A Newsletter for Alumni and Friends of the Department of Applied Economics University of Minnesota

Minnesota AppliedEconomist No. 716 Fall 2005 / Winter 2006

Department Head’s Notes

In this issue...In

On October 31 more than 100 participants in a Univer-sity-wide forum explored the meaning and importanceof public engagement in a great research university. TheWeb site for the newly established Office of Public En-gagement defines engagement as follows.

…the partnership of university knowledge andresources with those of the public and privatesectors to enrich scholarship, research, and cre-ative activity; enhance curriculum, teaching, andlearning; prepare educated, engaged citizens;strengthen democratic values and civic respon-sibility; address critical societal issues; and con-tribute to the public good.

This partnership is a two-way process. It is a logicalextension and expansion of our traditional Land Grantmission through which the University and the broad com-munity we serve, enrich and revitalize each other.

Student Engagement Plans Reach Beyondthe ClassroomFor me, one of the most exciting aspects of the newinitiative on public engagement is the emphasis beingplaced on student involvement. Our department is al-ready at the forefront of this effort. This past fall stu-dents in our orientation class (ApEc 1001), which istaught by Undergraduate Program Coordinator GaryCooper, spent several sessions creating an “IntentionalPlan of Engagement.” These sessions were led by stafffrom the University’s Office of Student Development.They were designed to help our students develop per-sonalized plans for using experiences outside of the class-

room to develop skills in five criti-cal areas; adaptability, communi-cations, conflict management,critical thinking, and development

of meaningful relationships. A student’s plan might in-clude volunteer activities, involvement with student or-ganizations, study abroad, a research experience, and/or an internship.

A group of students taking a “special problems” classon entrepreneurship with Professor Ward Nefstead putthese concepts into action this past semester. With thehelp of the Southeast Sustainable Regional Partnership,they were contacted by an entrepreneur from southeastMinnesota interested in developing a business plan for afruit processing operation. Working with the entrepre-neur gave the students a great opportunity to developtheir own skills in finance, planning, marketing, commu-nications, and team building. The end result was a soundbusiness plan and a great experience for our students.

(Continued on page 2.)

Loss of a Recent Alumnus . . . . . . . . . . . 2

New Faculty Members . . . . . . . . . . . . . .3

Visiting Scholars . . . . . . . . . . . . . . . . . . .4

Scholarship Recipients . . . . . . . . . . . . . . 6

Graduate Student Networking . . . . . . . .7

New Expanded College . . . . . . . . . . . . . 7

New Lecture Series . . . . . . . . . . . . . . . . .8

Houck Scholarship Fund . . . . . . . . . . . 10

Recent Publications . . . . . . . . . . . . . . . 11

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Upcoming Events

For further information on these and futureevents, see the departmental website:

http://www.apec.umn.edu/DeptEMS.html

March 31 - Applied Economics Seminar withRobert Town, School of Public Health, on “TheWelfare Consequences of Hospital Mergers.”

April 3 - Environmental & Resource Eco-nomics Seminar with Steve Polasky, Topic TBA.

April 10 - Environmental & Resource Eco-nomics Seminar with Frances Homans, TopicTBA.

April 17 - Environmental & Resource Eco-nomics Seminar with Donald Hansen fromArgonne National Laboratory on “Modeling En-ergy Supply, Demand, and Technology.”

April 21 -Applied Economics Seminar withBrian McCall from Carlson School of Manage-ment on “Decoupling the Sources of Earnings In-equalities Within and Across Industries.”

(Department Head Notes continued from Page 1.)

Your Help Is NeededFriends and alumni can help us offer more public en-gagement opportunities for our students. I would behappy to hear from you about ideas you have for projectsand activities. Also, I encourage you to enter informa-tion on the St. Paul Campus Career Center “BuildingBridges” Web site. The URL is as follows.

http://alumni.coafes.umn.edu/bb

This new initiative, developed in collaboration with theNew College Alumni Society, gives alumni, friends, andpotential employers a chance to share information thatcan help establish connections with our students. In theprocess, it will help us strengthen the partnerships thatare the necessary foundation for effective public engage-ment.

Lance Sannes, a 2005 Univer-sity graduate and former Uni-versity of Minnesota footballplayer, died of cardiac arrest onOctober 16, 2005. Lanceearned his B.S. degree in agri-culture, food, and businessmanagement. His advisor wasGerard McCullough, who hadthis to say about Lance.

Lance Sannes did not have to introduce him-self when he first became my advisee. I knewthat he played on the offensive line for theGophers, and he was the only one of myadvisees who filled the doorframe when hecame to my office. We spent much of our timetalking about the economics of sports—espe-cially the economics of football. What im-pressed me about Lance was his deep interestin both economics and sport. He approachedthese with a keen intelligence and a ready senseof humor. I pointed out to him that BillBelichick, the highly successful coach of theNew England Patriots, had been an econom-ics major at Wesleyan and used optimizationand statistical analysis in his game planning.Lance understood immediately. We talkedabout the possibility of Lance doing graduatework in applied economics and focusing onthe economics of sports. He’d have been anexcellent researcher and an excellent teacher.

Sannes was a native of Wahpeton, ND, and, last fall,was working at a real-estate development company inSt. Louis Park, MN. He also refereed high school bas-ketball and lacrosse games in his spare time and waspreparing to referee Division III basketball games in thewinter of 2005–06. We send our heartfelt condolencesto his family and friends.

Recent Department AlumnusPassed Away This Fall

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Department Welcomes Its Newest Faculty Members

Clarissa YeapProfessor Clarissa Yeap,a native of Singapore,joined our department thisfall as an assistant profes-sor in the areas of indus-trial organization and foodmarketing. Clarissa re-ceived her A.B. with amajor in economics fromDartmouth College, herM.Sc. in econometrics

and mathematical economics from the London Schoolof Economics, and her A.M. and Ph.D. in economicsfrom the University of Chicago.

In her recently completed dissertation, “Competition andMarket Structure in the Food Services Industry,” Clarissaused establishment-level data from the Economic Cen-sus and Population Census to explore questions of theo-retical importance to economists and practical interestto the food industry. She will continue to work with cen-sus data to refine her analyses of industrial organizationissues in the food industry. In earlier work, Clarissa alsoexplored issues of competition and firm integration inthe cable television industry and Personal Communica-tions Services (PCS) spectrum auctions.

In the spring semester, Clarissa is co-teaching APEC4821, Agribusiness Management, with Vernon Eidman.In the 2006-07 academic year, she will teach threeclasses: APEC 4451, Food Marketing, with Jean Kinsey;APEC 8803, Marketing/Managerial Economics, withDonald Liu; and APEC 4821, Agribusiness Manage-ment.

Members of the department are very excited to haveClarissa on board and look forward to watching herresearch and teaching programs flourish in the years tocome.

Judy TempleProfessor Judy Templejoined us from the De-partment of Economics atNorthern Illinois Univer-sity, where she’s servedon the faculty since 1989.Judy carries a joint ap-pointment between ourdepartment and theHumphrey Institute for

Public Affairs, and also has an adjunct appointment inthe Institute of Child Development. Judy received herB.A. in economics at the University of Wisconsin-Madi-son and earned her M.A. and Ph.D. degrees in eco-nomics at Michigan State University.

Judy’s current research includes estimating the long-termbenefits of early childhood education. Her research alsoinvestigates the determinants of educational attainmentas well as the effects of school policies such as graderetention and special education placement. Anotherstrand of research includes topics in state and local pub-lic finance.

Arriving in January 2006, Judy hit the ground runningwith a lecture titled, “Cost Effectiveness in Early Inter-vention,” about cost savings to society brought about byearly childhood education, given with co-author ArthurReynolds from Child Development. She is also co-teach-ing a Ph.D. graduate seminar course with Ford Runge.

We look forward to the contributions that Judy will bringto the department’s program.

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As part of the USDA Faculty Exchange Program (FEP),the department welcomed three scholars from Tunisia,Russia, and Bulgaria. This is the sixth year the depart-ment has participated in this program. While here fromAugust through mid-December 2005, the visiting schol-ars observed our teaching methods, developed coursesto teach at their home universities, participated in a vari-ety of field trips at the state and national level, and twoof them presented seminars in the department. Here is abrief introduction to each our three FEP visiting schol-ars.

Anna Arkhiereeva, Bashkir State AgrarianUniversity in Ufa, RussiaAnna received her diploma with a concentration in ac-counting and auditing in 1999 and her candidate degreein 2003. Her thesis was on monitoring the developmentof regional agriculture, taking into account financial sta-bility and economic cycles. Anna has worked as a re-searcher at the Social-Economic Research Institute of[xx the?] Ufa Scientific Center since 2002, where she ishelping to develop a 10-year social-economic develop-ment plan for the Republic of Bashkortostan. She alsoteaches courses in investment strategy and the securitiesmarkets. While here in the department, Anna presenteda seminar entitled, “Bashkortostan Agriculture: Impor-tance, Problems, and Perspectives.” To view the

PowerPoint slides from her presentation, please visith t t p : / / w w w. a p e c . u m n . e d u / d o c u m e n t s /AArkhiereeva_Seminar05.pdf .

Dimitrina Docheva, Trakia University, BulgariaDimitrina received her master’s degree in 2002 in agri-cultural economics, specializing in agricultural finance.She is currently a Ph.D. student and teaching assistant inthe Department of Management. She currently conductsseminars for courses in agricultural finance and interna-tional trade and, in the future, hopes to teach agriculturalfinance, agricultural credit markets, and financial man-agement. While here, Dimitrina presented a seminar en-titled, “Agricultural Financial Markets in Bulgaria—TheCurrent State and Perspectives for Future Develop-ment.” To view the PowerPoint slides from her presen-tation, please visit http://www.apec.umn.edu/documents/AgriculturalFinancialMarkets-Bulgaria.pdf .

Driss Mehouachi, Ecole Superieure d’Agriculturedu Kef, TunisiaDriss has been teaching in the economics departmentsince 1994. He currently teaches accounting, manage-ment, and applied microeconomics. In 1998 he studiedrural development and project analysis in France and, in1997, studied rural economics in Canada.

The FEP program funds overseas faculty for six monthsin the U.S. and also funds return visits from U.S. facultymembers, who will meet with the visitors in their homeuniversities next academic year. At the University ofMinnesota, the FEP program is coordinated by JohnVreyens with the Office of International Agricultural Pro-grams in COAFES, and by Glenn Pederson in the De-partment of Applied Economics. Other department mem-bers who participated by actively mentoring our visi-tors, include Ed Usset, Bill Lazarus, and Jeff Apland.

The Department Hosted Three FEP Visiting Scholars This Fall

USDA Faculty Exchange Program (FEP) visitors(l to r): D. Docheva, D. Mehouachi, and A. Arkhiereeva.

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Three New International Visiting Scholars Arrivedin the Department this Fall

Jozef BarnakProfessor Jozef Barnakcame to Minnesota fromthe Department of Market-ing and Management at theLegnica School of Man-agement and from theAgribusiness Department atthe Agricultural University in

Krakow, Poland. At these two institutions he has beeninvolved in teaching marketing and management coursesin English.

While here, he got to know the teaching curricula andteaching methods used in marketing and managementcourses at a U.S. university. He also worked on hisresearch project titled, “Comparative studies of the or-ganization and functioning of marketing systems for ag-ricultural and food products in the U.S. and in Poland.”

Professor Barnak arrived in September and was with usthrough February 28, 2006. Ben Senauer was his fac-ulty host during his visit.

Toyokazu NaitoProfessor Toyokazu Naitois visiting the departmentfrom the Department ofEconomics at KyotoGakuen University inKyoto, Japan. His researchinterests are resource eco-

nomics, applied econometrics, and applied game theory.

Professor Naito will be in the department for his one-year sabbatical, through August 2006. During his visit,he plans to work on both theoretical and empirical re-search about common property resources with StevePolasky, who is his faculty host.

Gerald OrtmannProfessor Ortmann spentslightly more than fourmonths in the department,from late July through earlyDecember. He is a facultymember in the Departmentof Agricultural Economicsat the University ofKwaZulu-Natal in

Pietermaritzburg, South Africa. Professor Ortmann’sresearch interests include production economics, farmand agribusiness management, and institutional econom-ics. During his visit, he worked on his sabbatical projecttitled, “Promoting the Competitiveness of Small-ScaleFarmers in South Africa by Facilitating Access toAgribusiness Value Chains.” Based on that work, Pro-fessor Ortmann and Rob King, his faculty host, co-authored a paper titled “Small-Scale Farmers in SouthAfrica: Can Agricultural Cooperatives Facilitate Accessto Input and Product Markets?” (Staff Paper P06-4).Professor Ortmann also interacted with faculty regard-ing Center for International Food and Agricultural Policyinitiatives in South Africa.

The Department benefits greatly by hosting visiting schol-ars. They share new ideas and perspectives with us,and their visits are often the starting point for longer termprofessional collaboration. At the same time, their con-nections with us help increase our visibility around theworld.

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Congratulations go out to the three undergraduate stu-dents—Michael Boerboom, Crystal Lehnertz, andKristyna Schultz—who were awarded scholarships bythe department for this academic year, 2005-2006.

Willis Peterson Scholarship RecipientsMichael Boerboom is a sophomore majoring in agricul-tural and food business management. Michael grew upon a family-owned and operated farm outside Marshall,MN. In his work on the farm, he gained experience car-ing for animals, managing a feed mill, maintaining ma-chines and barns, keeping farm records, and working infinishing barns. He also served many years with the 4H–Lyons County Fair.

Kristyna Schultz is a junior majoring in agricultural andfood business management, with a minor in scientific andtechnical communication. Kristyna has been on theDean’s list every semester. Last year, she served on theCOAFES Curriculum Review Committee. She currentlyserves on the COAFES Scholastic Affairs Committeeand the Applied Economics Undergraduate ProgramCommittee. Kristyna has been very active with FFA (for-merly Future Farmers of America), having served in theroles of chapter president, regional president, and statepresident. She is from Litchfield, MN.

The Willis Peterson Scholarship allows undergraduatestudents to pursue their interest in economics. The awardwas established by the colleagues, friends, and relatives

Three Students Received Departmental Scholarships This Yearof Professor Emeritus Willis Peterson to honor hismemory. For many years Professor Peterson taught twocourses—“Principles of Microeconomics” and “Prin-ciples of Macroeconomics”—and won the University’shighest award for teaching excellence, the Horace T.Morse–Minnesota Alumni Association Award for out-standing contributions to undergraduate education.

Hal Routhe Scholarship RecipientCrystal Lehnertz is a junior majoring in agricultural andfood business management, with an emphasis in financeand a minor in environmental horticulture. Crystal grewup on a farm near Plainview in southeastern Minnesota,and has been actively involved with the University ofMinnesota Horticulture Club and the FFA.

The Hal Routhe Scholarship is awarded to an upper-division undergraduate student with an interest in agri-cultural finance. This scholarship was set up to honorHarlund (Hal) Routhe, Professor Emeritus, Universityof Minnesota. Hal graduated from the College of Agri-culture in 1951 with a B.S. in agricultural economics in1951, and earned a master’s degree in 1954. Hal de-voted his career to the University of Minnesota, as a 4-H leader, as an applied and agricultural extension econo-mist, as program director of agriculture and related in-dustries, and as associate director of the Minnesota Ex-tension Service. Hal created this scholarship because ofhis continuing interest in agriculture and education.

Kristyna Schultz, Michael Boerboom & Crystal Lehnertz

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Last July the Board of Regents approved sweepingchanges in our graduate program. Faculty from the Di-vision of Health Services Research and Policy in theSchool of Public Health, from the Hubert H. HumphreyInstitute of Public Affairs, and from the Department ofHuman Resources and Industrial Relations in the CarlsonSchool of Management have joined our graduate fac-ulty. This is enabling us to expand learning opportunitiesfor our students and is creating exciting new opportuni-ties for research collaboration.

As our scholarly community within the University ex-pands, we also want to strengthen the much broadercommunity that includes graduates from our graduateprogram. New connections may include mentoring re-lationships, internships, opportunities to meet studentsat Departmental events, or sharing information on stu-dents entering the job market. This is consistent withthe new emphasis on public engagement featured in the

Opportunities to Network with Graduate Students

On June 10, 2005 the Board of Regents approved a setof recommendations from President Bruininks for Uni-versity strategic positioning. The resolution approved bythe Regents includes the integration of the programs nowin the College of Agricultural, Food, and EnvironmentalSciences; the College of Natural Resources; and theNutrition program from the College of Human Ecology.

In early September, President Bruininks appointed fac-ulty, staff, students, and stakeholders to a task forcecharged with setting the direction for the new, expandedcollege. The task force worked through the fall to de-velop recommendations on how the new, expanded col-lege can achieve higher levels of excellence in teaching,research, extension, and engagement. Twenty workinggroups—made up of faculty, staff, students, and alumni—were established to support the task force.

The Department of Applied Economics was well-rep-resented in this process; Professor Steve Polasky served

Creating a New Expanded College

“Department Head’s Notes” section in this issue of Min-nesota Applied Economist. Strengthening our con-nections with M.S. and Ph.D. program alumni will helpus build a truly great applied economics program. It willalso give our alumni, wherever they may be located,better access to the stream of bright, well-trained stu-dents who graduate from our program each year,

We hope to use the “Building Bridges” web site de-scribed in the “Department Head’s Notes”(http://alumni.coafes.umn.edu/bb) to facilitate this com-munity building. The St. Paul Campus Career Center isworking closely with our faculty and students in this ef-fort. We will use information from this data base to de-velop networking opportunities for graduate programstudents, alumni, and faculty. We encourage all gradu-ate program alumni to help us with this effort.

on the task force, and twelve other faculty, staff, andstudents participated in working groups. The task forcereleased its final report on February 3 and recommendssignificant structural changes in the college. Specifically,the task force made two main recommendations, as fol-lows: 1) establish a University-wide Institute of the En-vironment; and 2) develop a number of initiatives thatwill attract stronger students, allowing the college to beeven more responsive to the public good. If you’d liketo read the complete report, please visit the college Website at the following address.

http://www1.umn.edu/systemwide/strategic_positioning/tf_final_reports/cnr_coafes_che_final.pdf

The proposed name for the New College - College ofFood, Agricultural, and Natural Resource Sciences -will be considered for approval by the Regents at theirMarch meeting.

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The department is pleased to announce an annual seriesof four lectures that are being sponsored jointly by theCenter for International Food and Agricultural Policy(CIFAP), the Center for International Science and Tech-nology Practice and Policy (InSTePP), the Food Indus-try Center (TFIC), the Fesler-Lampert Chair, and theDepartment of Applied Economics. Each of the lecturesin the series is named to honor an outstanding memberof the department’s faculty—past, or present and emeri-tus. The four lectures, which are free and open to thepublic, are as follows.

• The Willard W. Cochrane Lecture on PublicPolicy• The Philip M. Raup Lecture on Land andEnvironmental Policy• The James P. Houck Lecture on Food andConsumer Policy• The Vernon W. Ruttan Lecture on Scienceand Development Policy

These four lectures will be offered annually, on a recur-ring basis, and will complement the regular departmen-tal series of seminars.

Ambassador Yeutter Presented the First Lec-ture in the SeriesThe first lecture in the series, the Cochrane Lecture, was

New Lecture Series Inauguratedgiven on November 30, 2005, by Ambassador ClaytonYeutter, the former U.S. trade representative and secre-tary of agriculture. His talk is summarized in this issue ofMAE on page 9 (“U.S. Farm Policy at the Crossroads”)and online athttp://agecon.lib.umn.edu/mn/wp05-03.pdf .

Upcoming Lectures in the SeriesDr. Emery Castle, professor emeritus from the Depart-ment of Agricultural and Resource Economics at Or-egon State University, will present the next lecture in theseries, the Philip M. Raup Lecture. Dr. Castle will give alecture entitled, “The Separation of Powers—Federal,State, Local—and Environmental Public Policy,” onMarch 9, 2006 at 3:00 p.m. in the Cargill Building forMicrobial and Plant Genomics on the St. Paul Campus.Additional information can be found online athttp://www.apec.umn.edu/rauplecture .

The final two lectures in the series have also been sched-uled. Juan Enriquez-Cabot of Harvard University willdeliver the James P. Houck Lecture on May 16, 2006and Richard Nelson of Columbia University will presentthe Vernon W. Ruttan lecture in October.

For more details about these upcoming lectures, keepyour eyes on the departmental website and future issuesof MAE.

Professor Emeritus Willard Cochrane and Ambassador Clayton Yeutter

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On November 30, 2005, Ambassador Clayton Yeutter,former U.S. trade representative and secretary of agri-culture, presented the inaugural Willard W. CochraneLecture in Public Policy. His lecture, “U.S. FarmPolicy—At a Crossroads? The 2007 Farm Bill and theDoha Round,” provided key insights from an experi-enced negotiator in both the trade and legislative arenas.In his lecture, Yeutter warned of the difficulties of puttingtogether a trade deal given the global resistance to liber-alization in agriculture. This resistance comes not onlyfrom U.S., European, and Japanese farmers, but alsofrom developing countries that are loathe to open theirmarkets, many of which remain protected. In addition,said Yeutter, the expiration under U.S. law of the TradePromotion Authority (“fast-track”) in July 2007, makesthe timing of both the farm bill and Doha round highlyproblematic because a successful trade round dependson trade negotiating authority.

Government Subsidies Should Be ReducedIn assessing the current state of U.S. agricultural policy,Yeutter argued for a gradual shift in responsibility for thecoverage of farm risks from the public to the privatesector. He noted, “Our present safety net is complicated,costly to administer, and its benefits tilt heavily towardlarge producers, and toward the producers of only fivemajor commodities (wheat, corn, cotton, rice, and soy-beans). Those benefits are also rapidly capitalized intoland values, often boosting the net worth of absenteelandowners, while also reducing our international com-petitiveness and making it extremely difficult for youngpeople to start farming. In addition, some aspects of ourcommodity programs may well be vulnerable to chal-lenge under international rules.”

U.S. Agriculture Will Grow Only by BoostingExportsThe current international trade rules are a problem in theDoha Round negotiations, and the failure to reach agree-ment over agriculture has slowed progress to a crawl,despite their importance to U.S. agriculture. As Yeutterobserved, “The Doha Round of trade negotiations can,and should, complement and support whatever domes-

U.S. Farm Policy at the CrossroadsC. Ford Runge

tic policy-changes are in order. Domestic demand alonewill never again support a vibrant, prosperous Americanagriculture. Our opportunities for market growth, par-ticularly in commodities, lie outside the borders of theU.S. Those opportunities are primarily in developingcountries, whose per capita incomes are on the rise.Most of those countries are in Asia and access to theirmarkets should be our first priority in the Doha Roundnegotiations. If we succeed in that endeavor, adjustments(which will be necessary no matter what happens in theDoha Round) in our domestic farm programs will bemuch more palatable to U.S. farmers.”

In the Future Green Agricultural ProgramsWill Be ImportantFinally, Yeutter emphasized the key future role of “green”programs in agriculture and the need to revitalize ruralinfrastructure. He noted that much of the money nowspent on commodity programs could better be directedto “a variety of programs that are not likely to run afoulof international rules, with benefits that can reach morerural residents than our present programs, and do so ina more equitable way. Included would be environmentalprograms that are already authorized and regularly over-subscribed, new environmental programs, a variety ofenergy generation possibilities, opportunities providedby biotechnology, tree planting for carbon fixation, in-dustrial uses of farm products, and both hard and softinfrastructure investments.”

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In 2001 the Minnesota Council on Economic Educa-tion established a memorial scholarship fund in honor ofJames P. Houck, a former head of the Department ofApplied Economics and long-time friend and mentor tothe Council.

Professor Houck was actively involved on the Council’sboard for many years, giving the organization an institu-tional home when it left the College of Education in 1992.“He was our champion, providing leadership at a chal-lenging time in the Council’s history,” says Council Ex-ecutive Director Claudia Parliament. “We would not bewhere we are today without his guidance and unwaver-ing support.”

Houck Scholars Gain Valuable Experiencein EconomicsThe James P. Houck Memorial Scholarship Fund, nowan endowed fund held at the University of MinnesotaFoundation, was established to encourage MinnesotaK-12 classroom educators to seek additional educa-

Houck Memorial Scholarship Fundtion in economics. Since the fund was established in 2001,six Minnesota teachers have benefited from the fund. Inthe summer of 2005, Emily Widen, an economics teacherat Blaine High School, received a Houck scholarship totake a microeconomics class in the department. Says Ms.Widen, “Taking the intermediate-level economics coursewas a great experience for me, I came away with adeeper understanding of the economic principles I teach.Now I can truly see the difference in my students’ eyes,as they are better able to grasp tough concepts becausemy teaching ability has improved.”

In addition, taking microeconomics at the University al-lowed Ms. Widen to be approved as a College-in-the-Schools (CIS) instructor at Blaine High School. “Be-cause of the scholarship,” she said, “Blaine High Schoolstudents can reap the benefits of another CIS class beingoffered in their school.” Professor Houck “understoodthe value of continuing education,” says Jim Hammill, along-time friend and colleague. “He would be thrilled toknow that Minnesota teachers are benefiting from thiswonderful legacy – now and well into the future.”

Houck’s Career Took Him WorldwideProfessor Houck had a distinguished career as an econo-mist and educator. He served on the faculties of Pennsyl-vania State University and Harvard University, beforejoining the University of Minnesota in 1965, where heserved as head of the Department of Applied Economicsfrom 1990-1998. “Jim articulated a clear vision for agreat applied economics department,” says current De-partment Head Rob King. “That vision, which includesthe outstanding work on economic education done bythe Council, still helps to shape what we do today.”

While a member of the University faculty, ProfessorHouck worked overseas in Bangkok and Sydney. Inaddition, he spent shorter periods teaching and conduc-ing research in other parts of the world such as Africa,South America, and Europe. In 1969, in response to theassassination of Dr. Martin Luther King, Jr., ProfessorHouck spent a three-month leave teaching at A&T StateUniversity, a historically black university located inGreensboro, North Carolina.

Margaret (Peg) Houck helps acknowledge the Univer-sity of Minnesota Foundation's President's Club Award(presented to the Council for funds raised to supportthe scholarship endowment) at the Council's 2005 an-nual meeting.

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Houck’s Accomplishments in EconomicsWere ManyProfessor Houck was prominent in the American Agri-cultural Economics Association (AAEA) and served inmany leadership positions, including the presidency. Inrecognition of his many contributions to agricultural eco-nomics, Professor Houck was elected a Fellow of theAAEA in 1997. He wrote a widely used textbook, Ele-ments of Agricultural Trade Policies, which has beentranslated into Spanish, Russian, Chinese, and Polish.Says department alumnus, Dick Todd, who is vice presi-dent for Community Affairs at the Federal Reserve Bankof Minneapolis, “Jim cared about communicating eco-nomic ideas clearly and to a wide audience. He wantedpeople, as citizens, to understand that economic policydecisions mattered. He worked hard to find clear, simple,robust ways of getting theoretical and factual pointsacross.” Added Todd, “I think Jim would be very happyto see how these scholarship recipients and other teach-ers trained by the Council, are preparing our youngpeople to become informed participants in the globaleconomy.”

For additional information about the Houck MemorialScholarship Fund and the Minnesota Council on Eco-nomic Education—or to make a financial contributionto either—please call the Council at 612-625-3727 orvisit the Council’s Web site at www.mcee.umn.edu.Contributions to the Houck Memorial Scholarship Fundcan also be made through the University of MinnesotaFoundation at http://www.giving.umn.edu/.

RECENT PUBLICATIONS

For information on locating a copy of a publication notavailable on the Internet, contact the underlined authorat the department by calling 612-625-1222.

Consumption and Household Economics

Emerging Research and Public Policy Issues for aSustainable Global Food Network by Jean Kinsey.This paper presents research questions and policy issuesrelated to three emerging issues pertinent to developmentsin the global food and agricultural supply network. Devel-opments in the production and delivery of food to consum-ers are rapid, prolific, and extreme. We have gone from afarmer-centric to a consumer-centric food system. Thechanges are forcing us to revise our thinking about the or-ganization and operation of the food supply chain one-hun-dred and eighty degrees, and to challenge old assumptionsabout who sets standards and who decides what will beproduced. Public policies, which typically lag the world ofcommerce, will need to learn their relevance and catch upwith dramatic changes in the way business is being con-ducted. University of Minnesota, The Food Industry Cen-ter Working Paper 05-04, 2005. http://agecon.lib.umn.edu/mn/tr05-04.pdf

The Empirics of Information Sharing in Supply Chains:The Case of the Food Industry by Hamid Mohtadi.Using the Supermarket Panel Data gathered by The FoodIndustry Center at the University of Minnesota, the behav-ior of food retailers is examined in their adoption of infor-mation technologies that facilitate information exchange withsuppliers. Using a theoretical framework developed byMohtadi and Kinsey (2004), the predictions of that paperare examined. Logistic regressions based on maximum like-lihood estimation, support the hypothesis that food retailerswith greater market power and numerous suppliers are moreinclined to share, rather than to withhold, sales information.Stock-outs play a key role in the process as well. Finally,the structure of the market plays an interesting role in thetype of information-sharing platforms that the retailers adopt.The Food Industry Center Working Paper 05-02, 2005.http://agecon.lib.umn.edu/mn/tr05-02.pdf

Jim Houck shares a lesson with a Franklin Music Magnetstudent at the MN Council's annual meeting in 1995.

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Food Safety and Security Issues in Agro-Food Policyand Global Trade by Jean Kinsey. The imperative tofood safety and security is taking on new dimensions withemerging pathogens in plants and animals and terrorist threats.The economic opportunities for expanding markets versesthe costs of complying with a variety new public and pri-vate safety and security standards provide trade-offs thatare complicated by the industrialization of the global foodsupply chain, including retailing. Investments in modern pro-cessing and information technologies are an imperative, ifsmaller producers and manufacturers are to participate inglobal trade. In Food, Agriculture, and the Environment:Economic Issues, edited by Edi Defrancesco, Luigi Galletoand Mara Thiene. Milano, Italy: Universita di Padvoa,Dipartimento Territorio e Sistemi Agro-forestali; FondazioneCassa di Risparmio di Padova e Rovigo; FrancoAngeli,2005.

The Globalization of Food Systems: A ConceptualFramework and Empirical Patterns by BenjaminSenauer and Luciano Venturini. This paper discussesagro-food trade flows as well as foreign direct investmentsin the food industry in an increasingly global food system.While the process has long been dominated largely by in-ternational food manufacturers, the emergence of globalretailers is a further powerful engine of globalization with farreaching implications for the food system. In Food, Agri-culture, and the Environment: Economic Issues, editedby Edi Defrancesco, Luigi Galleto and Mara Thiene. Milano,Italy: Universita di Padvoa, Dipartimento Territorio e SistemiAgro-forestali; Fondazione Cassa di Risparmio di Padovae Rovigo; FrancoAngeli, 2005.

Information Exchange and Strategic Behavior in Sup-ply Chains: Application to the Food Sector by HamidMohtadi and Jean Kinsey. Information technology (IT)facilitates information exchange between retailers and sup-pliers. Based on evidence from the food industry, informa-tion strategies under uncertainty are analyzed, using gametheory. Some key results are as follows: 1) under certainconditions, retailers withhold valuable sales data from sup-pliers, even if this means less supply coordination; 2) a re-vealed equilibrium exists where suppliers learn retailers’market data despite retailers’ withholding of such data; 3)this leads either to full information convergence, or, surpris-ingly, incomplete information convergence with some infor-mational asymmetry remaining; and 3) retailers with greater

market power and numerous suppliers are more inclined toshare, rather than to withhold, information. American Jour-nal of Agricultural Economics, v.87, no.3, August 2005.

No Green Light to Chow Down by Ben Senauer. Anewly released government study regarding the health risksof overweight and obesity was causing confusion and mis-interpretation, which this op-ed paper attempted to clarify.The key finding of the study is still that obesity poses aserious health risk, causing an additional 112,000 deathsannually in the U.S. Pioneer Press, May 24, 2005.

Product Market Competition and Human ResourcePractices: An Analysis of the Retail Food Sector byElizabeth Davis, Matthew Freedman, Julia Lane,Brian McCall, Nicole Nestoriak, and Timothy Park.The rise of super-centers and the entry of Wal-Mart intofood retailing have dramatically altered the competitive en-vironment in the industry. This paper explores the impact ofsuch changes on the labor market practices of traditionalfood retailers. We use longitudinal data on workers andfirms to construct new measures of compensation and em-ployment, and examine how these measures evolve withinand across firms in response to changes in product marketstructure. An additional feature of the analysis is to combinerich case study knowledge about the retail food industrywith the new matched employer-employee data from theCensus Bureau. University of Minnesota, The Food In-dustry Center Working Paper 05-03, 2005.http://agecon.lib.umn.edu/mn/tr05-03.pdf

WIC Food Packages: Time for a Change by JeanKinsey, et al. The recommendations of a committee of theInstitute of Medicine’s Food and Nutrition Board at theNational Academy will dramatically improve the food of-ferings in the health and nutrition program for more than 7.6million women, infants, and children in the U.S. with a costneutral amount of $4.5 billion per year. Currently, aboutone half of all U.S. infants and one quarter of children aged1 through 4 years receive Women, Infants, and Children(WIC) benefits. New food packages designed for theserecommendations include adding fresh fruits and vegetables,whole grains, and reducing high-caloric fruit juices. Moreincentives for breast feeding are build in as well. Institute ofMedicine of the National Academies, Food and NutritionBoard, Committee to Review the WIC, Washington, DC:National Academies Press, 2005.

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Production and Marketing Economics

The Economic Value of Barge Transportation: A CaseStudy of the Minneapolis Upper Harbor by JerryFruin. Some officials have proposed closing the Minne-apolis Upper Harbor to barge traffic so that the MississippiRiver area above the St. Anthony Falls can be converted tohousing, industry, and recreational use. This study estimatesthe monetary and public externality costs that would occur,if barges were eliminated above the St. Anthony dams andessential commercial traffic was shifted to truck or rail. Theestimated increases in transport costs to Minnesota ship-pers and customers would exceed $4 million annually, whilepublic cost increases—due to increased highway mainte-nance, congestion, and pollution—would exceed $1 mil-lion. In Food, Agriculture, and the Environment: Eco-nomic Issues, edited by Edi Defrancesco, Luigi Galletoand Mara Thiene. Milano, Italy: Universita di Padvoa,Dipartimento Territorio e Sistemi Agro-forestali; FondazioneCassa di Risparmio di Padova e Rovigo; FrancoAngeli,2005.

Four Articles—“Employee Rosters Rise: Wages onthe Upswing”; “Employees, Employers Search for theRight Fit”; “Industry Survey Tracks EmploymentTrends”; and “Work Environment Tops EmployeePriority Lists”—all by Terrance Hurley, JamesKliebenstein, Peter Orazem, and Dale Miller. Thisseries of articles summarizes the latest survey in a series offour surveys that have been conducted over the past 15years by the National Pork Board, the National Pork Pro-ducers Council, and National Hog Farmer Magazine. Thesurvey results highlight important trends in employment andemployee relations in the U.S. pork industry, as the indus-try has become more industrialized and more dependenton hired labor. In Nationwide Survey of Employees andProducers: A 15-Year Summary; a Special Report byNational Hog Farmer. Pfizer Animal Health, 2005.

FINBIN 2004 Minnesota Farm Financial Update byDale Nordquist. The approximately 2,400 Minnesotafarms in the FINBIN database represent a broad cross-section of Minnesota production agriculture. While there isno “typical” Minnesota farm, these farms include a largeenough sample to provide a good barometer of commer-cial farming in Minnesota. If any group is over-represented,it is probably the mid-sized family farm, the group that most

experts feel is being squeezed the hardest by competitiveeconomic forces. With this caveat, this paper takes a lookat the current financial condition of these farms at the end of2004, and trends over the nine years for which statewidedata is available in FINBIN. Center for Farm FinancialManagement, 2005. http://www.cffm.umn.edu/Pubs/2004MinnesotaFarmFinancialUpdate.pdf

Industry Survey Tracks Employment Trends byTerrance Hurley, James Kliebenstein, Peter Orazem,and Dale Miller. Key information gleaned from the sur-vey responses includes average salaries (reported by re-gion and job title), employee benefits, levels of educationand experience, employee management and job satisfac-tion trends. Additionally, the survey tracks ages, types ofoperations and production levels of owners/employers, aswell as the operations the employees represent. In Nation-wide Survey of Employees and Producers: A 15-YearSummary; a Special Report by National Hog Farmer.Pfizer Animal Health, 2005.

National Farmers Organization: 50 Years of BuildingFarmer Market Power by Richard Levins. The Na-tional Farmers Organization (NFO) has evolved from aradical organization that dumped milk and killed pigs to onethat administers sophisticated group marketing programsfor farmers. NFO’s focus on market power, as opposed togovernment programs, makes it an interesting alternative intoday’s world of globalized farm markets. Agro Washing-ton, v.4, no.4, 2005.

Spatial Yield Risk Across Region, Crop, and Aggre-gation Method by Michael Popp, Margot Rudstrom,and Patrick Manning. A researcher interested in crop-yield risk analysis often has to contend with a lack of field-or farm-level data. While spatially aggregated yield dataare often readily available from various agencies, aggrega-tion distortions for farm-level analysis may exist. This paperaddresses how much aggregation distortion might be ex-pected, and whether findings are robust across wheat,canola, and flax grown in two central Canadian productionregions that differ mainly by rainfall, frost-free growing days,and soil type. Using Manitoba Crop Insurance Corpora-tion data from 1980 to 1990, this research, regardless ofcrop or region analyzed, indicates that 1) spatial patterns inrisk are absent; 2) use of aggregate data overwhelminglyunder-estimate field-level yield risk; and 3) use of a relative

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risk measure compared to an absolute risk measure leadsto slightly less aggregation distortion. Analysts interested inconducting farm-level analysis using aggregate data are of-fered a range of adjustment factors to adjust for potentialbias. Canadian Journal of Agricultural Economics, v.53,no.2–3, June/September 2005.

The Supply Chain for Parmigiano-Reggiano Cheesein the United States by Andrea Berti, MaurizioCanavari, and Robert King. International supply chainsfor food products differentiated by their place of origin arehighly variable, and are influenced by product characteris-tics, trade policies, and the business strategies of key chainparticipants. However, most products that achieve wide-spread distribution in another country usually reach con-sumers by “plugging into” standard domestic wholesale andretail channels. This paper 1) describes the channels throughwhich Parmigiano-Reggiano cheese reaches U.S. consum-ers; 2) develops hypotheses about how the supply chainwill change, as U.S. restrictions on Italian cheese importsare relaxed; and 3) assesses the contributions of institutionsthat make it easier for Italian producers of Parmigiano-Reggiano cheese to signal quality to U.S. consumers and,thus, capture a greater share of revenues from Parmigiano-Reggiano cheese sold in the U.S. In Food, Agriculture,and the Environment: Economic Issues, edited by EdiDefrancesco, Luigi Galleto and Mara Thiene. Milano, Italy:Universita di Padvoa, Dipartimento Territorio e SistemiAgro-forestali; Fondazione Cassa di Risparmio di Padovae Rovigo; FrancoAngeli, 2005.

Ten Reasons Market Power is Important for DairyFarmers by Richard Levins. Only a handful of proces-sors control most of fluid milk and cheese making in theUnited States. Dairy farmers must market milk in very largevolumes to achieve counter-vailing force in the market place.Hoard’s Dairyman, v.150, no.13, August 10, 2005.

U.S. Dry-Grind Ethanol Production: Economic Com-petitiveness in the Face of Emerging Technologiesby Vernon Eidman and Douglas Tiffany. A comparisonof published data on lignocellulosic ethanol processing withstate-of-the-art dry-mill ethanol plants in the Midwest sug-gests that lignocellulosic processing will become competi-tive with the dry-mill process when the price of corn reaches$3.00 per bushel in the production area. Further improve-ments in lignocellulosic processing that make lignocellulosic

processing more competitive, may be forthcoming withinthe coming decade. Corn prices and other factors that af-fect them will guide the adoption of this alternative to thedry-mill process. In Food, Agriculture, and the Environ-ment: Economic Issues, edited by Edi Defrancesco, LuigiGalleto and Mara Thiene. Milano, Italy: Universita diPadvoa, Dipartimento Territorio e Sistemi Agro-forestali;Fondazione Cassa di Risparmio di Padova e Rovigo;FrancoAngeli, 2005.

Utilizing Federal Crop Insurance: Coverage Alterna-tives and Marketing Strategies for Managing GrainYield and Price Risk by Gary Hachfield and RobertCraven. Producing and marketing grain in today’s agricul-tural and economic environment historically carries with itnarrow, uncertain profits as well as yield and price risk.Producers can manage and reduce these risks by utilizingrevenue-based federal crop insurance, coupled with a pre-harvest marketing plan. Understanding crop insurance al-ternatives will enable producers to accomplish this risk-management goal. University of Minnesota Extension Ser-vice, 2005. http://www.cffm.umn.edu/Pubs/federalcropinsurance2005.pdf

Welfare Trade-Offs in U.S. Rail Mergers by MarcIvaldi and Gerard McCullough. Since the publicationby Williamson (1968) of his seminal paper on antitrust, therehas been a growing recognition by regulators of the need toassess trade-offs between merger-related efficiency gainsand merger-induced increases in market power. This pa-per addresses that need by presenting a structural econo-metric model of recent mergers in the U.S. rail industry.The paper extends the structural methodology by evaluat-ing actual (as opposed to simulated) merger effects and byincorporating parametric estimates of 1986 and 2001. Wefound that despite dramatic industry consolidation, theWilliamson trade-offs have favored rail customers. In ad-dition, we found that behavior in these markets is consistentwith the Kreps-Scheinkman (1983) model of a two-stagegame, where capacities are chosen first and then prices areset to give the Cournot outcome. London, UK: Center forEconomic Policy Research, Discussion Paper 5000, 2005.

Public and Community Economics

Aspects of Small-Firm Research by Alexander Amatiand Glenn Pederson. This paper reviews the research

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literature on small firms versus large firms, in order to iden-tify what special functions small and medium enterprises(SMEs) play in the internationalization process. The pro-cess of internationalization is incremental, because SMEsmove first into neighboring countries. Thus, distance has asignificant impact on both SME export activity and foreigndirect investment. The evidence suggests that the reach ofsmall manufacturing firms is limited, but the reach of knowl-edge-intensive firms is more distant. In Food, Agriculture,and the Environment: Economic Issues, edited by EdiDefrancesco, Luigi Galleto and Mara Thiene. Milano, Italy:Universita di Padvoa, Dipartimento Territorio e SistemiAgro-forestali; Fondazione Cassa di Risparmio di Padovae Rovigo; FrancoAngeli, 2005.

The Effect of Competition on the Practice of Outpa-tient Services for Diabetes Patients at Different Lev-els of Hospitals in Taiwan by Ya-Ming Liu and JeanKinsey. This paper empirically analyzes hospital non-pricecompetition in a market characterized by a governmentaccreditation system in Taiwan. Outpatient services pro-vided to diabetes patients were used to measure the qualityof patient care in outpatient departments in three types ofhospitals. The hypothesis that an increase in the number ofhighest accredited hospitals would improve the quality ofcare in other types of hospitals was rejected. However,after carefully controlling endogeneity and measurementerror of the hospital competition index by using instrumentalvariables, empirical findings (based on the National HealthInsurance Research Database from 1997–99) show thatdifferent types of hospitals may respond to competitive pres-sure from the various levels of hospitals differently. Positivespillover effects were found from competition from regionalto district hospitals. These findings may deserve seriousconsideration when forming policy to allocate medical re-sources to different levels of hospitals. Applied Econom-ics, v.37, no.12, 2005.

Minnesota Farm Real-Estate Sales: 1990-2004 bySteven J. Taff. This publication (http://agecon.lib.umn.edu/mn/p05-07.pdf) is a snapshot of the Minnesota Farm Real-Estate Sales Web site (http://www.apec.umn.edu/faculty/sjtaff/salesstudy) as of June 2, 2005. Because the farm real-estate sales information is formally reissued every spring asnew sales data become available, the 1990–2004 sum-mary consists largely of graphs and tables summarizing sales

over the past 15 years. In addition, the 1990–2004 sum-mary provides averages at the multi-county region and atthe statewide levels of aggregation. Please note that indi-vidual transaction data are available for downloading andanalysis at the Minnesota Land Economics Web site, lo-cated at http://www.apec.umn.edu/landeconomics.

Public Acquisition of Property Rights to Serve Agri-culture/Conservation Policy: Lessons from Italy andthe U.S. by Davide Viaggi and Steven J. Taff. Thispaper focuses on public programs that purchase conserva-tion contracts (leases and easements) on agricultural land inItaly and the U.S. These contracts are strongly embeddedin the overall Common Agricultural Policy of the EuropeanUnion and in the agricultural programs of the U.S. Not allthe promised gains from these programs, however, havebeen born out in practice. The movement in both countriesis towards: 1) a decentralization of decision power to lowergovernment authorities; 2) measures designed to providemore environmental services; 3) stronger targeting, basedon locally defined environmental scores; and 4) longer-term—but not perpetual—contracts. In Food, Agricul-ture, and the Environment: Economic Issues, edited byEdi Defrancesco, Luigi Galleto and Mara Thiene. Milano,Italy: Universita di Padvoa, Dipartimento Territorio e SistemiAgro-forestali; Fondazione Cassa di Risparmio di Padovae Rovigo; FrancoAngeli, 2005.

Residential Development Impacts in Two MinnesotaRegions by Laura Kalambokidis and Bob Patton. Newhomes and new residents often bring to local governmentsboth increased tax revenues and increased government ser-vice costs. Whether the development is a contributor to, ora drain upon, the local budget, depends on thedevelopment’s “net fiscal impact”—the difference betweenthe revenues flowing from the development and the costsof providing services to new residents. This article reportson the net fiscal impact of residential development in twoMinnesota regions. The authors conclude that changing thelocation and density of new residential development withina region changes the impact of the development on localgovernments’ budgets. In addition, development that spansjurisdictions can have differing effects on the budgets ofthose jurisdictions. CURA Reporter, v.35, no.2, spring2005.

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Resource and Environmental Economics

Are Rural Residents Willing to Pay Enough to Im-prove Drinking Water Quality? by Yongsung Cho, K.William Easter, Laura McCann, and FrancesHomans. The concentrations of iron and sulfate in com-munity water supplies are a concern for a number of areasin southwestern Minnesota. This study used the contingentvaluation method to determine how much consumers wouldbe willing to pay to improve their drinking water quality. Onaverage, individuals were willing to pay US $5.25 per monthto reduce the level of iron and US $4.33 per month toreduce the level of sulfate in their water to the U.S. Envi-ronmental Protection Agency’s secondary standards fordrinking water quality. Journal of the American WaterResources Association, v.41, no.3, June 2005.

Conserving Species in a Working Landscape: LandUse with Biological and Economic Objectives byStephen Polasky, Erik Nelson, Paul Fackler, and An-thony Starfield. Habitat loss and fragmentation are majorthreats to biodiversity. Establishing formal protected areasis one means of conserving habitat, but socio-economicand political constraints limit the amount of land in suchstatus. Addressing conservation issues on lands outside offormally protected areas is also necessary. In this paper wedevelop a spatially explicit model for analyzing the conse-quences of alternative land-use patterns on the persistenceof various species and on market-oriented economic re-turns. We find that with thoughtful land-use planning, a largenumber of conservation objectives can be achieved at littlecost to the economic bottom line. Ecological Applications,v.15, no.4, 2005.

Cost Recovery and Water Pricing in Irrigation by K.William Easter, Yang Liu, and Cesare Dosi. The chapterfocuses on ways to improve the collection of water chargesand use incentives (prices and markets) to encourage wa-ter saving. The authors summarize a set of strategies thathave proven successful in different irrigation systems aroundthe world. The chapter concludes with policy recommen-dations based on successes that have been achieved in sys-tems facing different economic, political, and institutionalconditions. In Food, Agriculture, and the Environment:Economic Issues, edited by Edi Defrancesco, Luigi Galletoand Mara Thiene. Milano, Italy: Universita di Padvoa,Dipartimento Territorio e Sistemi Agro-forestali; Fondazione

Cassa di Risparmio di Padova e Rovigo; FrancoAngeli,2005.

Diversity, Productivity, and Temporal Stability in theEconomies of Humans and Nature by David Tilman,Stephen Polasky, and Clarence Lehman. Recent ad-vances in ecology are of great potential relevance to econo-mists. Here we present two ecological models of mecha-nisms of competition and coexistence, and use these toderive how the primary productivity of ecosystems, theamount of carbon dioxide removed from the atmosphereand stored by plants, the efficiency of resource use, and thespatial and temporal variability of productivity and resourceuse should depend on diversity. We then discuss the rel-evance of these results to ecosystem services and the eco-nomic value of diversity, and the functioning of any com-petitive system—including the economy. Journal of Envi-ronmental Economics and Management, v.49, no.3, May2005.

Ecosystem Goods and Services and Their Limits: TheRoles of Biological Diversity and Management Prac-tices by David Tilman and Stephen Polasky. Humansreceive vital goods and services from both managed andnatural ecosystems and have become the inadvertent ordeliberate managers of essentially all of the terrestrial eco-systems of the world. We consider the forces that influencethe flows and the stability of flows of ecosystem goods andservices, and the optimization of social welfare that couldcome from policies that maximize the net value of the flowsof these goods and services. In Scarcity and Growth Re-visited: Natural Resources and the Environment in theNew Millennium, edited by R. David Simpson, MichaelA. Toman, and Robert U. Ayres. Washington, DC: Re-sources for the Future, 2005.

Ecosystems and Human Well-Being: BiodiversitySynthesis—Report of the Millennium EcosystemAssessment by Stephen Polasky, et al. The MillenniumEcosystem Assessment was carried out to assess the con-sequences of ecosystem change for human well-being andto analyze options available to enhance the conservationand sustainable use of ecosystems. This report synthesizesand integrates findings related to biological diversity, and itscontribution to ecosystem services and human well-being.Washington, DC: World Resources Institute, 2005.

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Institutional Arrangements are Critical for EffectiveWater Markets by K. William Easter and RodneySmith. This chapter tries to determine why the use of watermarkets has not expanded more rapidly given the growingscarcity of water. They find there are two principal con-cerns that tend to limit the use of markets. One is the effectwater trading might have on regional income, and the otheris the possible environmental impacts of water trading. Theanalysis of the regional effects shows that if income flightdoesn’t occur, the region selling water to other regions isbetter off, but the service providers in the region may beworse off. In Food, Agriculture, and the Environment:Economic Issues, edited by Edi Defrancesco, Luigi Galletoand Mara Thiene. Milano, Italy: Universita di Padvoa,Dipartimento Territorio e Sistemi Agro-forestali; FondazioneCassa di Risparmio di Padova e Rovigo; FrancoAngeli,2005.

Minnesota’s Commercial Alternate Energy Indus-tries: Production, Policies, and Local Economies byBrendan Jordan and Steven J. Taff. A confluence ofeconomic and political forces is leading to renewed atten-tion to the potential for Minnesota to increase its share ofhome-grown energy. Alternative energy industries, the ar-gument goes, should receive public support because theygenerate a pattern of spending and outputs that are in somesense better than the patterns of traditional energy indus-tries. Is that true? How much potential is there, really? Andwhat would such an increase mean for the state’s economy?To properly address these questions, we need an analyticapproach that permits us to array dissimilar industries onthe same framework, making assumptions and key param-eters transparent, so that we can examine cross-industryeconomic linkages, and conduct forward-looking analysisof these industries. Our framework, at its core, is a set ofindividual energy-production-industry budgets that track thetransformation of feedstocks (such as corn, garbage, andwind) into energy, jobs, and spending. We use these bud-gets to estimate key outputs for each of the major alterna-tive energy industries in the state. Thus, our analysis focuseson two fuels (ethanol and biodiesel) and four types of alter-native electricity generating systems (wood, wind, garbage,and landfill gas). St. Peter, MN: Center for Rural Policyand Development, 2005.

Natural Resource Abundance and Economic Growthin the Two-Country World by Beatriz Gaitan andTerry Roe. We investigate the dynamics of nonrenewableresource abundance on economic growth and welfare in atwo-country world. One country is endowed with a nonre-newable resource, otherwise the countries are identical—except, possibly, for their initial endowments of capital.Unlike previous studies analyzing small open economies,we show that once interactions between research-rich andresource-less economies are considered, the effect of thenonrenewable resource on the resource-rich economy’sperformance can be positive. We derive the necessary con-dition for the nonrenewable resource to have a positiveeffect on the growth rate of the country, provided the elas-ticity of the initial price of the resource—with regard to theinitial stock of the resource—is greater than minus one. Ananalytical solution to the model confirms that this elasticity isgreater than minus one, and numerical simulations with avery large range of parameter values confirms the same.University of Minnesota, Economic Development CenterBulletin 05-1, 2005.http://agecon.lib.umn.edu/mn/edb05-01.pdf

Point-NonPoint Source Water-Quality Trading: ACase Study in the Minnesota River Basin by FengFang, K. William Easter, and Patrick Brezonik. Con-trary to the general trend of only a few actual trades occur-ring within point-nonpoint source water-quality trading pro-grams in the United States, two trading projects in the Min-nesota River Basin, created under the provisions of Na-tional Pollutant Discharge Elimination System (NPDES)permits, have generated five major trades and numeroussmaller ones. In this paper, these two projects are describedto illustrate their origins, implementation, and results. Jour-nal of the American Water Resources Association, v.41,no.3, June 2005.

Reform of Irrigation Management and InvestmentPolicy in African Development by K. William Easterand Slim Zekri. This paper examines the reform of waterand irrigation management in Africa and compares it withsimilar reforms in Asia. Several things are evident from thereview. First, Sub-Saharan Africa (SSA) is at en earlierstage of irrigation development and reform than Asia. Sec-ond, the articulated need for reform is much stronger inAsia than it is in SSA. Third, the productivity of small-scaleirrigated farms is significantly lower in SSA compared to

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Asia. Thus any irrigation investment strategy in SSA shouldbe different from Asia and focus on increasing small-farmproductivity as well as small-scale irrigation projects. Fi-nally, all direct government irrigation investments should bedone jointly with decisions regarding the type of projectmanagement. South African Journal of Economic andManagement Sciences, v.7, no.4, December 2004.

Strategies to Conserve Biodiversity by StephenPolasky. For many biologists the loss of biodiversity isperhaps the single most important environmental issue atthe beginning of the 21st century. Threats to biodiversityarise from a wide range of human actions including habitatconversion, introduction of invasive species, pollution, over-harvesting, and climate change. Conserving biodiversity willrequire reducing these threats. This chapter investigates cost-effective strategies to reduce threats to biodiversity. IN TheInternational Yearbook of Environmental and ResourceEconomics, 2005/2006: A Survey of Current Issues,edited by Henk Folmer and Tom Tietenberg. Northampton,MA: Edward Elgar, 2005.

Transaction-Cost Measurement for Evaluating En-vironmental Policies by Laura McCann, BonnieColby, K. William Easter, Alexander Kasterine, andK.V. Kuperan. Policy choice and policy design need totake account of transaction costs in order to increase theefficiency and sustainability of policies. However, transac-tion costs must first be measured to be included in the evalu-ation of alternative environmental or natural resource poli-cies. While a number of studies measure transaction costs,there has been no systematic treatment of the fundamentalissues involved. This article examines the issues involved intransaction-cost measurement and makes recommenda-tions regarding a typology of cost as well as the measure-ment methodologies themselves. In particular, methods usedfor the nonmarket valuation of environmental goods mayhave potential for measuring transaction costs. EcologicalEconomics, v.52, no.4, March 2005.

Trade and Development Economics

Agricultural Policy in an Increasingly Integrated In-ternational Economy by G. Edward Schuh. Globaliza-tion has caused national economies to become more opento forces from the international economy. That in turn causesnational economic policy to be less and less effective. This

paper discusses the reforms needed at the international,national, state, and local policy levels in light of this transfor-mational change. In Food, Agriculture, and the Environ-ment: Economic Issues, edited by Edi Defrancesco, LuigiGalleto and Mara Thiene. Milano, Italy: Universita diPadvoa, Dipartimento Territorio e Sistemi Agro-forestali;Fondazione Cassa di Risparmio di Padova e Rovigo;FrancoAngeli, 2005.

Agriculture and Economy-Wide Growth: Investiga-tion in a Ramsey Framework by Xavier Irz and TerryRoe. A two-sector Ramsey-type model of growth is de-veloped to investigate the relationship between agriculturalproductivity and economy-wide growth. In a closed-economy framework, the transitional dynamics of the modelestablish theoretically that, when preferences respect Engel’slaw, the level and growth rate of agricultural productivityinfluence the speed of capital accumulation. Further, a cali-bration exercise shows that a small difference in agriculturalproductivity has drastic implications for the rate and patternof growth of the economy. Hence, low agricultural produc-tivity can form a bottleneck limiting growth, because highfood prices result in a low saving rate. The paper also de-velops a framework to analyze the same relationship in thecase of an economy open to international trade. We estab-lish that, in the long run, openness to trade increases thesustainability as well as the growth rate of the economy—and, hence, may offer a means of bypassing the previouslymentioned bottleneck created by low agricultural produc-tivity. Invited paper prepared for the IFPRI/Cornell Con-ference on Threshold Effects and Non-Linearities in Growthand Development, Washington, DC, 2005.

Capital Accumulation and Economic Growth: TheCase of the Retail Food Industry in Developing Coun-tries by Terry Roe. Globalization has led in many devel-oping countries to adjustments that are occurring within halfthe time the same kind of adjustments occurred in U.S.agriculture. These adjustments are most obvious in the food-retail sector, with unfortunate negative consequences forthose least able to adjust. Growth in real household incomein metropolitan areas, an increase in gender equity in labormarkets, access to transportation and refrigeration (alongwith digital technology to manage the quality, variety, andflow of food), has caused rapid growth in many of the low-and middle-income countries in the market share of theretail food dollar captured by modern supermarkets such

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as WalMart. The larger commercial farmers in these coun-tries are the main contributors to this success. The smallersubsistence farmers with a relatively large family in com-parison to land holdings, cannot produce the quality ofgrains, fruits, poultry, and livestock that meet the modernmarketing requirements of supermarkets. Consequently,retail food prices in the traditional food outlets serviced bythe smaller farmers have declined. The lack of a safety net,poor land tenure arrangements, low levels of education,and the lack of cooperatives and other organization formsto better coordinate marketing activities, leave few alterna-tive opportunities to support these rural families. For them,economic growth and globalization is not the happy out-come experienced by others. In Food, Agriculture, andthe Environment: Economic Issues, edited by EdiDefrancesco, Luigi Galleto and Mara Thiene. Milano, Italy:Universita di Padvoa, Dipartimento Territorio e SistemiAgro-forestali; Fondazione Cassa di Risparmio di Padovae Rovigo; FrancoAngeli, 2005.

Economy-Wide Gains from Decentralized Water Al-location in a Spatially Heterogeneous AgriculturalEconomy by Xinshen Diao, Terry Roe, and RachidDoukkali. This paper considers the allocation of water ina spatially heterogeneous irrigated agriculture, and evalu-ates the economy-wide benefits from establishing propertyrights to water that private agents may then rent in/out toothers. A detailed economy-wide model of the Moroccaneconomy is developed, with major attention given to sevenirrigated regions whose water supplies and distribution aremanaged by seven water authorities. Environment andDevelopment Economics, v.10, part 3, June 2005.

Is War Necessary for Economic Growth? MilitaryProcurement and Technology Development by VernonRuttan. Military and defense-related procurement has beenan important source of technology development across abroad spectrum of industries that account for an importantshare of U.S. industrial production. In this book, the authorfocuses on six general-purpose technologies; 1) interchange-able parts and mass production, 2) military and commer-cial aircraft, 3) nuclear energy and electric power, 4) com-puters and semiconductors, 5) the Internet, and 6) the spaceindustries. In each of these industries, technology develop-ment would have occurred more slowly, and in some cases,much more slowly or not at all, in the absence of militaryand defense-related procurement. Oxford Press Dec. 2005.

Productivity Growth in World Agriculture: Sourcesand Constraints by Vernon Ruttan. I anticipate that inthose countries and regions in which land and labor pro-ductivity are already approaching scientific and technicalfrontiers, it will be difficult to achieve growth in agriculturalproductivity comparable to the rates that occurred over thelast half century. For those countries in which land and la-bor productiveness are furthest from the frontier levels, par-ticularly in sub-Saharan Africa, acquisition of greater scien-tific and technical capacity will open up substantial oppor-tunities to enhance the rate of growth in agricultural produc-tivity. During the next half century, I anticipate that the prob-lem of pest and pathogen control will become the mostserious constraint on sustainable growth in agricultural pro-duction. In The Economics of Sustainable Development,edited by Sisay Asefa, Kalamazoo, MI: W.E. Upjohn In-stitute for Employment Research, 2005.

Sustainability and Enclosure: Land, IntellectualProperty, and Biotechnology by C. Ford Runge andEdi Defrancesco. The global debate over intellectualproperty rights (IPR) relating to genetic information andbiotechnology, has divided developed and developingcountries. A fundamental issue undergirds thesecomplexities. Who is to be excluded from various kinds ofinformation, defining life itself? And who is to be included inthe benefits of these ideas? Insight into these issues may begained from the history and theory of property rights inland—especially the enclosure of lands held in common.After considering successful examples of commonproperty, the paper considers the modern version of thedebate over intellectual property in plant genomics. InFood, Agriculture, and the Environment: EconomicIssues, edited by Edi Defrancesco, Luigi Galleto andMara Thiene. Milano, Italy: Universita di Padvoa,Dipartimento Territorio e Sistemi Agro-forestali;Fondazione Cassa di Risparmio di Padova e Rovigo;FrancoAngeli, 2005.

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Minnesota Applied Economist

The Center for International Food and Agricultural Policy is sponsoringthe 3rd Minnesota International Economic Development Conference tobe held April 28 and 29, 2006 at the McNamara Alumni Center.

Thirty papers will be presented in ten separate sessions: transition eco-nomics, trade and growth models, fertility and marriage, discrimination andlabor markets, poverty, Vietnam, education, trade and international finan-cial flows, child labor and intrahousehold allocation, child nutrition andeducation. The guest speaker is Dani Rodrik, Professor of InternationalPolitical Economy at the Kennedy School of Government, Harvard Uni-versity. He will present, “Export Composition and Economic Develop-ment.”

Registration fee (includes 5 meals) is $20 for graduate students and $75for all others. The deadline for registration is April 7. For more informa-tion, see the conference web site at:http://www.apec.umn.edu/faculty/pglewwe/Minnconf/

Third Annual Development Conference