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Gains to Chinese Agricultural Research and Extension

Last week, Nature published this piece on a massive study conducted by Chinese agricultural researchers.  Accompanying the piece was a summary/editorial describing the study:

Running from 2005 to 2015, the project first assessed how factors including irrigation, plant density and sowing depth affected agricultural productivity. It used the information to guide and spread best practice across several regions: for example, recommending that rice in southern China be sown in 20 holes densely packed in a square metre, rather than the much lower densities farmers were accustomed to using.

The results speak for themselves: maize (corn), rice and wheat output grew by some 11% over that decade, whereas the use of damaging and expensive fertilizers decreased by between 15% and 18%, depending on the crop. Farmers spent less money on their land and earned more from it — and they continue to do so.

The project appears to have created substantial economic benefits.  The authors of the study write:

Direct profit, calculated from increased grain output and reduced nitrogen fertilizer use, was US$12.2 billion (Table 1), which does not include relevant environmental benefits associated with reductions in reactive nitrogen losses and in GHG emissions. On the basis of the rough estimates, the cost:benefit ratio would be 1:226.

The cost-benefit ratio is in some ways over- and in other ways under-estimated.  The benefits are over-estimated in the sense that it does not appear it takes into consideration the fact that greater grain production will dampen prices (it is also unclear how the benefits and costs are discounted or not over time).  The benefits are under-estimated because they do not include any of the environmental improvements.  

It is useful to contrast these findings with the rather large research on the value of agricultural R&D and extension investments in the U.S.  Jin and Huffman calculated the rate of return on spending on agricultural extension in the U.S. at 100%.  More broadly, Julian Alston gave the fellow's address at this this year's AAEA meetings on precisely this topic, and his remarks were recently published in the American Journal of Agricultural Economics.  He writes:

Our estimates (Alston et al. 2010a, 2011) indicate that U.S. federal and state government expenditure on agricultural research and extension generates benefit-cost ratios of at least 10:1 (more likely 20:1 or 30:1)—evidence of a serious underinvestment. Pardey and Beddow (2017), echoing Pardey, Alston, and Chan-Kang (2013), suggested that a reasonable first step would be to double U.S. public investment in agricultural R&D—an increase of, say, $4 billion over recent annual expenditures. A conservatively low benefit-cost ratio of 10:1 implies that having failed to spend that additional $4 billion per year on public agricultural R&D imposes a net social cost of $36 billion per year

Given the lower level of development in China, it is certainly possible to imagine that the rate of return on investments in agricultural research and extension being higher than is the case in the U.S.  But, can the benefit cost ration really be 10 times higher in China than the U.S. (226:1 vs. 20:1)?  One interesting thing about Chinese study in Nature is that, if I read correctly, it didn't entail development of any new genetics, pesticides, etc; rather it seemed to largely entail the application of previously developed "science" and practices to the particular geographies in question, and as such, the costs might have been much lower than in situations where new technologies are being created. 

In a sense, the shows an enormously high value to "better information."  This contrasts with perspectives such as this one by David Pannell, who argues that better technologies are much more impactful than "better information."  One way to reconcile this seeming paradox is that that the "information" conveyed to the Chinese farmers was to use better technologies and practices that were already known to exist.  Here in the developed world, the knowledge/technologies are likely already more widely dispersed.  

I'll end with this quote from Alston's paper, who articulated the value of increased productivity in a createive way:

Clearly agricultural productivity growth is enormously valuable. Of the actual farm output in 2007, worth about $330 billion, only one-third (i.e., 100/280 = 0.36) or about $118 billion could be accounted for by conventional inputs using 1949 technology, holding productivity constant. The remaining two-thirds (i.e., 180/280 = 0.64) or about $212 billion in that year alone, is attributable to the factors that gave rise to a 180% increase in productivity since 1949—including improvements in infrastructure and inputs (if not captured already in the indexes), as well as new technology, developed and adopted as a result of agricultural research and extension, and other sources of innovations.

Who Says They Waste Food (and when)?

Applied Economics Perspectives and Policy just published a paper I co-authored with Brenna Ellison entitled "Examining Household Food Waste Decisions: A Vignette Approach."  Here is a summary of the paper:

The purpose of this research is to examine household (consumer) food waste decisions. Because measuring food waste is fraught with difficulty, our first contribution is the application of vignette methodology to the issue of food waste. Our second contribution is to systematically determine how decisions to waste food vary with factors such as price, location, cost of replacement, and freshness, among other factors. The empirical analysis is concentrated on specific food waste decisions: one focused on leftovers from a fully prepared meal and a second related to a single product (milk). The empirical results show that decisions to discard food are a function of consumers’ demographic characteristics and some of the factors experimentally varied in the vignette design.

In particular, each subject saw a description like the following (where they saw one of the values in each of the brackets): 

Imagine this evening you go to the refrigerator to pour a glass of milk. While taking out the carton of milk, which is [one quarter; three quarters] full, you notice that it is one day past the expiration date. You open the carton and the milk smells [fine; slightly sour]. [There is another unopened carton of milk in your refrigerator that has not expired; no statement about replacement]. Assuming the price of a half-gallon carton of milk at stores in your area is [$2.50; $5.00], what would you do? “Pour the expired milk down the drain” or “Go ahead and drink the expired milk”

I suspect you won't be too surprised to hear that "smell" had a significant effect on consumers' decisions to waste or not waste.  Apparently food safety considerations are one key driver of household food waste decisions.  

We also had another vignette surrounding the decision of whether to keep a leftover meal.  The findings?

In the case of meal leftovers, respondents were generally less likely to waste the leftovers when the meal cost was high, when there were leftovers for a whole meal, when there were no future meal plans, and when the meal was prepared at home. Many of these relationships have a very obvious time component. Leftovers can save individuals time when there is enough for a whole meal and there are no future meal plans; further, when a meal is prepared at home, there is already a time cost for that meal (albeit a sunk cost) that people do not want to discount by throwing the leftovers out.

Meat Taxes?

This morning I appeared on Fox Business Network with Varney & Co to discuss the idea of meat taxes (something proposed by many groups and authors - e.g., see this recent piece in Bloomberg).  The short segment is below.  It cut out before my last comment where I argued that efficiency is also good for the consumer because it helps bring down food prices.

Do we produce enough food already?

Earlier this week I had the pleasure of giving the George Morris AgriFood Policy lecture at the University of Guelph.  I primarily focused my talk on the benefits of food and agricultural technologies and the importance of productivity growth for solving our future world food problems.  

At the conclusion of my talk, an audience member played devils advocate asked an important question that deserves more widespread discussion.  In short, the question was something along the lines of the following: don't we produce enough food already?  It is a question reflected in many popular writings.  This headline, for example, is "We Don't Need to Double World Food Production by 2050." Here's Mark Bittman writing in the New York Times: "The world has long produced enough calories . . .".  Here's Bittman again under a headline in the same outlet "Don't Ask How to Feed the 9 Billion" because, in his words, "The solution to malnourishment isn’t to produce more food." 

Here are my main main thoughts on this line of thinking:

1) Even if we produce enough calories today to meet today's population, that doesn't mean we produce enough for tomorrow's population.  Productivity growth is gradual and incremental, and if we found ourselves in a situation of needing more food, the new technologies to produce them cannot be created over night.  This is particularly true of our ability to produce in the future is hampered by climate change.

2) There is no binary category of "enough food."  Greater food production leads to lower food prices and lower food insecurity.  I haven't yet met a food consumer who wouldn't prefer paying lower food prices, holding quality constant. 

3) I may be true in an accounting sense that we produce enough calories today to meet total caloric needs.  But accounting isn't economics, and we need to consider the incentives of the system that produces the sufficient calories today relative to an alternative system that is either less productive or involves widespread redistribution.  Massive redistribution of food can destroy the incentives of people to produce the food.  One cannot disentangle the fantastic productivity of our current system with the market forces that led to it's origin.  Stated differently, there is no reason to imagine we'd produce the same number of calories if "the system" were changed to one with massive confiscation/redistribution.  Brady Deaton altered me to this fascinating paper in the Journal of Political Economy showing that 75% of the increase in China's agricultural productivity after 1978 was due to strengthening of individual incentives.

4) It's important to look at productivity through the lens of sustainability.  Higher productivity means getting more (or the same) amount of food output using fewer inputs and resources.  Are people really wanting to argue that they'd prefer systems that require more of our natural resources - more land, more water, more fossil fuels? Since when is lower productivity and inefficiency preferred?  Even if "enough" food is produced today, improved productivity means we can keep producing the same quantity but shrink agricultural's footprint on the land, use less water, fewer pesticides, etc.    

5) If the solution to the food problem is simply shipping food from high productivity countries and sending (or stated more pejoratively "dumping") in lower productivity countries with hungrier citizens, this may harm the livelihoods of producers in low productivity countries and reduce their incentives to adopt efficient forms of agriculture.

6) If places like the US decided to forego new food and agricultural technologies and farmers were forced or incentivized to adopt lower productivity systems, what would happen to patterns of global trade and production.  US farmers compete with farmers all over the world to serve US consumers and consumers worldwide.  Not only would such policies likely reduce US exports, it would make imports relatively more attractive.  Is the solution then import tariffs to prop up our lower productivity system?

7) One can go back to writings from over 100 years ago and find claims that the problem of production and scarcity had essentially been solved, and all that was needed was a heavier handed state to ensure "fair" distribution (e.g., see Edward Bellamy's Looking Backward, published in 1888).  Imagine the world we would live in today if that premise were widely accepted back in 1888 - that the state of production was "good enough" and we could stop worrying about growth and progress.  How much growth would we have lost out on had we stopping innovation in 1888?  We'd still be hand-picking cotton, planting with mules, eating much more salt- and vinegar-cured meats, and more.  What will the food and agriculture future look like in 2088, and what will we give up if we stop working on productivity-enhancing technologies today? 

Personal Choices to Reduce Greenhouse Gas Emissions

This article in Environmental Research Letters by Seth Wynes and Kimberly Nicholas calculates the ways various personal choices affect greenhouse gasses. The paper has received a lot of attention in the media (e.g., see here or here).   At the heart of the issue are the results from this figure in the original paper showing the relative effect of different actions on greenhouse gas emissions.

 

The findings led to headlines like this one in The Guardian, "Want to fight climate change? Have fewer children."  The findings are interesting on a number of fronts.  For example, I regularly see stories suggesting that the most impactful thing one can do to fight climate change is eat less meat.  That strategy shows up as a mere 7th on this chart, and way, way behind having children (not having a child has more than 60 times the emissions impact as moving to a more plant based diet).  

The implication that we should have fewer children raises a number of thorny issues that have long been debated.  Since at least Malthus, folks have been worried about a growing world population.  Stanford biologist Paul Ehrlich has raised alarm since the 1960s about the dire consequences of a "population bomb."  At the heart of this thinking is the premise that an extra person is a kind of threat: a threat to food security, a threat to the climate, a threat to the environment.  There's even a bit of a hint of this thinking in the common mantra of many agricultural organizations that we need to do what we can so that we can feed nine billion people by 2050.  The extra people that will arrive in the next 30 years or so are placing a burden on us today to increasing productivity.  

An alternative perspective, one often attributed to Julian Simon, is that an extra person is a blessing rather than a curse.  People aren't just consumers of resources but are are sources of ideas, creativity, and ultimately new resources.  An extra person isn't a threat but an opportunity.

Regardless of where one falls in this debate, it should be noted the above graph looks at just one side of the equation: the cost of an extra human in terms of extra greenhouse gasses.  What is ignored is the potential benefit of an extra human.  What is the opportunity cost of a foregone Einstein, Edison, or Jobs?  Going further, who are the folks most likely to heed the advice to forego children for the climate, and what would their would-be kids have been like?

It is also worthwhile mentioning that there is no guarantee that population will continue to grow, particularly if the world continues to develop and incomes rise.  Even the UN projections place some probability on a population decline in 30 years time.  One writer of Wired magazine, Kevin Kelly, when asked what we should be worried about (but presumable are not), fretted about about an underpopulation bomb.  Here's what he writes:

Here is the challenge: This is a world where every year there is a smaller audience than the year before, a smaller market for your goods or services, fewer workers to choose from, and a ballooning elder population that must be cared for. We’ve never seen this in modern times; our progress has always paralleled rising populations, bigger audiences, larger markets and bigger pools of workers. It’s hard to see how a declining yet aging population functions as an engine for increasing the standard of living every year. To do so would require a completely different economic system, one that we are not prepared for at all right now. The challenges of a peak human population are real, but we know what we have to do; the challenges of a dwindling human population tending toward zero in a developed world are scarier because we’ve never been there before. It’s something to worry about.

 A couple final thoughts.  The above graphs shows several possible mitigation options, but I haven't heard much discussion of tradeoffs.  Surely the end goal in life isn't to focus all our individual energies on activities to reduce carbon emissions.  So, given my preferences for driving, eating meat, or being a parent, the figures above suggest useful ways of thinking about this problem.  Maybe I don't want to have a more plant-based diet, but at least in terms of greenhouse gas impacts, I can "offset" that and more by foregoing my trip to Paris this year.  

More broadly, we don't normally worry about impacts of our various consumption choices on availability of other resources like steel or fertilizer or labor.  Why?  Because the market price for the goods should reflect the relative scarcity of these items.  One upside to a carbon tax is that we could forego all the moralizing and all these sorts of "consumption advice" types of papers and simply allow consumers to make choices they want given the relative prices of different goods.  But what about children?  The above graph would seem to justify a large carbon tax on having kids.  I'd guess that is a highly unpopular idea, which suggests to me that most of us are more likely to be in the Simon camp than the Ehrlich one when thinking about our own offspring.