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Fair policies for the coffee trade - protecting people or biodiversity?

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  • Kitti, Mitri
  • Heikkila, Jaakko
  • Huhtala, Anni

Abstract

We investigate the role that economic instruments can play in the eradication of poverty and preservation of biodiversity in agroforestry management in coffee production. Most of the world's coffee producers live in poverty and manage agro-ecosystems in regions that culturally and biologically are among the most diverse on the globe. Despite the relatively recent finding that bees can augment pollination and boost coffee crop yields substantially, the short-term revenues to be had from intense monoculture drive land-use decisions that destroy forest strips serving as habitats for pollinating insects. Our study investigates the possibility of multiple equilibria in the adoption of technology in coffee production; farmers specialize in environmentally detrimental (sun-grown) or sustainable (shade-grown)farming or both practices co-exist. We calibrate an empirical model to characterize the equilibria and investigate the ecological and economic impacts of alternative policy instruments, among these protection fees, price premiums and a minimum wage.

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Bibliographic Info

Paper provided by MTT Agrifood Research Finland in its series Discussion Papers with number 11858.

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Date of creation: 2006
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Handle: RePEc:ags:mttfdp:11858

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Related research

Keywords: Environmental Economics and Policy; Food Security and Poverty;

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References

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  1. Sedjo, Roger & Swallow, Stephen, 1999. "Eco-Labeling and the Price Premium," Discussion Papers dp-00-04, Resources For the Future.
  2. Laura T. Raynolds & Douglas Murray & Peter Leigh Taylor, 2004. "Fair trade coffee: building producer capacity via global networks," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(8), pages 1109-1121.
  3. Pablo Benítez & Timo Kuosmanen & Roland Olschewski & G. Cornelis van Kooten, 2004. "Conservation Payments under Risk: A Stochastic Dominance Approach," Working Papers 2004-05, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
  4. Bulte, E.H. & Horan, R.D., 2003. "Habitat conservation, wildlife extraction and agricultural expansion," Open Access publications from Tilburg University urn:nbn:nl:ui:12-112507, Tilburg University.
  5. Ninan, K.N. & Sathyapalan, Jyothis, 2005. "The economics of biodiversity conservation: a study of a coffee growing region in the Western Ghats of India," Ecological Economics, Elsevier, vol. 55(1), pages 61-72, October.
  6. Simpson, R. David & Ferraro, Paul, 2000. "The Cost-Effectiveness of Conservation Payments," Discussion Papers dp-00-31, Resources For the Future.
  7. Stephen K. Swallow & Roger A. Sedjo, 2000. "Eco-Labeling Consequences in General Equilibrium: A Graphical Assessment," Land Economics, University of Wisconsin Press, vol. 76(1), pages 28-36.
  8. Gobbi, Jose A., 2000. "Is biodiversity-friendly coffee financially viable? An analysis of five different coffee production systems in western El Salvador," Ecological Economics, Elsevier, vol. 33(2), pages 267-281, May.
  9. Lall, Somik V. & Selod, Harris & Shalizi, Zmarak, 2006. "Rural-urban migration in developing countries : a survey of theoretical predictions and empirical findings," Policy Research Working Paper Series 3915, The World Bank.
  10. Loureiro, Maria L. & Lotade, Justus, 2005. "Do fair trade and eco-labels in coffee wake up the consumer conscience?," Ecological Economics, Elsevier, vol. 53(1), pages 129-138, April.
  11. Perfecto, Ivette & Vandermeer, John & Mas, Alex & Pinto, Lorena Soto, 2005. "Biodiversity, yield, and shade coffee certification," Ecological Economics, Elsevier, vol. 54(4), pages 435-446, September.
  12. Gindling, T.H. & Terrell, Katherine, 2005. "The effect of minimum wages on actual wages in formal and informal sectors in Costa Rica," World Development, Elsevier, vol. 33(11), pages 1905-1921, November.
  13. Lustig, N. & Mcleod, D., 1996. "Minimum Wages and Poverty in Developing Countries : Some Empirical Evidence," Papers 125, Brookings Institution - Working Papers.
  14. Paul Ferraro & Toshihiro Uchida & Jon Conrad, 2005. "Price Premiums for Eco-friendly Commodities: Are ‘Green’ Markets the Best Way to Protect Endangered Ecosystems?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(3), pages 419-438, November.
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Cited by:
  1. Barham, Bradford L. & Weber, Jeremy G., 2012. "The Economic Sustainability of Certified Coffee: Recent Evidence from Mexico and Peru," World Development, Elsevier, vol. 40(6), pages 1269-1279.

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