No More Crying About Your Stats Class and Cry1Ab: An Application of the Coefficient of Variation

Lots of times students complain that either their statistics classes used silly examples that were too simple to ever be realistic, or that their course was too complicated and thus they leave the class without the capability of  any practical application.  A recent study looking at the safety of GMO corn provides a great case study for the practical application of the coefficient of variation (CV). 

In ‘Maternal and fetal exposure to pesticides associated to genetically modified Foods in Eastern Townships of Quebec, Canada’ the authors claim to have identified the toxin Cry1Ab in the blood of pregnant women.  Cry1Ab is a protein produced by the bacteria Bacillus thuringiensis (Bt) that is toxic to certain insect pests. Cry1Ab is just one version (event) of this Bt toxin.  Bt toxins have been used extensively by organic farmers and biotechnology has enabled seed companies to develop corn plants that express Cry1Ab proteins giving them a built in defense mechanism against insects susceptible to the toxin, while preserving the biodiversity of friendly insects.  Bt genetics have also been incorporated into cotton. The economic, environmental, safety, and health benefits have made this a very popular  tool used by the majority of family farmers. 

One of the major criticisms of the article was the use of the test used to identify the Cry1Ab protein. In the article the authors state:

‘Cry1Ab protein levels were determined in blood using a commercially available double antibody sandwich(DAS)enzyme-linked immune sorbent assay.’

In previous research, the enzyme-linked immunosorbent assay or ELISA test has been shown to be one of the most unreliable tests for detecting Cry1Ab proteins.  Recall, the CV is relative measure of variation measuring the standard deviation relative to the mean.   It can be used as a metric for risk and reliability (such a consistent yield performance or stock returns).  In the article ‘Comparison and Validation of Methods To Quantify Cry1Ab Toxin from Bacillus thuringiensis for Standardization of Insect Bioassays’ the authors investigate procedures commonly used to identify Cry1Ab.  The authors explain:

“We compared three methods of quantification on three different toxin preparations from independent sources: enzyme-linked immunosorbent assay (ELISA), sodium dodecyl sulfate-polyacrylamide gel electrophoresis and densitometry (SDS-PAGE/densitometry), and the Bradford assay for total protein....The Bradford method resulted in statistically higher estimates than either ELISA or SDSPAGE/ densitometry but also provided the lowest coefficients of variation (CVs) for estimates of the Cry1Ab concentration (from 2.4 to 5.4%). The CV of estimates obtained by ELISA ranged from 12.8 to 26.5%, whereas  the CV of estimates obtained by SDS-PAGE/densitometry ranged from 0.2 to 15.4%....we conclude that standardization of Cry1Ab production and quantification by SDS-PAGE/densitometry may improve data consistency.”

If we look at their reported statistics, we can see for ourselves just how high the CV is on the ELISA test (and therefore how unreliable it is as a method for quantifying Cry1Ab)  compared to other proven methods of quantification.

 

So there you have it. A practical example of an application of a very basic statistic, the coefficient of variation.

References:

Maternal and fetal exposure to pesticides associated to genetically modified foods in Eastern Townships of Quebec, Canada. Reprod Toxicol. 2011 May;31(4):528-33. Epub 2011 Feb 18.

Aris A, Leblanc S.

Comparison and Validation of Methods To Quantify Cry1Ab Toxin from Bacillus thuringiensis for Standardization of Insect Bioassays. Andre´ L. B. Crespo,1 Terence A. Spencer,1 Emily Nekl,2 Marianne Pusztai-Carey,3 William J. Moar,4 and Blair D. Siegfried1* APPLIED AND ENVIRONMENTAL MICROBIOLOGY, Jan. 2008, p. 130–135 Vol. 74, No. 1

A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates. Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva Science 8 June 2007: Vol. 316. no. 5830, pp. 1475 – 1477

Comparison of Fumonisin Concentrations in Kernels of Transgenic Bt Maize Hybrids and Nontransgenic Hybrids. Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.

Indirect Reduction of Ear Molds and Associated Mycotoxins in Bacillus thuringiensis Corn Under Controlled and Open Field Conditions: Utility and Limitations. Dowd, J. Economic Entomology. 93 1669-1679 2000.

Impact of Bt cotton on pesticide poisoning in smallholder agriculture: A panel data analysis. Shahzad Kouser, Matin Qaim. Ecological Economics

Volume 70, Issue 11, 15 September 2011, Pages 2105–2113

Communal Benefits of Transgenic Corn. Bruce E. Tabashnik  Science 8 October 2010:Vol. 330. no. 6001, pp. 189 - 190DOI: 10.1126/science.1196864

Rent Seeking and Biotechnology

"Yet today we have only a handful of genetically modified crops, primarily soybeans, corn, canola and cotton. All are commodity crops mainly used for feed or fiber and all were developed by big biotech companies. Only big companies can muster the money necessary to navigate the regulatory thicket woven by the government's three oversight agencies: the E.P.A., the Department of Agriculture and the Food and Drug Administration."

http://www.nytimes.com/2011/08/19/opinion/genetically-engineered-food-for-all.html?_r=3

AgBiotech combating climate change « The Berkeley Blog

http://blogs.berkeley.edu/2011/08/14/agbiotech-and-combating-climate-change/

Some teasers:

"GMOs in the US and in other countries, reduce significantly the use of rather toxic pesticide chemicals and there is evidence that they actually save significant amount of lives in India and China. "

"It is easy to show that if restrictions on the adoption of GMOs would have been removed and adoption rates of GM varieties in Europe would have been similar to the observed patterns of adoption, then much of the recent increase in commodity food prices would have been diminished. Introduction of GM varieties to wheat and rice would have further reduced commodity prices whereby helping the poor and would have released resources for other uses."

"The land use saving effect of GM varieties is estimated to have the equivalent effect of taking between 800,000-9 million passenger cars off of the road....The use of herbicide-tolerant varieties enable large scale adoption of low-tillage practices that sequester carbon and greenhouse gas sequestering effect is estimated to be equal to that of taking 6.4 million cars off the road."

"The heavy regulation of GMOs are unsound not only because of the loss of benefits from existing varieties, but because of the loss of potential benefits from newer applications of GMOs"

ScienceDirect - Ecological Economics : Impact of Bt cotton on pesticide poisoning in

http://www.sciencedirect.com/science/article/pii/S0921800911002400

A case of the internalization of negative externalities via technological change and market forces w/o taxes or  new regulations. 

Abstract

While substantial research on the productivity and profit effects of Bt cotton has been carried out recently, the economic evaluation of positive and negative externalities has received much less attention. Here, we focus on farmer health impacts resulting from Bt-related changes in chemical pesticide use. Previous studies have documented that Bt cotton has reduced the problem of pesticide poisoning in developing countries, but they have failed to account for unobserved heterogeneity between technology adopters and non-adopters. We use unique panel survey data from India to estimate unbiased effects and their developments over time. Bt cotton has reduced pesticide applications by 50%, with the largest reductions of 70% occurring in the most toxic types of chemicals. Results of fixed-effects Poisson models confirm that Bt has notably reduced the incidence of acute pesticide poisoning among cotton growers. These effects have become more pronounced with increasing technology adoption rates. Bt cotton now helps to avoid several million cases of pesticide poisoning in India every year, which also entails sizeable health cost savings.

Jude Capper on Sustainable Beef

From a recent interview with food sustainability expert Dr. Jude Capper:

What is the environmental impact of beef grown on grass compared to conventional beef?

Dr. Capper – "Cows grow more slowly when grass is all they eat. If all of the beef in the U.S. were grass-fed we would need an additional 64.6 million cows in order to match the amount of beef produced in 2010. That would require an additional 131 million acres of land, which is about 75% of the state of Texas. That many cows would need an additional 1,700-billion liters of water, which amounts to the annual consumption of 46.3-million U.S. households. These cows would generate an additional 135 million tons of carbon which would be like adding 26.6 million cars to the road every year. So, in terms of land, energy, water, and carbon, grass-fed beef has a much larger environmental impact than conventional beef production."

Is it more natural for a cow to eat grass instead of corn?

Dr. Capper – "Cows probably did not eat corn 500 years ago. But does it matter if it's natural as long as it improves environmental impact, food safety, and beef affordability?  Almost nothing we do today is 'natural' compared to 500 years ago. We have cars and airplanes. We have treatments for cancer and heart disease. Why is it that in every other business sector we celebrate increased efficiency and productivity thanks to new technology while when it comes to food some want it done the old-fashioned way?"

Read the entire interview:

http://www.bestfoodfacts.org/main/food_for_thought/0/30

Do we get more energy out of ethanol than it takes to make it?

"Overall then, ethanol has made the transition from an energy sink, to a moderate net energy gain
in the 1990s, to a substantial net energy gain in the present."

2008 Energy Balance for the Corn-Ethanol Industry. USDA

Has genetically modified Bt corn had a negative impact on Monarch butterflies?

"There is no significant risk to monarch butterflies from environmental exposure to Bt corn, according to research conducted by a group of scientists coordinated by the Agricultural Research Service (ARS), U.S. Department of Agriculture. This research was published in the Proceedings of the National Academy of Sciences (PNAS)."  Link References: Proceedings of the National Academy of Sciences:   Monarch larvae sensitivity to Bacillus thuringiensis-purified proteins and pollen. Richard L. Hellmich, Corn Insects and Crop Genetics Unit, Agricultural Research Service-U.S. Department of Agriculture, Ames, Iowa; (515) 294-9343, fax (515) 294-2268, e-mail rlhellmi@iastate.edu. http://www.pnas.org/cgi/content/full/211297698v1 Impact of Bt corn pollen on monarch butterfly populations: A risk assessment. Mark K. Sears, Department of Environmental Biology, University of Guelph, Ontario, Canada; (519) 824-4120 ext. 3921, fax (519) 837-0442, e-mail msears@evb.uoguelph.ca. http://www.pnas.org/cgi/content/full/211329998v1 Corn pollen deposition on milkweeds in and near cornfields. John M. Pleasants, Department of Zoology and Genetics, Iowa State University, Ames; (515) 294-7204, fax (515) 294-8457, e-mail jpleasan@iastate.edu. http://www.pnas.org/cgi/content/full/211287498v1 Assessing the impact of Cry1Ab-expressing corn pollen on monarch butterfly larvae in field studies. Diane E. Stanley-Horn, Department of Environmental Biology, University of Guelph, Ontario, Canada; (519) 824-4120 ext. 4847, fax (519) 837-0442, e-mail destanle@uoguelph.ca. http://www.pnas.org/cgi/content/full/211277798v1 Temporal and spatial overlap between monarch larvae and corn pollen. Karen S. Oberhauser; Department of Ecology, Evolution and Behavior, University of Minnesota, St. Paul, Minnesota (612) 624-8706, fax (612) 624-6777, e-mail oberh001@tc.umn.edu. http://www.pnas.org/cgi/content/full/211234298v1 Effects of exposure to event 176 Bacillus thuringiensis corn pollen on monarch and black swallowtail caterpillars under field conditions. M. R. Berenbaum, Department of Entomology, University of Illinois at Urbana-Champaign, Urbana, Illionois; (217) 333-7784, fax (217) 244-3499, e-mail maybe@uiuc.edu. http://www.pnas.org/cgi/content/full/171315698v1

Ten Facts Related to the Economics of Modern Food Production

Dairy & Livestock Production

#1 The carbon footprint for a gallon of milk produced in 2007 was only 37 percent of that produced in 1944. For every 1 million cows, the reduction in global warming potential from rBST supplemented cows is equivalent to removing 400K cars from the roadways or planting 300 million trees. (Capper, 2009)

#2 Transportation accounts for at least 26% of total anthropogenic GHG emissions compared to roughly 5.8% for all of agriculture & less than 3% associated with livestock production in the U.S. (Stackhouse, 2009)

#3 The use of grain and pharmaceutical technology in beef production has resulted in a nearly 40 percent reduction in greenhouse gases (GHGs) per pound of beef compared to grass feeding. (Avery, 2007)

#4 Bans on feed grade sub- therapeutic antibiotics in European countries lead to increased reliance on therapeutic antibiotics important to human health. (Hayes & Jensen, 2003)

Crop Production

#5 Biotechnology improves insect biodiversity, crop plant diversity, and has lower levels of carcinogens than conventional and organic corn. (Munkvold,1999;Dowd,2000; Miller &Conko,2006 ; McCreedy et al 2007, Smith et al ,1992)

#6 The use of biotech Roundup resistant crops has led to reduced herbicide use and allowed roundup to replace other herbicides that were up to 17 times more toxic. (USDA,2000)

#7 Total decreases in carbon dioxide as a result of using biotech crops was equivalent to removing 6 million cars from the road in 2007. (that’s a lot more than the # of hybrid cars sold in 2007) (Brookes & Barfoot, 2009)

Modern Agriculture in General

#8 Rather than having a negative impact on climate change, intensive agriculture has actually has a mitigating effect on climate change with a reduction of 68 kgC (249 kgCO2e) emissions relative to 1961 technology. ( Burneya et al , 2010)

#9 Small farms actually benefit more from subsidy programs than large scale farms, despite the relative shares of total subsidies paid. The impacts of subsidies on food choices have not contributed to the obesity epidemic.  (Alston et al, 2007; USDA, 2011)

#10 Local food production can actually be more energy intensive than modern efficient supply chains. On average, fuel use per cwt for local food production is about 2.18 gallons vs. .69 and 1.92 for intermediate and traditional supply chains for beef production. (Sexton, 2009; Weber,2008)

References:

The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science,Capper, J. L., Cady, R. A., Bauman, D. E. 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781

San Diego Center for Molecular Agriculture: Foods from Genetically Modified Crops

A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates. Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva Science 8 June 2007: Vol. 316. no. 5830, pp. 1475 – 1477

Comparison of Fumonisin Concentrations in Kernels of Transgenic Bt Maize Hybrids and Nontransgenic Hybrids. Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.

Indirect Reduction of Ear Molds and Associated Mycotoxins in Bacillus thuringiensis Corn Under Controlled and Open Field Conditions: Utility and Limitations. Dowd, J. Economic Entomology. 93 1669-1679 2000.

"Why Spurning Biotech Food Has Become a Liability.'' Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.

Genetically Engineered Crops: Has Adoption Reduced Pesticide Use? Agricultural Outlook ERS/USDA Aug 2000

GM crops: global socio-economic and environmental impacts 1996- 2007. Brookes & Barfoot PG Economics report. 2009

The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production. By Alex Avery and Dennis Avery, Hudson Institute, Centre for Global Food Issues. 2007

Lessons from the Danish Ban on Feed Grade Antibiotics. Dermot J. Hayes and Helen H. Jenson. Choices 3Q. 2003. American Agricultural Economics Association.

Does Local Production Improve Environmental and Health Outcomes. Steven Sexton. Agricultural and Resource Economics Update, Vol 13 No 2 Nov/Dec 2009. University of California.

Environ. Sci. Technol. 2008, 42, 3508–3513. Weber.


Communal Benefits of Transgenic Corn. Bruce E. Tabashnik Science 8 October 2010:Vol. 330. no. 6001, pp. 189 - 190DOI: 10.1126/science.1196864

Farm Subsidies and Obesity in the United States. Julian M. Alston, Daniel A. Sumner, and Stephen A. Vosti. Agricultural Resource Economics Update V. 11 no. Nov/Dec 007 U.C. Davis

Greenhouse gas mitigation by agricultural intensification Jennifer A. Burneya,Steven J. Davisc, and David B. Lobella.PNAS June 29, 2010 vol. 107 no. 26 12052-12057

Clearing the Air: Livestock's Contribution to Climate ChangeMaurice E. Pitesky*, Kimberly R. Stackhouse† and Frank M. MitloehnerAdvances in Agronomy Volume 103, 2009, Pages 1-40

Comparing the Structure, Size, and Performance of Local and Mainstream FoodSupply ChainsRobert P. King, Michael S. Hand, Gigi DiGiacomo,Kate Clancy, Miguel I. Gómez, Shermain D. Hardesty,Larry Lev, and Edward W. McLaughlin Economic Research Report Number 99 June 2010

The environmental impact of recombinant bovine somatotropin (rbST) use in dairy production Judith L. Capper,* Euridice Castañeda-Gutiérrez,*† Roger A. Cady,‡ and Dale E. Bauman* Proc Natl Acad Sci U S A. 2008 July 15; 105(28): 9668–9673

''Diversity of United States Hybrid Maize Germplasm as Revealed by Restriction Fragment Length Polymorphisms.'' Smith, J.S.C.; Smith, O.S.; Wright, S.; Wall, S.J.; and Walton, M. (1992) Crop Science 32: 598–604

USDA Report- Government Payments and the Farm Sector: Who Benefits and How Much?

http://www.ers.usda.gov/Briefing/FarmPolicy/gov-pay.htm (accessed  May 2011)

USDA Report-Farm Income and Costs: Farms Receiving Government Payments

http://www.ers.usda.gov/Briefing/FarmIncome/govtpaybyfarmtype.htm  (accessed  May 2011)

Have Ethanol Subsidies Impacted Food Prices?

"Using the 2004 corn price of $2.06 per bushel as a reference, actual corn prices increased by an average of $1.65 per bushel from 2006 to 2009. Only 14 cents (8%) of this increase was due to ethanol subsidies. Another 45 cents of the increase was due to market-based expansion of the corn ethanol industry. Together, expansion of corn ethanol from subsidies and market forces accounted for 36% of the average increase that we saw in corn prices from 2006 to 2009. All other market factors accounted for 64% of the corn price increase."  Read more here.

The Impact of Ethanol and Ethanol Subsidies on Corn Prices: Revisiting History
by Bruce A. Babcock and Jacinto F. Fabiosa. Center for Agricultural and Rural Development. Iowa State University.

Energy Use and GHG Emissions Associated with Local Food

The Economics of Local Food

”It is a maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” - The Wealth of Nations

This is tied to the concept of comparative advantage and gains from specialization and trade, which lead to an increase in the size of the ‘economic pie’ which can be used to make everyone better off. Modern food supply chains, made possible by companies such as Cargill, ADM, and retailers like Wal-Mart, have helped to reduce our impact on the environment.

The Inefficiency of Local Food
 Steve Sexton
11/14/2011

http://www.freakonomics.com/2011/11/14/the-inefficiency-of-local-food/

Forsaking comparative advantage in agriculture by localizing means it will take more inputs to grow a given quantity of food, including more land and more chemicals—all of which come at a cost of carbon emissions.....In order to maintain current output levels for 40 major field crops and vegetables, a locavore-like production system would require an additional 60 million acres of cropland, 2.7 million tons more fertilizer, and 50 million pounds more chemicals. The land-use changes and increases in demand for carbon-intensive inputs would have profound impacts on the carbon footprint of our food, destroy habitat and worsen environmental pollution.

It’s not even clear local production reduces carbon emissions from transportation. The Harvard economist Ed Glaeser estimates that carbon emissions from transportation don’t decline in a locavore future because local farms reduce population density as potential homes are displaced by community gardens. Less-dense cities mean more driving and more carbon emissions. Transportation only accounts for 11 percent of the carbon embodied in food anyway, according to a 2008 study by researchers at Carnegie Mellon; 83 percent comes from production. 

The locavore’s dilemma 
Urban farms do more harm than good to the environment
Edward L. Glaeser
http://articles.boston.com/2011-06-16/bostonglobe/29666344_1_greenhouse-gas-carbon-emissions-local-food/2
Berkeley graduate student Steven Sexton estimates that an American switch to more local corn production would require 35 percent more fertilizer and 22.8 percent more energy....But the most important environmental cost of metropolitan agriculture is that lower density levels mean more driving. Today, about 250 million Americans live on the 60 million acres of this country that are urban — which is about four people per acre....If halving densities also doubled distance to the metropolitan area center, this would add an extra 44 gallons of gas annually. Together, the increased gas consumption from moving less than a tenth of agricultural farmland into metropolitan areas would generate an extra 1.77 tons of carbon dioxide per year, which is 1.77 times the greenhouse gases produced by all food transportation and almost four and a half times the carbon emissions associated with food delivery.

Food miles, Kowalski's and that steak on your plate
MPR News

"That steak you bought at the farmers' market from the family operation down the road might have taken more fuel to get to you than the rib-eye from a steer slaughtered in Kansas."

Read the article here.

The actual research is here.

Comparing the Structure, Size, and Performance of Local and Mainstream Food
Supply Chains

USDA Economic
Research
Report
Number 99
June 2010

"Transportation fuel use is more closely related to supply chain structure and size than to the distance food products travel. Products in local supply chains travel fewer miles from farms to consumers, but fuel use per unit of product in local chains can be greater than in the corresponding mainstream chains. In these cases, greater fuel efficiency per unit of product is achieved with larger loads and logistical efficiencies that outweigh longer distances."


From Marginal Revolution: Food Miles

"How far your food travels matters a lot less than what kind of food it is, or how it was produced. According to a recent study out of Carnegie Mellon University, the distance traveled by the average American’s dinner rose about 25 percent from 1997 to 2004, due to increasing global trade. But carbon emissions from food transport saw only a 5 percent bump, thanks to the efficiencies of vast cargo container ships. Should we minimize our “music miles” and boycott bands on tour?"

Eating Local and Climate Change link from National Geographic ("Eating Local" Has Little Effect on Warming, Study Says. Mason Inman  National Geographic News April 22, 2008)

"Being a "locavore" and eating foods grown near where you live may not help the environment as much as you might think, according a new study.When it comes to global warming, focusing simply on where food comes from will make only a small difference, the study's authors say."

Cited research: Environ. Sci. Technol. 2008, 42, 3508–3513

See also this entry from the EconLog blog:

 The Locavore's Dilemma: Why Pineapples Shouldn't Be Grown in North Dakota

In this post four arguments related to local food are discussed:
1: Buying Local Foods is Good for the Local Economy
2: Buying Local Foods Is Good for the Environment
3: Local is Fresher and Tastier
4: Local Food is Healthier and Should be Served in School

The authors conclude:

"Economists are a diverse bunch, but we have a few core principles, two of which are that there is a balance of payments and that there are gains from trade. These universal principles are as timeless as the law of gravity. If politicians and activists proposed to suspend belief in gravity, physicists would not cower. They would resolutely defend reality. So should we."

Also, find this Cato book forum with Pierre Desrochers (also a Mercatus Institute Fellow), co-author of The Locavore’s Dilemma: In Praise of the 10,000-Mile Diet.

Paper finds no empirical link between biofuels, land use changes

"An empirical approach is used to detect evidence for iLUC that might be catalyzed by United States biofuel production through a “bottom-up”, data-driven, statistical approach. Results show that biofuel production in the United States from 2002 to 2007 is not significantly correlated with changes in croplands for corn (coarse grain) plus soybean in regions of the world which are corn (coarse grain) and soybean trading partners of the United States. "


Reference:

“Indirect Land Use Change for Biofuels: Testing Predictions and Improving Analytical Methodologies” Biomass and Bioenergy.  Seungdo Kim and Bruce Dale. Michigan State University.

The Coase Theorem

Traditionally when it comes to enviromental pollution, the general philosophy was that ‘the polluter pays’. A factory polluting the air or water should pay for the damages that are caused. In a much simpler case, if you build a house next to me and you don’t like the smell of livestock waste coming from my property, the traditional philosphy would hold that you could have the government stop my operation.

The insight that Coase brought was 1) yes it is true that my operation is harming you via air pollution. 2) however, in stopping me via government or legal intervention ( or taxing my waste production) you are harming me.

Coase says that the issue is that nonone owns the air that sourrounds my livestock operation and your home. There then follows a dispute over how the air should be used- to absorb livestock odor, or to provide a scent free atmosphere in your back yard. Whenever the cost of one’s behavior is not factored into a price at which a choice can be valued, I can harm you without compensating you for it. ( i.e. an externality exists)

However, if I own rights to the air, then I can choose to pollute the air. If you own rights to the air, then you can prevent me from polluting it. If noone owns the air, then it is first come first served or winner takes all.

That is not the end of the story though. What Coase emphasizes is that if I own the rights to pollute, you can pay me to limit my pollution i.e. buy those rights from me. I can then use the proceeds to alter my livestock nutrition, genetics, and management to reduce the odor my operation is causing. On the other hand, if you own the rights to pollute I can purchase those rights from you, or invest in technology that will allow me to continue my operation without violating your rights. I will do which ever is most optimal. This can be accomplished without major goevernemnt regulation, or the arbitrary imposition of a tax.

The assignment of property rights and the potential for bargaining results in behavior that is changed or altered to account for the negative impact our choices have on others. This is the essence of what is known as the ‘Coase Theorem”

The Tragedy of the Commons

http://www.prism-magazine.org/apr07/tt_01.cfm

“People like the freedom to choose their lifestyles, what they consume and when they consume it,” observes Attari. “However, the environment is a ‘commons’ that we share with other citizens of the world, and when individual choices start negatively impacting others, we need to understand how to change or alter those behaviors.”

The phrase ‘tragedy of the commons’ was first used by Garret Hardin in a 1968 issue of Science.

To illustrate, in the case of cattle grazing on public land, it is in the interest of the cattle owner to place as many cattle as possible on the land. Of course too many cattle will result in erosion and deterioration in forage quality, but this cost is shared among all grazers. The grazer does not bear the full cost of grazing an additional animal, but receives the full benefit. Each grazer acting in his own interest results in the degradation of the ‘commons’ for everyone.

Whenever the cost of one’s behavior is not factored into a price at which a choice can be valued, a commons problem exists. This is in essence what we get from Hardin ( ‘The Tragedy of the Commons’) after applying a little basic economics to his reasoning.

However, according to Coase (‘The Problem of Social Cost’) with the establishment of property rights and markets (bargaining) the externality of the commons can be internalized. Behavior is changed or altered to account for the negative impact our choices impose on others. Demsetz (Towards a Theory of Property Rights) goes on to say that property rights often evolve as a means to internalize externalities. Sometimes given the current state of technology, the costs of developing property rights and markets are greater than the benefits that would arise. However, with technological development, these cost structures change and new options become available. Today we can see how technology has allowed for many externalities (or commons problems) in agriculture to be internalized with examples such as biotechnology and GPS. The article linked above focuses on how engineering can contribute to this end.

Many of the ‘commons’ problems that Hardin cites in his article such as polluting the commons with insecticides and fertilizer have much been mitigated with modern technology and markets. See also - articles labeled 'coase theorem.'

REFERENCES:

Towards a Theory of Property Rights.
Harold Demsetz
The American Economic Review. Volume 57, Issue 2. May, 1967

The Problem of Social Cost
R. H. Coase
Journal of Law and Economics, Vol. 3, Oct., 1960 (Oct., 1960), pp. 1-44

The Tragedy of the Commons
Garret Hardin
Science, Vol 162 no 3859 Dec 13, 1968 p. 1243-1248

The Economics of Welfare
Arthur C. Pigou Macmillan and Co. London, Fourth edition, 1932. First published: 1920.
http://www.econlib.org/Library/NPDBooks/Pigou/pgEW.html

A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates
Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva
Science 8 June 2007:Vol. 316. no. 5830, pp. 1475 - 1477

Biotech Alfalfa: Who May Harm Who- An application of the Coase Theorem

From Drovers/Cattle Network "Using Property Rights Is A Trick Against Biotech Crops"

"Some politicians wrap themselves in the flag to justify their positions, and then there is Secretary of Agriculture Tom Vilsack appealing to farmers and ranchers' belief in "private property rights" to justify limiting biotech crop production"

Great article with a lot of great points. For the sake of this discussion, lets view biotech contamination of organic crops as 'pollution.' (despite the evidence that the risks are slight)

Traditionally when it comes to environmental pollution, the general philosophy was that 'the polluter pays'. A factory polluting the air or water should pay for the damages that are caused. In a much simpler case, if you build a house next to me and you don't like the smell of livestock waste coming from my property, the traditional philosophy would hold that you could have the government stop my operation. (or in this case, the biotech alfalfa grower pays for genetic contamination of organic alfalfa)

The economist Ronald Coase brought additional insight to this issue. 

1) yes it is true that my operation is harming you via air pollution. (odor)
2) however, in stopping me via government or legal intervention ( or taxing my waste production) you are harming me.

Coase says that the issue is that nonone owns the air that surrounds my livestock operation and your home. There then follows a dispute over how the air should be used- to absorb livestock odor, or to provide a scent free atmosphere in your back yard. Whenever the cost of one's behavior is not factored into a price at which a choice can be valued, I can harm you without compensating you for it. ( i.e. an externality exists)

However, if I own rights to the air, then I can choose to pollute the air. If you own rights to the air, then you can prevent me from polluting it. If noone owns the air, then it is first come first served or winner takes all.

That is not the end of the story though. What Coase emphasizes is that if I own the rights to pollute, you can pay me to limit my pollution i.e. buy those rights from me. I can then use the proceeds to alter my livestock nutrition, genetics, and management to reduce the odor my operation is causing. On the other hand, if you own the rights to pollute I can purchase those rights from you, or invest in technology that will allow me to continue my operation without violating your rights. I will do which ever is most optimal. This can be accomplished without major government regulation, or the arbitrary imposition of a tax.

The assignment of property rights and the potential for bargaining results in behavior that is changed or altered to account for the negative impact our choices have on others. This is the essence of what is known as the 'Coase Theorem"

However, if transaction costs are high, then bargaining may not take place. In that case, Coase emphasizes that any assignmnet of property rights should be based on which party can bear the externality at the lowest cost. Transaction costs can change based on changes in technology, which can also change how we define property rights. (for example, the technology that allows us to monitor CO2 emissions is what makes the concept of cap and trade possible).

How might this apply in the context of biotech alfalfa?  According to the Coase Theorem, it shouldn't matter who is assigned the rights in this case (giving the biotech producer the right to pollute, or giving the organic producer the right to stop neighbors from planting biotech). Both parties could bargain ahead of time to determine the optimal mix of biotech/organic production. Transaction costs should not be any higher than any normal land rental agreement.  Alternatively, one producer or the other could purchase insurance that would pay an indemnity in the event of contamination. (who would have to pay the premiums would depend on who has the right to pollute etc.) However, monitoring and enforcement costs could be high in terms of determining genetic contamination.

Another option would be a regulatory approach, limiting planting options for biotech producers.  This is what the Drovers article is critical of Tom Vilsack for. You could say it is enforcing property rights, but  only in a very arbitrary way, and unnecessary.

The agriculture industry offers some of the greatest examples of how technological advances and market forces lead to self correcting or internalization of externalities.  The adoption of biotechnology has led to reduced groundwater pollution, increased biodiversity, and reduced greenhouse gas emissions. All of which has occured in absence of taxes or government regulations. In the case of biotech alfalfa, a technological advancement that would trump legal or regulatory remedies would be use of 'terminator' gene technology.  Of course, that takes the power and prestige away from regulators, and empowers  property owners and market forces. In any case, what the Coase Theorem tells us is that there is no case for arbitrarily giving organic growers a trump card over those that want to use biotech alfalfa. The principle of polluter pays is not always optimal.

The Impact of Farm Subsidies on the Federal Budget and Small Farms

"This is good news. Agricultural subsidies cost taxpayers more than $15 billion each year, and until those subsidies are eliminated, farming in America will never be sustainable." - Baltimore Sun, May 18, 2011.

I've seen similar numbers reported recently in the New York Times as well. Bear in mind, $15 billion sounds like a lot, but it amounts to less than 1/2 of 1% of total federal spending. The data also show that small farms depend more heavily on subsidies than larger farms (often misunderstood  as 'big agribusiness' or 'industrial farms' ). Eliminating subsidies then, if anything would lead to more concentration in the industry and larger farms. 

So in terms of financial sustainability, then yes the article would be correct on that point, as the smaller, less financially sustainable farms may go away. But what about environmental sustainability? 

The argument that eliminating subsidies will make agriculture more environmentally sustainable is tantamount to arguing that eliminating smaller farms will make agriculture more sustainable (which seems to be the opposite of what many anti-subsidy  advocates want or think is sustainable)

Many of the green technologies (herbicide and pest resistant GMO crops, pharmaceuticals) used by modern farmers dwarf the impact of other consumer green technologies like hybrid cars. Many of these are 'scale neutral' (for instance, the single largest growing demographic among GMO adoption is small farmers in developing countries) so eliminating small farms that use these technologies won't help with sustainability, given they have adopted these technologies. Other green technologies in agriculture include GPS and auto steer technology. Larger scale production is likely necessary to get the most (financially and environmentally) from these technologies. 

Among those most lagging in green technology adoption are organic producers, which have zero tolerance for GMOs, (although fully embracing more volatile methods utilizing nuclear radiation to breed better plants)

However, even as the market for these products is greatly expanding, it makes up a very small proportion of the food we consume (largely supplementals like fruits and vegetables vs. the staple commodities that feed the world) making organic largely irrelevant to the overall conversation about sustainability in agriculture and subsidies. I'm not sure why the article even goes down this path.

Some are arguing for a compromise, capping subsidies based on income level. That may be a way to preserve smaller farms, but doesn't really make much difference in terms of government spending and likely won't matter much in terms of sustainability without knowing more about green technology adoption rates and productivity of smaller farms.  Many of the arguments  for ending farm subsidies based on spending, sustainability, nutrition etc. lack empirical support. Ultimately the argument about farm subsidies comes down to your view on the role of government.

As far as  the article's comments on farming like our great grandparents, I'm not sure 26 bushels an acre, no matter what the method, is going to cut it these days. 

Economics, Sustainability, & Statistics

To be sustainable is in essence to use resources in a way that is compatible with the needs of future generations as well as meeting the needs of today. Economics is the study of people's choices and how they can be made compatible. As such, economics provides the perfect analytical framework for studying the sustainable use of resources. My primary interest in graduate school focused on the economic and environmental impacts of biotechnology.

In this section of the blog (Under the heading Economics and Sustainability) I plan to share links to research and current events as they relate to economics, statistics, and sustainability. For more information on economics and sustainability see the links below, or any of my posts with the label 'sustainability.'


Pamela Ronald (Sustainability Lectures)  

Pamela Ronald (labels and GMO foods)

The Invisible Green Hand - George Mason University

Got (green) Milk? Mitigating Climate Change with rbST

Farm Subsidies and Sustainability: Corrections for the Environmental Working Group

Do Subsidies Benefit the Largest Farms the Most? 

The Impact of Ethanol Subsidies on Corn Prices


Global Warming- Forecasts by Scientists vs. Scientific Forecasts

Modern Sustainable Agriculture (video)

Office Sustainability Committee (video)

more....

Do Farm Subsidies Benefit the Largest Farms the Most?

Most people contend that farm subsidies should be eliminated because they benefit mostly larger farms vs. saving the family farm. It's true that many subsidies are tied to commodity production. As a result, those that grow more commodities (i.e. larger farms) will get more money from the government. As a result larger producers take in a larger share of all subsidies (especially those related to commodities). However, subsidies account for a much smaller percentage of income for large producers, and make up a much larger percentage of total income for medium or small producers.

                                                  Definitions:        Commercial farms:  >=  $250,000
                                                                             Farms with sales < $250,000 include
                                                                                 1) Intermediate farms: full time operators
                                                                                 2) Rural residence farms

As the chart above (from the USDA) shows, in 2008 farms earning less than $250,000 /yr recieved a much greater percentage of their income in the form of government payments, while subsidies only accounted for 4% of income for producers with the largest incomes. The chart below indicates that this relationship seems to hold across years for the last decade.

References:
USDA Report- Government Payments and the Farm Sector: Who Benefits and How Much?
http://www.ers.usda.gov/Briefing/FarmPolicy/gov-pay.htm

USDA Report-Farm Income and Costs: Farms Receiving Government Payments
http://www.ers.usda.gov/Briefing/FarmIncome/govtpaybyfarmtype.htm

Energy Prices and Natural Resouorces

An application directly from Greg Mankiw's principles of economcis textbook applied to energy prices:

"In a market economy, scarcity is reflected in market prices. If the world were running out of natural resources, then the prices of those resources would be rising over time. But in fact, the opposite is more often true. Natural resource prices exhibit substantial short run fluctuations, but over long spans of time, prices of most natural resources (adjusted for overall inflation) are stable or falling. It appears that our ability to conserve these resources is growing more rapidly than their supplies are dwindling." –Greg Mankiw, Brief Principles of Macroeconomics, 5^th Ed Ch. 7 p. 144

There Will Be Fuel: NYT

"The same high prices that inspired dire fear in the first place helped to resolve them. High oil and gas prices produced a wave of investment and drilling, and technological innovation has unlocked oceans of new resources. Oil and gas from ocean bottoms, the Arctic and shale rock fields are quickly replacing tired fields in places like Mexico, Alaska and the North Sea...."The technology producing these resources has absolutely made the difference," Mr. Odum said. "It's the same with the Arctic, with the shale oil, all over the world. Technology is the key...."When you add it up," Mr. Morse noted, "you get something that very closely approximates energy independence."

Economic Optimism: NYT

"It's true that the real price of oil is slightly higher now than it was in 2005, and it's always possible that oil prices will spike again in the future. But the overall energy situation today looks a lot like a Cornucopian feast, as my colleagues Matt Wald and Cliff Krauss have recently reported. Giant new oil fields have been discovered off the coasts of Africa and Brazil. The new oil sandsprojects in Canada now supply more oil to the United States than Saudi Arabia does. Oil production in the United States increased last year, and the Department of Energy projects further increases over the next two decades.........You can always make news with doomsday predictions, but you can usually make money betting against them. "

The Energy Future Ain't What it Used to Be: NYT

"The price of natural gas and electricity will be low over the next quarter-century, and crude oil will become more expensive but not radically so, the Energy Department predicted on Thursday, in a report that contradicts widely held notions. And even without a national global warming law, American carbon dioxide emissions will not inexorably set new records; they will stay below the rate of 2005 for the next 15 years because of economic forces, the forecast said. "

A great video on comparative advantage, economic growth, & technological change

See also:


and

Farm Subsidies and Sustainable Agriculture

I  ran across a piece by the EWG titled 'Government's Continued Bailout of Corporate Agriculture' which, in addition to the title, made some pretty bold and possibly misleading statements. I'm not saying this is intentional on the part of EWG, but these statements could easily be misinterpreted.

From 1995-2009 the largest and wealthiest top 10 percent of farm program recipients received 74 percent of all farm subsidies

This is true, but it could give the false perception that farm subsidies benefit large farms perhaps at the expense of smaller farms, but I addressed this before in another post Do Farm Subsidies Benefit the Largest Farms the Most?

It's true that many subsidies are tied to commodity production. As a result, those that grow more commodities (i.e. larger farms) will get more money from the government. As a result larger producers take in a larger share of all subsidies (especially those related to commodities). However, subsidies account for a much smaller percentage of income for large producers, and make up a much larger percentage of total income for medium or small producers.  

EWG  does admit that they favor subsidies going to smaller and midsize farms, where they have the biggest impact on operating budgets.  Another quote:


The vast majority of farm subsidies go to raw material for our industrialized food system, not the foods we actually eat. Even less money goes to support the production of the fruits and vegetables that are the foundation of a healthy diet.


This couldn't be further from the truth. It is true, as I discussed above, that most of the subsidies go to commodities, but it isn't true that they don't contribute to the production of foods that we actually eat. In fact, as Michael Pollan has brilliantly stated:

"What I keep finding in case after case, if you follow the food back to the farm — if you follow the nutrients, if you follow the carbon — you end up in a corn field in Iowa, over and over and over again." -Michael  Pollan

It is a miracle that modern sustainable agriculture can feed so many people in so many ways, with just a few common staple crops, and do it sustainably!

The EWG quote also could give some people the perception that healthy supplements in our diets, like fruits and vegetables, are more expensive than processed foods containing corn and soybeans because corn and soybeans are subsidized more heavily than fruits and vegetables. Again, this couldn't be further than the truth. The agronomics, labor, risk, economies of scale, and capital costs associated with fruit and vegetable production make those crops much more expensive than commodities, and have a much larger role on their prices than subsidies.  Eliminating commodity programs would have an insignificant impact at the retail level, and the subsides required to make fruits and vegetables more affordable would dwarf what we are currently spending on commodities. 

Finally, while this corporate giveaway has gone on unabated, conservation continues to be shortchanged.

While this may be true, in terms of the allocation of funds, conservation and sustainability in terms of on the farm practices isn't shortchanged in the least. Market forces have overcome subsidy related distortions and led producers and agribusinesses to focus heavily on green technologies including herbicide and pest resistance, water use efficiency, fuel efficiency etc.  Again, all the practices that make modern agriculture, sustainable agriculture.