Subsidy Scheme Research Articles

The Value and Cost of Crop Minimum Support Price: Farmer and Consumer Welfare and Implementation Cost

In many developing countries, crop minimum support price (MSP) is a subsidy scheme to (i) improve farmer welfare by safeguarding farmers’ incomes against vagaries in crop price and (ii) improve consumer surplus by ensuring sufficient crop production. Among different mechanisms to operationalize an MSP scheme, we focus on credit-based MSPs under which the government credits farmers should the prevailing market price be below the prespecified MSP. By accounting for the implementation cost of the MSP, we examine the effectiveness of the MSP in terms of net benefit (i.e., farmer’s surplus minus the implementation cost) and net social value (i.e., sum of farmer’s and consumer’s surpluses minus the implementation cost) in a market that consists of risk-averse farmers with heterogeneous production costs. Also, farmers face two types of uncertainties: (1) market and (2) production yield uncertainty. We find that a credit-based MSP can induce crop production, which is intuitive. However, we find some more interesting results: (i) offering a higher MSP may not improve farmer’s surplus, (ii) the net benefit of an MSP can be negative—the cost of offering an MSP can exceed the farmer’s surplus, and (iii) there exists an MSP that maximizes the net social value. We extend our single-crop model to the case of two crops to capture the intercrop MSP interaction. We show that when one crop is more rewarding but riskier than the other crop, then it is sufficient to offer an appropriate MSP for one of the two crops while offering no MSP to the other crop. This paper was accepted by Vishal Gaur, operations management.

Age, industry, and unemployment risk during a pandemic lockdown

This paper models the macroeconomic and distributional consequences of lockdown shocks during the COVID-19 pandemic. The model features heterogeneous life-cycle households, labor market search and matching frictions, and multiple industries of employment. We calibrate the model to data from New Zealand, where the health effects of the pandemic were especially mild. In this context, we model lockdowns as supply shocks, ignoring the demand shocks associated with health concerns about the virus. We then study the impact of a large-scale wage subsidy scheme implemented during the lockdown. The policy prevents job losses equivalent to 6.5% of steady state employment. Moreover, we find significant heterogeneity in its impact. The subsidy saves 17.2% of jobs for workers under the age of 30, but just 2.6% of jobs for those over 50. Nevertheless, our welfare analysis of fiscal alternatives shows that the young prefer increases in unemployment transfers as this enables greater consumption smoothing across employment states.

Modelling the Impact of Energy Subsidies Reform in the Republic of Moldova

This article presents the methodology and results of modelling for the analysis on energy affordability and assessing the impact of a possible value added tax increase on the affordability of households to consume adequate levels of natural gas, electricity and heat. The analysis of the reform impact of the subsidy schemes is based on a partial equilibrium model which measures the impact of reforms on energy affordability of different householder groups and budgetary revenue and expenditure, but also on greenhouse gas emissions. Using of targeted social policies generates a budget surplus that can be allocated to energy

Geospatial Analysis and Environmental Impact Assessment of a Holistic and Interdisciplinary Approach to the Biogas Sector

Crop-based biogas energy production, in combination with electricity generation under subsidy schemes, is no longer considered a favourable business model for biogas plants. Switching to low-cost or gate fee feedstocks and utilising biogas via alternative pathways could contribute to making existing plants fit for future operations and could open up new space for further expansion of the biogas sector. The aim of this study was to combine a holistic and interdisciplinary approach for both the biogas production side and the utilisation side to evaluate the impact of integrating the biogas sector with waste management systems and energy systems operating with a high share of renewable energy sources. The geospatial availability of residue materials from agriculture, industry and municipalities was assessed using QGIS software for the case of Northern Croatia with the goal of replacing maize silage in the operation of existing biogas plants. Furthermore, the analysis included positioning new biogas plants, which would produce renewable gas. The overall approach was evaluated through life cycle assessment using SimaPro software to quantify the environmental benefits and identify the bottlenecks of the implemented actions. The results showed that the given feedstocks could replace 212 GWh of biogas from maize silage in the relevant region and create an additional 191 GWh of biomethane in new plants. The LCA revealed that the proposed measures would contribute to the decarbonisation of natural gas by creating environmental benefits that are 36 times greater compared to a business-as-usual concept. The presented approach could be of interest to stakeholders in the biogas sector anywhere in the world to encourage further integration of biogas technologies into energy and environmental transitions.

Agricultural Water Management Using Two-Stage Channels: Performance and Policy Recommendations Based on Northern European Experiences

Conventional dredging of ditches and streams to ensure agricultural drainage and flood mitigation can have severe environmental impacts. The aim of this paper is to investigate the potential benefits of an alternative, nature-based two-stage channel (TSC) design with floodplains excavated along the main channel. Through a literature survey, investigations at Finnish field sites and expert interviews, we assessed the performance, costs, and monetary environmental benefits of TSCs in comparison to conventional dredging, as well as the bottlenecks in their financing and governance. We found evidence supporting the expected longer-term functioning of drainage as well as larger plant and fish biodiversity in TSCs compared to conventional dredging. The TSC design likely improves water quality since the floodplains retain suspended sediment and phosphorus and remove nitrogen. In the investigated case, the additional value of phosphorus retention and conservation of protected species through the TSC design was 2.4 times higher than the total costs. We demonstrate how TSCs can be made eligible for the obligatory vegetated riparian buffer of the European Union agri-environmental subsidy scheme (CAP-AES) by optimising their spatial application with respect to other buffer measures, and recommend to publicly finance their additional costs compared to conventional dredging at priority sites. Further studies on biodiversity impacts and long-term performance of two-stage channels are required.

Responses to Covid-19 from Kiwi hospitallers

Responses to Covid-19 from Kiwi hospitallers

Cancer Screening Knowledge and Behavior in a Multi-Ethnic Asian Population: The Singapore Community Health Study.

BackgroundCancer has become the leading cause of mortality in Singapore and among other Asian populations worldwide. Despite the presence of National Cancer Screening programmes in Singapore, less than half of the population has had timely screening according to guidelines. The underlying factors of poor cancer screening rates and health outcomes among Asian ethnic groups remain poorly understood. We therefore examined cancer screening participation rates and screening behavior in a multi-ethnic Singapore population.MethodsWe collected data from 7,125 respondents of the 2015–2016 Singapore Community Health Study. Factors associated with cervical, breast, and colorectal cancer screening were evaluated using modified Poisson regression. Adjusted prevalence ratios were computed with 95% confidence intervals after adjusting for confounders.ResultsThe mean age of the respondents was 57.7 ± 10.9 years; 58.9% were female and were predominately Chinese (73.0%), followed by Malay (14.2%), and Indian (10.9%). Less than half of the respondents in the recommended age groups had undergone cancer screening (cervical, 43%; breast, 35.1%; colorectal, 27.3%). Malay respondents were significantly less likely to screen as recommended for cervical (aPR = 0.75, CI = 0.65–0.86, p < 0.001), breast (aPR = 0.83, CI = 0.68–0.99, p = 0.045), and colorectal cancer (aPR = 0.55, CI = 0.44–0.68, p < 0.001), as compared to Chinese respondents. Respondents who had obtained lower secondary level education were 42% more likely to screen for cervical cancer (aPR = 1.42, CI = 1.23–1.64, p < 0.001), and 22% more likely to screen for breast cancer (aPR = 1.22, CI = 1.02–1.46, p = 0.032), compared to those with primary level education and below. Respondents with a household income ≥S$10,000/month were 71% more likely to screen for breast cancer (aPR = 1.71, CI = 1.37–2.13, p < 0.001), as compared with <$2,000/month.ConclusionsEthnicity and socio-economic status were significantly associated with lower uptake of cancer screening tests in Singapore. To improve the screening uptake among disadvantaged groups, a multi-faceted approach is needed that addresses the barriers to screening such as the adequacy of subsidy schemes and ethnic differences.

Summable C factors for contemporary soil use

Crop cultivation, crop stages and the seasonal distribution of rainfall erosivity are continuously changing in response to changes in climate and socio-economic conditions. Therefore, the crop and cover factor (C factor) of the (Revised) Universal Soil Loss Equation should also be adjusted continuously. Within the framework of the (R)USLE, C factors can only be calculated for crop rotations. However, for large-scale and regional modeling of soil erosion on arable land and targeted subsidy schemes for the implementation of soil protection measures, C factors are required that quantify the effect of individual crops and management options on the risk of soil erosion. We therefore develop a method for deriving summable C factors that can easily be combined to derive C factors for crop rotations. These summable C factors also account for carry-over effects that influence the risk of soil erosion in subsequent crops. Using the latest data on the temporal distribution of rain erosivity and approximately 3.5 million observations of crop stages, summable C factors were derived for 57 crops and crop management options, including double cropping, which is currently becoming more prevalent in temperate areas. These C factors apply for Germany. However, the regional variation of summable C factors within Germany was small and comparison with Swiss data indicated that our summable C factors will also apply in neighboring countries in Central Europe. Changes in the seasonal distribution of rain erosivity and in crop development due to climate change caused some convergence of the summable C factors for different crops, i.e. the C factors for crops where the risk of soil erosion potential had previously been low increased, while for those crops where the risk of erosion had previously been high the C factors decreased. Of the arable crops, potatoes had by far the highest summable C factor, whereas sod-forming crops had negative summable C factors, leading to low C factors for crop rotations. The sod crops seem to be largely responsible for the low level of soil erosion found on many organic farms and in Switzerland, where sod crops account for a large share of arable land.

Optimal Subsidy Schemes and Budget Allocations for Government‐Subsidized Trade‐in Programs

Applications of government subsidies to speed up consumer trade‐ins of used products can be commonly observed in practice. This study investigates the design of such trade‐in subsidy programs and aims to provide implementable insights for practice. In particular, we focus on two open problems in the literature, (i) how to optimally allocate the subsidy budget among the multiple products covered by the trade‐in program, and (ii) how to most effectively utilize the assigned budget to incentivize consumer trade‐ins for each product. We develop a three‐stage Stackelberg game model that captures the essence of the interaction between the government's subsidy decision, the manufacturer's trade‐in rebate decision, and the consumer's product replacement decision. We show that a sharing subsidy scheme under which the government subsidy is proportional to the manufacturer's rebate is more effective in encouraging consumer trade‐ins than fixed‐amount subsidies. Moreover, a product with a higher environmental impact, a larger market size, a longer lifespan, or a lower value to consumers typically demands a larger subsidy budget allocation. We further use our results to derive a simple proportional budget allocation rule that can provide robust and near‐optimal performance. We illustrate our results by a case study based on the “old‐for‐new" program in China that subsidizes home appliance trade‐ins. Our results indicate that policy makers should pay attention to the correlation between government subsidies and manufacturer's rebate as well as key product and market characteristics when designing a subsidy scheme for trade‐in programs.

Environmental and economic benefit comparison between coupled grey-green infrastructure system and traditional grey one through a life cycle perspective

Green infrastructure is increasingly incorporated into the existing urban drainage system, i.e., grey infrastructure, for stormwater management in the context of rapid urbanization and climate change. Whether the coupled green–grey system can yield additional benefits requires quantification of environmental and economic performance. This study proposes a cost-combined life cycle assessment method to evaluate the environmental and economic benefits of coupled grey and green infrastructure system. Compared to traditional assessment methods, this method introduces internal (e.g., material cost, energy cost) and external (i.e., human health, ecological restoration, and pollutants emission) economic costs to conduct assessment. This research identifies key factors (i.e., categories, processes, and substances) of a coupled grey and green infrastructure system in a typical residential area in China. The coupled system is shown to generate higher environmental impacts and economic costs than grey system in the construction stage. The operation stage of coupled system can observe significant environmental and economic benefits. The payback time of related environmental impacts (except for non-carcinogens) and total economic costs is 4 years for the current case study. Noteworthy, a currently existing subsidy scheme would allow to reduce the payback time of total economic costs from 3.78 to 1.18 years. This study provides concrete evidence in support of urban stormwater management.

Circular Economy and Environmental Sustainability: A Policy Coherence Analysis of Current Italian Subsidies

Policy instruments for a circular economy and for environmental protection both aim at sustainable development, but do not necessarily share the same goals. The purpose of the paper is to assess the coherence with the EU-recognized circular economy principles of a large set of subsidies currently in force in Italy: those listed in the Italian Catalogue of Environmentally Harmful Subsidies and Environmentally Friendly Subsidies. The method is inspired by the OECD’s “Checklist” method and “Policy Coherence for Sustainable Development” approach recommended by the UN 2030 Agenda, which can be usefully applied to all policy instruments, including subsidies and green budgeting. The analysis allows one to identify as many as 56 potentially harmful subsidies for the circular economy in Italy, for a financial value of at least 13.5 billion euros in 2019, and 75 potentially friendly subsidies for the circular economy, for at least 13.0 billion euros. A total of 25% of subsidy schemes analyzed with a circular economy perspective have contradictory effects when compared to the Catalogue’s results obtained with an environmental perspective. The results of the study underline the importance of coordination between environmental and circular economy policies in achieving sustainable development goals. The analysis can be considered a “pilot study” on a national case; its method can be easily replicated by administrations also in ex-ante evaluation of new subsidy schemes.

Has the Sloping Land Conversion Program in China impacted the income and employment of rural households?

As the largest scale payment for ecosystem services program in the developing world, one of the key objectives of the Sloping Land Conversion Program (the SLCP) is to increase rural households' income and to reallocate their employments. This paper estimates the effects of the SLCP on rural households' income and employment changes using the unique panel dataset of 1001 rural households in six provinces from 1995 to 2014. Following a strict parallel trend and other econometrics tests, the Propensity score matching-Difference-in-differences (PSM-DID) estimation technique was used. Based on the unique panel dataset, this paper expands upon existing studies by estimating the effects of mid-to-long-term and subsidy scheme adjustment of the SLCP on rural households' income and employment. Our empirical results indicate that 1) the SLCP has no significant effect on rural households’ total income, while it has a negative effect on farm income. 2) The SLCP has a positive effect on forestry labor input. 3) Half reduction subsidy of the SLCP has caused different effects on rural households’ income and employment compared with that before policy adjustment. 4) The income effects of the SLCP are indifferent by income, location, demographic or resource endowment sub groups. Policy decision-makers should pay more attention to create more off-farm opportunities for rural households enrolled in the SLCP to maintain the achievements of the SLCP.

Airport subsidies and domestic inbound tourism in China

Since 2013, the Civil Aviation Administration of China (CAAC) has subsidized small and medium-sized airports. The key objective of this study is to empirically validate the benefits and impacts of airport subsidies in facilitating domestic tourism development. This study contributes to the aviation and tourism literature and offers important insights to policymakers regarding airport subsidies and tourism promotion. The empirical results show that increases in airport subsidies increased airport passenger throughput and indirectly brought more tourists to the cities where airports are located. In addition, the airport subsidy scheme has had a stronger effect in boosting domestic tourist arrivals in inland regions compared with coastal regions. This study empirically finds that the government's airport subsidy scheme for small and medium-sized airports has been effective in supporting aviation and tourism development in ethnic minority areas, poor or remote regions with inconvenient land transportation.

Rethinking the mineral fertilizer subsidy scheme to promote environmental protection in Italy

Nitrogen fertilizers are essential inputs into modern agriculture, however the use of large amounts of mineral fertilizers in Italy caused, in the last three decades, severe environmental impacts such as eutrophication of waters and soils, loss of biodiversity, and drinking water pollution including human health risks. To date, regulatory instruments, such as the Nitrate Directive applied to reduce and manage mineral fertilizers showed scarce results in terms of environmental protection. Meanwhile the EU Common Agricultural Policy (CAP) subsidy scheme continues to encourage intensive agriculture and the national fiscal policy includes VAT reduction to 4% for mineral fertilizers. The aim of this paper is to propose a reform of direct and indirect fertilizers’ subsidies considering multiple fiscal options to adjust and eliminate some harmful incentives. The elimination of direct subsides shows the ability to generate a financial effect of €252.54 million per year. As for indirect subsidies for chemical fertilizers, their fiscal remodelling by bringing back the VAT rate from 4% to 22%, has the ability to generate revenues for the state of €597.40 million. The proposed subsides reform has the capacity to generate a significant revenue for the state amounting to €849.94 million every year, which may be used for investments in organic farming and sustainable agriculture practices.

Techno-economic analysis of combined heat pump and solar PV system for multi-family houses: An Austrian case study

With the increasing amount of building renovations in Austria, the potential increases for replacing conventional national gas heating systems with heat pumps (HP) and thereby reduce CO2 emissions particularly when combined with solar photovoltaics (PV). The Austrian subsidization scheme for HP and PV systems are different for every state, creating confusion and inconstancy for potential adopters. This study provides a parametric techno-economic analysis of PV + HP systems to identify the critical economic parameters on profitability and make policy recommendations. A case study in Vienna is modelled using demand from the Building Model Generator and black box efficiency models for the HP and PV simulated with hourly time steps. The results show that both air-source and ground source heat pumps are currently profitable with PV under current subsidy schemes. The benefit-to-cost ratio (BCR) is highly influenced by capital costs and subsidies, however natural gas prices have the greatest influence. Increasing natural gas prices by 0.01 €/kWh, or 17%, is enough to replace all other complicated subsidies for both HP and PV. This is equivalent to a carbon emissions price of 33 €/ton and could result in a reduction of CO2 emissions in multi-family houses by approximately 45%–60%.

Information shocks and profitability risks for power plant investments – impacts of policy instruments

Climate change mitigation requires governmental intervention and there are various measures that can achieve this. While economists generally advocate first-best instruments, the reality is rather different, as subsidy schemes are commonly used for supporting renewable energy sources. The supporters of these schemes often argue that investment risk reduction is essential to achieving ambitious environmental targets. In this paper, we compare four different instruments (carbon cap, carbon tax, minimum renewable quota, and feed-in tariffs / renewable auctions) in terms of effectiveness, efficiency, and mitigation of investment risks. Risks are assessed assuming an uncertain investment environment, represented by different information shocks on demand, investment, and fuel cost. We employ an electricity market equilibrium model (generalized peak load pricing model) of the future German electricity market implemented as a linear optimization problem. Beginning from a long-run equilibrium, single input parameters such as demand, fuel prices, and investment costs are varied to simulate the arrival of new information. Rerunning the model with partially fixed capacities enables us to analyze the sequential adjustment of the power generation portfolio toward a new equilibrium over time. As expected, we find that quantity-based instruments are effective in ensuring the achievement of quantitative goals—notably a certain emission level. However, risks for investors are rather high in such cases. While our analyses confirm that the first-best instruments—carbon cap and carbon tax—provide the most efficient trade-off between emission reduction and cost, we also establish that investment risks are lower with price-based mechanisms. Particularly feed-in tariffs / renewable auctions provide the possibility of substantially limiting risks by diversification even when only electricity market assets are considered.

Nihil novi sub sole:The Need for Rethinking WTO and Green Subsidies in Light ofUnited States – Renewable Energy

AbstractUS–Renewable Energyis the last in a series of WTO disputes involving subsidies schemes with local content requirements. Local content requirements (LCRs) are highly discriminatory and trade distortive instruments and therefore all cases concerning green energy have been found to violate WTO law. However, recent jurisprudence has developed a different definition of prohibited LCRs under the GATT and the SCM agreement, the latter allowing for some leeway to define origin of products under a government subsidy scheme. Depending how the subsidy scheme is framed, it will be able to be excused from the GATT's more stringent prohibition of LCRs, this raises question of consistency in the application of the LCRs prohibition. Moreover, we review a simple and robust approach that modern welfare economics suggests for framing discussions of subsidy policy. We apply this approach to the case of renewable energy subsidies and discuss some complexities with respect to local content requirements. In conclusion, this allows us to critically assess and review proposals to increase coherence between WTO subsidy policy and green energy promotion policies and submit proposals to achieve better suited WTO subsidy rules.

Springtime grazing by Arctic-breeding geese reduces first- and second-harvest yields on sub-Arctic agricultural grasslands

Large population increases of Arctic-breeding waterfowls over recent decades have intensified the conflict with agricultural interests in both Eurasia and North America. In the spring-staging region Vesterålen in sub-Arctic Norway, sheep, dairy and meat farmers have reported reduced agricultural grassland yields due to pink-footed geese Anser brachyrhynchus and barnacle geese Branta leucopsis that rest and forage in the region for 3–4 weeks in spring on their way to their breeding grounds on Svalbard. Here, we report from an experimental exclosure design where goose access to plots at three grassland fields in Vesterålen was prevented. The experiment was conducted over 3 years between 2012 and 2014. Goose abundance varied greatly between fields and years as a function of variable spring weather and forage quantity, facilitating evaluation of longer-term impacts under contrasting grazing intensities. First and second harvest yields across fields and years were 20% and 19% higher in exclosures than in plots open for grazing, while total yields (sum of first and second harvests) were on average 27% higher. Within-year effects on harvest yields varied substantially, primarily due to highly contrasting sward development during the spring-staging periods. Cool weather (2012) led to slow sward development and little or no effects on harvest yields, warmer weather (2013) resulted in generally large effects, while variable weather (2014) led to treatment effects varying across fields, with one field experiencing 61% higher yields in exclosures while there were no significant impacts on first-harvest yields at the two other fields. Goose grazing did not increase dry weight-based proportions of weeds. Overall, the farmers' reports on yield-loss due to goose grazing were confirmed, although impacts varied substantially between years. A novel finding is that second-harvest yields were also reduced. For the most affected farmers, it is unlikely that the current subsidy scheme is sufficient to cover all the their losses.

The missing asymmetry in the Polish house price cycle: an analysis of the behaviour of house prices in 17 major cities

This paper investigates the house price cycle in 17 major cities in Poland, analysing separately prices of newly constructed housing and prices in the existing stock. We apply the Andre, Gupta and Mwamba (2019) framework and test the deepness and steepness of the cycles. Deepness concerns the relative magnitude of peaks and downturns, while steepness determines, how fast peaks or downturns are reached. When at least one of those measures is not symmetric, there is asymmetry in the cycle. We apply the triples test and the entropy test and find little evidence for asymmetry, mostly only in small cities. This seems to be intriguing, because usually there are asymmetries, for example slow price increases end in sudden drops. The explanation for the smooth cycle in the Polish housing market are a still not satisfied demand for housing and continuously growing wages. Banks issued mortgages only to the more affluent people, which were able to pay back the mortgage. Additionally, two housing subsidy schemes helped to keep house prices stable, when the situation in the global economy worsened, which might have led to price drops.

Leverage points for accelerating adoption of shared electric cars: Perceived benefits and environmental impact of NEVs

New Energy Vehicles (NEVs), and especially electric cars, are rapidly changing the outlook of the car industry in China, the largest vehicle market in the world. However, an adjustment in subsidy schemes and breakout of COVID-19 appear to slow down the uptake of NEVs in the Chinese market. This raises the question of whether, other less costly, policy instruments can help the transformation towards cleaner vehicles. With the understanding that public support and user acceptance play a key role, we ask whether NEVs as part of increasingly popular car-sharing mode can gain further support, the increased uptake of new energy vehicles. To investigate this question, we perform an online survey, retrieving 1583 questionnaires, and scrutinize the perception of NEVs at the nexus with car-sharing. Relying on the Theory of Planned Behavior and ordered logistic regression model, we demonstrate that attitudes towards environmental protection and perceived benefits (economic and safety) play a key role in accelerating the adoption of shared electric cars. NEVs promotion policies need to specifically target groups by regions. Municipal agencies can substantially support NEV uptake by providing on-street parking exclusively for shared NEVs in cities, and information on the economic and social benefits of NEVs in rural areas.