Environmental Economics and Global Agribusiness Insights

Kuznets Curve

An inverted U-shaped curve that shows that as a country's income increases, environmental degradation first increases and then decreases.

Unintended Consequences

Outcomes that are not the ones foreseen or intended by a policy or action.

Example of Unintended Consequences

Subsidizing water use → overuse of water.

Example of Unintended Consequences

Deforestation policy → farmers burn more land.

Example of Unintended Consequences

Fuel subsidies → increased carbon emissions.

Agriculture vs Environment Trade-offs

Using fertilizers → more crops but pollutes water.

Agriculture vs Environment Trade-offs

Expanding farmland → more food but deforestation.

Agriculture vs Environment Trade-offs

Irrigation → higher yields but groundwater depletion.

Cost-Benefit Analysis

A method of evaluating decisions by comparing the total expected costs vs total expected benefits.

Externalities

A side effect (positive or negative) not reflected in market prices.

Positive Externality Example

Pollinator bees from a nearby farm help surrounding crops.

Negative Externality Example

Pesticide runoff harms fish in nearby streams.

Solutions to Positive Externalities

Subsidies, tax breaks, or grants to support beneficial practices.

Solutions to Negative Externalities

Taxes, fines, regulation, or cap-and-trade systems.

Regulations and Cost-Benefit Analysis

The first few regulations usually pass because they address big, easy problems.

Tragedy of the Commons

When individuals use a shared resource selfishly, leading to depletion for all.

Solutions to Tragedy of the Commons

Regulation, private property rights, or community management (like grazing permits).

Issues with Carbon Sequestration Policies

Hard to measure how much carbon is stored.

Issues with Carbon Sequestration Policies

Could lead to unintended land use changes (e.g., tree farms instead of food).

Issues with Carbon Sequestration Policies

Sometimes used for greenwashing.

Amazon Soy Moratorium

Helped: Reduced deforestation tied directly to soy farming.

Amazon Soy Moratorium

Didn't Help: Indirect deforestation still occurred (e.g., cattle replacing soy land elsewhere).

China's Green Wall vs Africa's Green Wall

China: Focused on tree planting, sometimes poorly adapted.

China's Green Wall vs Africa's Green Wall

Africa (Sahel): More agroecological and community-driven.

Better Environmentally

Africa's wall—more sustainable and locally managed.

EU's Farm to Fork, Canada, and NZ Policies

All work through regulations.

Greenwashing

Making a product seem environmentally friendly when it's not.

Example of Greenwashing

A plastic water bottle labeled 'eco-friendly' just because it's recyclable.

Industrial Agriculture vs Traditional

Industrial: Large-scale, tech-driven, specialized.

Industrial Agriculture vs Traditional

Traditional: Small-scale, diverse crops, manual labor.

Field to Fork

Entire food journey: farming → processing → distribution → consumer.

Marketing Margin / Farmer's Share

The percent of the final food price the farmer actually receives.

Example of Marketing Margin

Farmer may get 10¢ of a $2.00 loaf of bread.

Value Addition: 4 Utilities

Form: Processing raw product (e.g., milk → cheese).

Value Addition: 4 Utilities

Time: Making products available when needed (e.g., frozen foods).

Value Addition: 4 Utilities

Place: Making products available where needed (e.g., shipping oranges to Iowa).

Value Addition: 4 Utilities

Possession: Legal and emotional ability to own/use the product (e.g., labeling, branding).

Colonialism & Agriculture

Past: Focused colonies on export crops, not food for locals.

Colonialism & Agriculture

Present: Poor infrastructure, low value addition.

Agribusiness Sectors & Examples

Input: Seed and chemical companies (e.g., Bayer).

Agribusiness Sectors & Examples

Farmer: The grower (e.g., a corn farmer).

Agribusiness Sectors & Examples

Trader: Buys from farms, sells globally (e.g., Cargill).

Agribusiness Sectors & Examples

Food Company: Turns raw food into products (e.g., Nestlé).

Agribusiness Sectors & Examples

Retailer: Sells to consumers (e.g., Walmart).

Economies of Scale

Producing more lowers the cost per unit.

Example of Economies of Scale

A huge dairy farm has lower milk costs than a small one.

Volatility

Unpredictable prices (e.g., weather makes corn prices swing).

Complexity

Complicated systems (e.g., global supply chains).

Scrutiny

Public pressure and oversight (e.g., labeling GMOs).

HHI

Herfindahl-Hirschman Index - measures market concentration.

High HHI

Highly concentrated, monopolistic.

Low HHI

Competitive.

Most Concentrated Sectors

Input suppliers (seeds, chemicals).

Least Concentrated Sectors

Farmers.

Pros of Concentration

Economies of scale, efficiency.

Cons of Concentration

Less power for farmers, less competition.

Vertical Coordination

One company controls multiple steps (e.g., Tyson owns farms and processing).

Horizontal Coordination

One company buys out competitors (e.g., two seed companies merge).

Vertical Integration HHI Change

Doesn't always change HHI.

Horizontal Integration HHI Change

Increases HHI.

Bayer-Monsanto Merger

DOJ believed they didn't compete directly in all markets and promised remedies.

Monopoly

One seller → high prices for consumers.

Monopsony

One buyer → low prices for producers.

Foreign Direct Investment (FDI)

Investment by a foreign company into another country's business.

FDI Forms

Building new facilities (greenfield), or buying local companies (brownfield).

Dambisa Moyo's Preference

Prefers FDI over aid—long-term investment better than short-term help.

ESG

Rating companies based on sustainability and ethics.

Comparative Advantage

Lower opportunity cost.

Absolute Advantage

More efficient in total output.

Corn Laws

British laws protecting local grain farmers by taxing imports (repealed in 1846).

Trade Surplus

Exports > imports.

Trade Deficit

Imports > exports.

High Domestic Price Outcome

If world price is lower → the country will import.

Autarky

A country that doesn't trade at all.

Trade Winners

Importing Country: Producers: Hurt, Consumers: Helped.

Trade Losers

Exporting Country: Producers: Helped, Consumers: Hurt.

Trade Barriers

Import Restrictions: Tariffs, quotas.

Tariff

Tax on imports.

Currency & Trade

Weak currency → exports increase (cheaper abroad).

WTO Color System

Red: Prohibited. Amber: Limited. Blue: Trade-distorting but allowed under reforms. Green: Allowed (non-distorting).

Dumping

Selling goods below cost to beat competitors.

Indirect Dumping

Government support lets companies sell cheap abroad.

Beef Production Regions

Biggest: U.S., Brazil, China. Smallest: Many African countries, parts of Asia.

Taurine

Temperate cattle (e.g., Angus).

Zebu

Hump, heat-resistant (common in India).

Sanga

African hybrid of Taurine and Zebu.

Argentina's Pampas

Fertile plains; ideal for cattle.

Beef Export Ban

Used to protect local food prices—controversial.

Dangers of Stereotyping Regions

Oversimplifies diverse practices and cultures.

Modern Cattle Issues

Beef vs Other Meats: Beef has high environmental impact.

Vegetarianism/Veganism Threat

Rising in rich countries; challenges beef demand.

Cultivated Meat Pros

Lower emissions, animal welfare.

Cultivated Meat Cons

Cost, labeling, consumer acceptance.

Selective Breeding

Traditional, slow.

Genetic Editing

Precise, edits existing genes.

Genetic Modification

Adds foreign genes.

Genetic Modification Pros

More yield, disease resistance.

Genetic Modification Cons

Ethics, regulation, consumer concern.