraging Report on Emergency Assistance Aid.    The UN loses $10 million on currency exchanges for assistance to Myanmar.  "The market rate for the local currency, kyats, is around 1,100 per dollar but the U.N. rate is around 880, according to the Inner City Press, a blog that covers the United Nations and first raised the currency exchange issue." 

posted July 29, 2008 at 7:10 p.m.


New Problems in the Doha Round.   India insists that they should be able to limit agricultural imports if their farmers suffer from low prices. 

"Someone coming from another planet would not believe that after the progress made, we would not be able to conclude," Brazil's Foreign Minister Celso Amorim said. "This is a very painful failure and a real setback for the global economy at a time when we really needed some good news," an emotional EU Trade Commissioner Peter Mandelson told reporters, adding that developing countries would suffer most. ...But WTO chief Pascal Lamy said ministers wanted him to revive the talks quickly and he would not "throw in the towel."  Washington Post.

posted July 29, 2008 at 6:40 p.m.


Ten Policy Lessons from Economics.  These include:   "1. The market economy is the most efficient of all economic systems.  2. Free trade helps economic development. 3. Good institutions help development.  4. The best measure of a good economy is its growth.  6. Monetary stability, too, is necessary for growth; inflation is always harmful."

posted July 28, 2008 at 2:20 p.m.


Growing Demand for Free Food from Food Banks.  In California's San Fernando Valley.

posted July 28, 2008 at 11:40 a.m.


Cost Benefit Analysis and the Approaches to World Hunger.    Bjorn Lomborg discusses the use of cost-benefit analysis. 

"Providing micronutrients -- particularly vitamin A and zinc -- to 80% of the 140 million or so undernourished children in the world would require a commitment of just $60 million annually, a small fraction of the billions spent each year battling terrorism or combating climate change. The economic gains from improved productivity and a lower burden on the health system would eventually clear $1 billion a year. Every dollar spent, therefore, would generate economic benefits worth $17.Investing in research to make technological improvements to developing-country agriculture provides the opportunity to improve access to micronutrients. It also reduces the cost of food by increasing the incomes of landless laborers. Biofortification can be achieved through genetic modification, or through other methods. Spending $60 million a year would be enough to develop two staple crops such as rice and wheat fortified with micronutrients for about 40 countries across South Asia and sub-Saharan Africa.  The improved nutrition would lead to higher productivity and fewer health problems. Each extra dollar spent would generate economic benefits worth $16."

posted July 28, 2008 at 11:00 a.m.

Land "Redistribution" in Cambodia.  NYTimes:   "With the economy on the rise, land is being seized for logging, agriculture, mining, tourism and fisheries, and in Phnom Penh, soaring land prices have touched off what one official called a frenzy of land grabs by the rich and powerful....Whichever way the winds of history blow, some people here say, life only gets worse for the poor. If it is not “pakdivat,” revolution, that is buffeting the poor, they say, it is “akdivat,” development."

posted July 27, 2008 at 8:40 a.m.

Climate Change and Sea levels.  Global sea levels rise 50 mm (2 inches) between 1995 and 2006,  but drop 5 mm between 2006 and 2008.

posted July 26, 2008 at 4:00 p.m.

Technological Approach to Reducing Greenhouse Gas Levels.   Adding lime to seawater may reduce CO2 concentrations in the atmosphere.

posted July 24, 2008 at 8:00 a.m.

Yes, We Have No Bwanas.  Congressman (and former Presidential candidate) Duncan Hunter had an interesting idea:  he could go on a big game hunting trip in Chad;  the trip, as a Congressional fact finding trip, would be paid for by taxpayers;  he would get credit for humanitarianism by donating the wildebeest carcasses to feed Chad's hungry.  But problems emerged:  1.  Chad doesn't have any wildebeest ; 2.Chad does not permit hunting of large mammals;  3.  there is some question about whether this is the most cost effective way to help the hungry.

posted July 23, 2008 at 8:20 a.m.


Movement in the Doha World Trade Talks.  "U.S. Trade Representative Susan Schwab announced Washington was ready to cap its trade-distorting farm subsidies at $15 billion a year, on condition countries like Brazil and India also make concessions to save the World Trade Organisation talks."  via Reuters, excerpted in today's Washington Post.

posted July 23, 2008 at 6:30 a.m.

USAID Website.  Famine Early Warning System provides links to a lot of USAID work regarding food insecurity. (Thanks to UMD undergraduate Katya Kroupnik for the link.)

posted July 22, 2008 at 6:40 p.m.


Worldwide Fresh Water Crisis.  Covered by Scientific American.

posted July 22, 2008 at 5:50 p.m.


Impacts of Tax Rate Progressivity.  Tax law Professor Paul Caron notes data that shows that the impact of the Bush tax cut (widely thought to favor the rich) had the surprising impact of increasing the total percentage of all taxes paid by the rich.  He links to a WSJ editorial..

posted July 22, 2008 at 7:30 a.m.

Questions About Ag Subsidies.   Prof. Dan Sumner of UC-Davis promises to answer reader questions on ag policy and more at Freakonomics blog.   Sumner's answers are posted here.

posted July 21, 2008 at 7:00  p.m.

updated July 26, 2008 at 7:50 a.m.


Water for Agriculture, or water for the Environment?  In California's San Joaquin Valley.

posted July 21, 2008 at 10:00 a.m.


Eliminating Land as a Constraint to Food Production.   By vertical farms.   From the Vertical Farm Project Website:  Because of year-round farming, "indoor acre is equivalent to 4-6 outdoor acres or more," and of course, by stacking many stories on top of one another  you get multiple "indoor acres"  for each acre of land used.

posted July 21, 2008 at 10:00 a.m.


Population Control.  Euthanasia for sale in Mexico.  Using a veterinary drug normally used to euthanize animals.  (They shoot horses, don't they?)

posted July 21, 2008 at 9:50 a.m.


Crops or Water in the Middle East.  NYTimes:  "Global food shortages have placed the Middle East and North Africa in a quandary, as they are forced to choose between growing more crops to feed an expanding population or preserving their already scant supply of water."

posted July 21, 2008 at 9:50 a.m.

Poverty in Ouagaougou, Bukina Faso.  "Women hit hardest by food crisis."    Some accompanying photos include a poignant one of a young boy who has captured a pigeon for lunch, and another of a woman sweeping the street for $10 a month.

posted July 20, 2008 at 9:00 p.m.

The Food Problem in the United States.  NPR has a report on how rising food prices affects poor households in the US.  But many bloggers are unsympathetic because the family members are obese.  The "hunger problem" in the US is very different in nature from the hunger problem in sub-Saharan Africa.

posted July 19, 2008 at 2:20 p.m.


Population Growth and Cost of Contraception.


source:  http://www.environmentalgraffiti.com/offbeat-news/worlds-most-expensive-places-to-have-sex/1405

posted July 19, 2008 at 8:30 a.m.


Privatizing Farms in Cuba.  Farmers can get up to 100 acres of unused government land in order to "boost sluggish food production."  (Also, Cuba privatizes taxis.)

posted July 19, 2008 at 8:10 a.m.

An Example of Global Warming Skepticism.    Is here.   But the American Physical Society is quick to remind us that this is just one person's opinion, and the official APS position is that:  "The evidence is incontrovertible: Global warming is occurring."

posted July 18, 2008 at 9 a.m.

Technological Fixes to Environmental Problems.  Pakistan has had problems with arsenic in the drinking water.  Here's a plan to use nanotechnology (which can be applied in small scale at the village level) to rid water of arsenic.

posted July 16, 2008 at 11:10 a.m.

Overview of the 2008 Farm Bill.   From  AAEA. 

posted July 15, 2008 at 6:30 p.m.

Cuba Reopens Private Farms.    "Cuban state enterprises grew about 10% of the 700,000 tons of rice consumed last year. Private farmers produced about twice that. Although 70% has to be imported, scholars point to the rise in the small-farm output begun a decade ago."  LATimes.

posted July 14, 2008 at 9:00 a.m.

Drought in Australia.  Mentioned as one of the causes of the grain price increases in 2007-2008,  the Australian drought continues.

posted July 13, 2008 at 7:25 a.m.

Democracy Losing Ground in Africa.   The LA Times cites: problems in Zimbabwe, Kenya, Uganda, and Ethiopia;  "success stories"  in Ghana and Sierra Leone; "western interest wanes,"  China's growing influence; ."poverty is the biggest single handicap."

posted July 13, 2008 at 7:20 a.m.


World Bank Head Calls for Increased Food Aid.  WB President Bob Zoellick says that poor countries need $10 billion of food aid this year, and $6 billion/year for the forseeable future.

posted July 13, 2008 at 7:10 a.m.


EPA Estimates Value of Human Life at $6.9 million.    11% lower than the estimate from five years ago.

posted July 12, 2008 at 5:50 p.m.

Lifeboat Ethics Redux.  An opinion piece in the Independent raises some arguments first made by Garrett Hardin.  "How much morality is there in saving an Ethiopian child from starvation today, for it to survive to a life of brutal circumcision, poverty, hunger, violence and sexual abuse, resulting in another half-dozen such wide-eyed children, with comparably jolly little lives ahead of them? Of course, it might make you feel better, which is a prime reason for so much charity. But that is not good enough.  For self-serving generosity has been one of the curses of Africa. It has sustained political systems which would otherwise have collapsed."

posted July 11, 2008 at 4:10 p.m.


July Estimate for Worldwide Grain Output.   The July WASDE shows a slightly higher projection for the 2008/09 crop year than the June projection.  The 2008/09 projected output is 2.4% higher than the 2007/08 estimate and 8% higher than the 2006/07 output.

posted July 11, 2008 at 10:40 a.m.


July Estimate of US Wheat Crop is 3% higher than the June estimate.  USDA reports  that the 2008 winter wheat crop is 23% higher than the 2007 crop. Acreage is up 12% and yields up 9% over last year.

posted July 11, 2008 at 8:45 a.m.


Growing Food in the Desert. "A so-called halophyte, or salt-loving plant, the briny succulent thrives in hellish heat and pitiful soil on little more than a regular dousing of ocean water. Several countries are experimenting with salicornia and other saltwater-tolerant species as sources of food. Known in some restaurants as sea asparagus, salicornia can be eaten fresh or steamed, squeezed into cooking oil or ground into high-protein meal.  ...{Also, it] can be converted into biofuel. And, unlike grain-based ethanol, it doesn't need rain or prime farmland, and it doesn't distort global food markets. NASA has estimated that halophytes planted over an area the size of the Sahara Desert could supply more than 90% of the world's energy needs."   A for-profit company is doing research on this.


posted July 11, 2008 at 8:30 a.m.

Expanding Agricultural Land in the US.   By taking it out of the Conservation Reserve Program

posted July 11, 2008 at 7:10 a.m.


Globalization is Working in Colombia.   Exports up, crime down following actions in the 1990s and 2002 to reduce restrictions on imports to the US from Colombia.  The bill that will make these trade preferences permanent is currently on hold in Congress.

posted July 11, 2008 at 7:10 a.m.

updated July 13, 2008 at 7:00 a.m.

Will Technology Solve the Problem of Water Shortages?  Some research in desalination using nanotechnology.

posted July 10, 2008 at 2:50 p.m.


Brazil Votes Against Legalization of Abortion.  A lower-house committee votes 57-4 against the bill.

posted July 10, 2008 at 10:40 a.m.


More Evidence that CO2 in the atmosphere increases crop  yields.  From Germany:  When CO2 concentration was raised to the level expected level in 2050, wheat, barley, and beet yields increased 10%.

posted July 10, 2008 at 8:50 a.m.


Environmental Policy in Developing Countries.   India's National Action Plan on Climate Change  makes the following points:  "The former Prime Minister, ... Indira Gandhi, has stated:  'poverty is the worst polluter'.  Therefore development and poverty eradication will be the bes form of adaptation to climate change.  ...   It is obvious that India needs to substantially increase its per capita energy consumption to provide a minimally acceptable level of well-being to its people."  (page 14).  (Pointed out by Katherine Mangu-Ward in Reason blog.)

posted July 10, 2008 at 8:20 a.m.


Worldwide Overfishing.   Have FAO data been under-reporting worldwide fish catch?

posted July 10, 2008 at 7:30 a.m.


Fewer Calories = Longer Life.  At least in rats.

posted July 9, 2008 at 8:50 a.m.

May's American Economic Review.   Papers from the January 2008 meetings contain a lot of things relevant to AREC 365.


(1)  Institutions and economic development.  Easterly:  "After all this research and experience [showing formal land titling was frequently ineffective], the aid donors today remain stuck on some kind of idealized comprehensive (top down) government reform that would somehow make formal registration of land titles 'optimal.'"   Rodik:  "Yet this literature [suggesting that appropriate institutional arrangments in one country may be inappropriate in another country] appears to have had very little impact on operational practices. The type of institutional reform promoted by multilateral organizations such as the World Bank, the IMF or the ...WTO is heavily biased toward a best-practice model."


(2)  Height, Health and Economic Development.  Case and Paxson:  "[T]he advantages offered by a healthier early life environment—as measured by height—follow adults into old age. We use several waves of data from the Health and Retirement Study (HRS) to document the extent to which height is associated with more favorable outcomes for individuals above the age of 50. We find that taller men and women have greater cognitive function, measured on a wide variety of dimensions."    Deaton fails to find a consistent link between distribution of income and distribution of height   "Indeed, even the link between mean height and income is far from established (see particularly the analysis of global heights and income in Deaton 2007) where there is no relationship between mean height of women and GDP in the year of birth across poor countries in Asia, Africa, and Latin America."  Peracchi looks at the relationship between income and height in Italy.


(3)  Psychology and Development.  Duflo, Kremer, and Robinson :  "Many countries have withdrawn or scaled back fertilizer subsidies, in part because of fiscal constraints, corruption, and inefficiency in the administration of fertilizer subsidies, but also because of a belief among economists that farmers would choose to use inputs that actually raised profits in real-world conditions. ...  Behavioral economists have identified major departures from economists’ standard models ...However, it is still unclear whether these departures have any major impact on production. Fertilizer offers an attractive context to explore this question.  In this paper, we use a series of field trials on Kenyan farms to explore the most natural hypothesis: the possibility that, while fertilizer and hybrid seed increase yield on model farms, they are actually not profitable on many small farms, where conditions are less than optimal. Our mean estimates of yield increases due to fertilizer use are in the range of the estimates found on model farms. We find that the mean rate of return to using the most profitable quantity of fertilizer we examined was 36 percent over a season, or 69.5 percent on an annualized basis. However, other levels of fertilizer use, including the combination of fertilizer plus hybrid seed recommended by the Ministry of Agriculture, are not profitable for farmers in our sample."   Banerjee and Mullainathan "Economists have long been interested in the idea that there is a direct circular relation between poverty and low productivity, and not just one that is mediated by market failures, usually in asset markets. The nutrition-based efficiency wage model (Partha Dasgupta and Debraj Ray, 1987) is the canonical example of models where this happens: However it has been variously suggested (see for example T. N. Srinivasan 1994) that the link from nutrition to productivity, and especially the link from productivity to nutrition, is too weak to be any more than a small part of the story. Dasgupta himself acknowledges this when he writes that the “nutrition-productivity construct provides a metaphor … for … an economic environment harboring poverty traps” (Dasgupta 1997, 5)."

posted July 8, 2008 at 8:20 p.m.


A "Controlled Experiment" in Famine.  At the end of WWII, Nazi-occupied Netherlands experienced severe food shortages (the hongerwinter, or "hunger winter"), with average food intake estimated at 1000 calories per person per day, and some with diets as low as 400-800 calories per day.   The famine was short-lived, lasting only a few months in late 1944 and early 1945, and ending abruptly with the Allied victories in May 1945.   This situation, and the existence of precise birth records, created an unplanned "controlled experiment" by which children born, or in-utero during the famine could be compared to children born before and after the famine.    The study of the Dutch Famine Birth Cohort has generated a number of studies that identify the impacts of maternal undernutrition on unborn children.

posted July 8, 2008 at 9:00 a.m.

UN Climate Official Predicts.  Global warming is bad for food production.

posted July 7, 2008 at 9:30 a.m.


Cost-Benefit Analysis and Hard Decisions. This is not a hypothetical example.  The bad news:  you have incurable cancer and are very likely to die within one year.  The slightly less bad news:  There is a drug you can take that will prolong your life by 3 to 6 months, so that your life expectancy becomes 15-18 months, instead of a year.  The conundrum:  The drug will cost $125,000 to $150,000.    If you had to pay the cost of the drug yourself, would you use it,  reducing your children's inheritance by $125,000-$150,000?  If you have health care through a government program such as Medicare, should that program pay for the drug?  Doctors Without Borders says that they can protect a child from undernutrition for $62 a year, or for about $1000 (using a 2% discount rate) for the child's first 18 years of life.   If you had to bear the cost of the cancer drug, would you use the money to extend your own life by 3-6 months, or would you donate the money to Doctors Without Borders to protect 125-150 children from undernutrition during their developmental years?    If a government program is bearing the cost of the cancer drug, would the tax money be better spent on those children?

posted July 6, 2008 at 8:10 a.m.


Taxes on Agricultural Exports Hurt Farmers.   More evidence from Argentina.

posted July 5, 2008 at 12:05 p.m.

Biofuels causes food prices to increase 75%?   According to the Guardian, a "confidential World Bank Report"  by senior economist Don Mitchell expanded biofuels production have caused food prices to increase 75%.  Of course without seeing the report, we can't know how this number was arrived at (or even know for sure whether such a report exists).  But the June WASDE puts corn used for ethanol at 4000 million bushels (or 100 MMT) -- about 13% of world corn production of 775 MMT.  If non-biofuel demand for corn has an own price elasticity of -0.10  a 75% price increase would reduce that demand by 7.5%,  and if corn supply has an own price elasticity of 0.07, a 75% price increase would increase supply by 5.25%,  so the combination (7.5+5.25 = 12.75) is about the amount needed to account for biofuels demand.  These elasticities seem to be a little on the low side, especially the supply elasticity number, and this may make the 75% number too high.  For example if demand elasticity is -0.15 and supply elasticity is  0.15, the impact of ethanol is to increase corn price by 43%.  And of course, this is the direct effect on corn, not the effect on all food.

posted July 4, 2008 at 4:50 p.m.

The Difference a Goat Can Make.    Nick Kristof's column in today's NYTimes reports on one success story of the efforts of Heifer, International.    "She was on track to become one more illiterate African woman, another of the continent’s squandered human resources. ...  [A goat] bought by the Niantic [Connecticut] church went to Beatrice’s parents and soon produced twins. When the kid goats were weaned, the children drank the goat’s milk for a nutritional boost and sold the surplus milk for extra money.  The cash from the milk accumulated, and Beatrice’s parents decided that they could now afford to send their daughter to school."  Beatrice graduated with a bachelor's degree from Connecticut College last month.

posted July 3, 2008 at 8:30 p.m.


If There Is a Food Price Bubble, How Will it End?   Charles Kindleberger, in his book Manias, Panics, and Crashes  (and there is a newer edition) notes that bubbles don't just burst at their peaks.  Rather they peak, then slowly deflate, and then burst.  (So maybe there is a fault in the imagery of a "bubble.")  For example, the "bursting" of the stock market in October 1929 followed a peak of stock prices in August 1929, followed by 2 months of flat and slightly declining prices.

"As the speculative boom continues, interest rates, velocity of circulation, and prices all continue to mount.  At some stage, a few insiders decide to take their profits and sell out.  At the top of the market there is hesitation, as new recruits to speculation are balanced by insiders who withdraw.  Prices begin to level off.  There may then ensue an uneasy period of ”financial distress.” ....  For an economy as a whole, the equivalent is the awareness on the part of a considerable segment of the speculating community that a rush for liquidity --- to get out of other assets and into money --- may develop, with disastrous consequences for the prices of goods and securities, and leaving some speculative borrowers unable to pay off their loans.  As distress persists, speculators realize, gradually or suddenly, that the market cannot go higher.  It is time to withdraw.  The race out of real or long-term financial assets and into money may turn into a stampede."

So if the current high food commodity prices are in part caused by bubble psychology, we might expect not a sudden bursting at the peak, but rather a period of flat and slightly negative growth and then the sudden sharp decline in price.  Gallegati, et al.,  suggest that this phenomenon is seen not just for asset price bubbles, but also for commodity price bubbles (silver prices in the late 1980s) for which there is a "real" supply (production) and "real" demand (consumption).    So is the moderation of wheat prices in April and May of 2008 the presage of an even sharper decline as we move through the summer?    And would we have (mistakenly) seen the flatness in October - December 2007 (months 28-30 in the graph below) as a predictor of a sharp price decline?



posted July 3, 2008 at 8:20 p.m.



Morality of Charitable Giving Priorities.  Leona Helmsley leaves her $5-8 billion estate to animal welfare charities.  The "Free exchange blog comments, "Only the little people help people,"  echoing Leona's famous statement that only the little people pay taxes.

posted June 2, 2008 at 1:40 p.m.


Malthus Redux.   Opinion from The Atlantic:  "He challenged the conventional view of human perfectibility that was in fashion during the aftermath of the French Revolution and the approach of a new century. ...  [A] fear exists that at some fundamental level, Malthus is right. For the great contribution of this estimable man was to bring nature itself into the argument over politics. Indeed, in an era of global warming, Malthus may prove among the most-relevant philosophers of the Enlightenment."

posted June 2, 2008 at 9:50 a.m.


Iron-enriched Rice.   Cornell nutritionist Jere Haas finds that  "the iron status of women who ate biofortified, iron-rich rice was 20 percent higher than in women who ate traditional rice. 'Although this sounds like a modest increase, it means that instead of 50 percent of women getting adequate iron, 71 percent of the women who consumed the biofortified rice, while eating a traditional Philippine diet, met the estimated average requirement for iron,' said Jere Haas."   (December issue of the Journal of Nutrition (Vol. 135:12).) 

posted July 2, 2008 at 7:40 a.m.


Progress Reported in Super-Cassava.   Scientists identified three "problems" with cassava:  1.  it is low in protein and micronutrients, so a diet heavy in cassava is nutritionally inadequate;  2.  it is subject to viral diseases;  3.  it requires a significant amount of (low-tech) "processing" to keep it from developing poisonous chemicals.  A team led by Ohio State plant scientist Richard Sayre "has been able to address each of the plant's deficiencies in individual transgenic plants. The next step will be to combine some or all of the bioengineered traits into a single, farmer-preferred cultivar, with the goal of eventually developing cassava varieties that carry all of the improvements developed by the researchers."

posted July 2, 2008 at u7:40 a.m.


Hunger in the Horn of Africa  The Washington Post reports on the "harsh grip of famine."    I generally use the word "famine" to refer to temporary, intense, and geographically isolated incidences of hunger.  The situation in the horn of Africa challenges this definition.  The horn of Africa perennially struggles with widespread undernutrition.   Thus a year of low rainfall triggers emergency ("famine"?) conditions.  The short run response is increased food aid, but that does little or nothing to address the permanent condition of food insufficiency.

posted July 2, 2008 at 7:30 a.m.


Environmental Policies in Rich and Poor Countries.  As Florida announces it will buy up wetlands to eliminate sugar production and increase environmental quality,  Kenya announces it will allow private firms to begin sugar production in Kenyan wetlands.

posted July 1, 2008 at 6:30 p.m.


Do Current Commodity Prices Refute Julian Simon?  In the 1970s and 80s, Julian Simon won a famous bet, relying on his confidence that human ingenuity (and new technology) could solve problems of resource scarcity.  Tyler Cowen  and Jeffrey Sachs wonder if the current increases in commodity prices indicate that ingenuity is finally losing the race with scarcity.

posted July 1, 2008 at 4:50 p.m.