Many agri-environmental conservation programs are faced with the problem of imperfect monitoring. This provides farmers with an incentive for noncompliance, because they can receive subsidies without implementing the conservation scheme. In this paper, bidding behavior and auction performance are compared for discriminatory-price and uniform-price auctions in an imperfect monitoring environment. Our theoretical analysis suggests that auction performances are equalized between the discriminatory-price and uniform-price auctions. However, laboratory experiments reveal that, although the discriminatory-price auction has an advantage in terms of reducing policy costs, it is more likely to cause adverse selection. As a result, the uniform-price auction tends to have higher efficiency and cost-effectiveness when compliance behavior is taken into account.

No abstract

An economic crisis can be considered as a man-made disaster with the characteristics as an aggregate shock, thus complicating and hindering mutual insurance or help in local communities. This paper investigates the dynamics of productivity in prewar rural Japan and examines which farm households were more vulnerable to the Great Depression, as a representative example of aggregate shocks that have a serious impact on rural sectors. First, using panel data from farm households collected by the Imperial Agricultural Association (Teikoku Nokai), we measured the Malmquist productivity index (MPI) and decomposed it into technical change and efficiency change for the period of 1924-1933. Second, with this panel data, we investigated which farm households were more vulnerable to aggregate shocks. Our main findings are as follows. First, although the MPI declined rapidly after the Great Depression due to the technical and efficiency change, this rapid decline in productivity was temporary. Second, the vulnerability of farm households to aggregate shocks differed by region, and large-scale farmers were relatively robust to them. These differences in vulnerability across farm size may have triggered the structural changes in Japan's prewar agriculture after the Great Depression. Our findings shed light on the dynamics of farm household behavior in prewar Japan from the micro and quantitative perspectives.

The aim of this paper is to clarify the determinants of consumer willingness to buy biodiversityfriendly agricultural products. To this end, this study considers a Japanese case: fish-friendly rice that targets the preservation of habitat for the indigenous fish of Lake Biwa in Shiga Prefecture. We cast a spotlight on consumer characteristics identified from market segmentation based on consumer awareness and behavior and, in addition, ex ante consumer knowledge about the rice. The willingness to buy is shown to be stronger for those who are more highly concerned with agriculture, countryside and produce, those who highly evaluate the effect on the environment and ecosystem conservation provided by the fish-friendly production process, and those who have ex ante knowledge about this particular rice. As a result, in terms of policy implications, it is important to encourage consumers to purchase such products not only by informing them of environment and ecosystem conservation benefits from the fish-friendly production process but also by advertising messages that attract consumers who are more highly concerned with agriculture, the countryside, and produce.

A direct payment (DP) scheme for hilly and mountfainous areas has been in place in Japan since 2000. This scheme's objective is to fill the gap in production costs between these less favourable areas and other agricultural locations and prevent abandoned farmland from increasing. Eligible rural communities decide whether to receive DPs, and half of the DP allocation in communities with DPs is distributed for collaborative community activities, with the remaining half allocated directly to farmers. We apply a difference-in-differences approach to examine the effect of these payments on farmland use. Using a large farm-level panel data set from before and after the payments were initiated, we employ a causal framework of analysis with a treatment group and two alternative control groups. We find that the payments led to a slowdown in the increase of abandoned farmland among surviving farms. Moreover, the payments have a marginal positive effect on the operated farm size of surviving farmers. The results imply that direct payment schemes in less-favoured areas play a key role in maintaining farmland.