design of systems approaches to invasive pest risk management
DESCRIPTION
Design of Systems Approaches to Invasive Pest Risk Management. Everett B. Peterson (Virginia Tech) David Orden (IFPRI) Suzanne Thornsbury (Michigan State) Eduardo Romano (PIRE) Presentation made at 2004 PRESIM Workshop, Washington, DC, August 19 – 20, 2004. Project Overview. - PowerPoint PPT PresentationTRANSCRIPT
2004 PRESIM Workshop 1
Design of Systems Approaches to Invasive Pest Risk Management
Everett B. Peterson (Virginia Tech)David Orden (IFPRI)Suzanne Thornsbury (Michigan State)Eduardo Romano (PIRE)
Presentation made at 2004 PRESIM Workshop, Washington, DC, August 19 – 20, 2004
2004 PRESIM Workshop 2
Project Overview
Goal: To develop and test an evaluation methodology for regulations that adopt a “systems approach” to reducing invasive pest risks associated with imports that is less trade-restrictive than a product ban.
Will develop several case studies to evaluate the proposed methodology Avocado imports from Mexico Citrus imports from Argentina
Current status Have completed economic assessment of removing geographic and
seasonal import restrictions on avocado imports from Mexico Begun work on developing decision tree to evaluate alternative systems
2004 PRESIM Workshop 3
Background on Avocados
Importation of fresh Hass avocados from Mexico into the U.S. have been totally or partially banned since 1914
Since 1997, avocados from approved orchards in State of Michoacán, Mexico have been allowed to be imported during specific time periods to specific regions: In 1997, access to 19 Northeastern states plus D.C. during November to
February In 2001, access to additional 12 states during October 15 – April 15
Currently, there is a proposed to remove all geographic and seasonal restrictions
2004 PRESIM Workshop 4
Domestic Production and Imports of Hass Avocados
0
100
200
300
400
500
600M
illi
on lb
s
97/98 98/99 99/00 00/01 01/02 02/03
Marketing Year
Mexico
Chile
California
2004 PRESIM Workshop 5
Model Static, partial equilibrium model
3 supply regions: US (California), Chile, Mexico 3 domestic demand regions: currently approved states, avocado
producing states (California, Florida, and Hawaii), all other states 2 time periods: October 15 – April 15, April 16 – October 14
Consumer demand for avocados Derived from weakly separable nested CES utility function for
representative consumer in each region Two substitution parameters:
Between avocados and all other goods Between avocados from each supply region
Avocado supply CET revenue function determines supply in each time period Linear supply of an aggregate factor (determines location of ppf) Export supply of avocados from Mexico assumed to be perfectly elastic
2004 PRESIM Workshop 6
Data and Key Parameter Values
Baseline data is average of 2001/2002 and 2002/2003 marketing years
Demand elasticities SR: Californian producer-level own-price -0.62 (Carman and Kraft),
aggregate avocado -0.60 LR: 1.75 times SR elasticities
Supply elasticities SR: 0.35 (Romano) LR: 1.3 (Carman and Kraft) Chile: Adjust above total supply elasticities to reflect export supply
Long-run population and income growth Assumed 10% growth in real income for all demand regions Population growth varied from 3.5% to 9% across demand regions
2004 PRESIM Workshop 7
Preference Parameters
To calibrate the CES utility function, must choose a set of “preference parameters.” For example, consider one-level CES:
For time periods and geographic regions with import restrictions in place, the preference parameter for Mexican avocados will equal zero in initial equilibrium.
Removal of seasonal and geographic restrictions require adjustments in preference parameters Following Veneables, equate parameter value for Mexican and Chilean
avocados Maintain slight preference bias for Californian avocados
1 11
1 1
, 1,n n
j j jj j
U x
2004 PRESIM Workshop 8
ResultsBase Short-Run Long-Run
Variable
(Million lbs) Percent Change
California Avocado Production 346.0 -12.2 -14.6
Mexican Exports 58.2 259.6 485.1
Chilean Exports 176.8 -16.5 -9.3
California Producer Price
October - April $0.87 -36.8 -17.2
April - October $1.10 -32.7 -8.2
Producer Surplus $ Millions
California -$114.4 -$35.9
Chile -$24.4 -$3.9
Equivalent Variation $184.4 $116.2
Net US Welfare Change $70.0 $80.3
2004 PRESIM Workshop 9
Future Work
Avocado case Incorporate APHIS risk assessment and the economic analysis (similar
to work by Glauber and Narrod) Determine the costs alternative systems to controlling avocado pests Assess costs and benefits of alternative systems (including alternative
geographic restrictions)
Decision tree Continue to develop a generic framework for analyzing different system
approaches
Develop additional cases